What is ERP?
Like CRM, ERP (Enterprise Resource Planning) is a business strategy built around powerful software. However, if CRM is the front-office of a business, focusing on the customer, ERP is the organization’s back-office, looking internally to remove bottlenecks and inefficiencies.
ERP vs. CRM
While a CRM solution is focused on maximizing revenue, ERP focuses on reducing internal costs. They can be two complementary tools, so it’s not really a case of “CRM vs. ERP”.
ERP is the domain of production. Though its benefits can be felt by all teams across the company, with all using it to record data, its core function is to monitor cash flow relative to the maximum level of productivity and highlight where high costs and scheduling hold-ups are associated with the process.
Like CRM, ERP relies on specialist software that takes the same name, recording information that relates to the supply and production side of business clearly and concisely.
Who is ERP for?
ERP requires input from the whole company, as every department’s responsibilities factor into the internal workings of a business.
The departments that benefit most from ERP are those most associated with making sense of your business processes to understand the day-to-day running and make data-driven decisions based on it:
Finance departments will benefit from the automation of time-consuming manual tasks (such as payables, receivables, billing, inventory management) and easily accessed metrics in dashboard overviews
Streamlined data management for HR departments, with powerful features such as performance tracking, so that potential staffing issues can be predicted and required recruitment made
Large feature sets to automate basic tasks and present real-time information to Manufacturing teams to help with customer demands and resource management, as well as tools to optimize planning and management
Automation of time-consuming manual data-entry and stock records for optimum supply chain management
Ability to automate purchase requests (with customizable content to match each business’s process) for procurement teams
Project Management teams receive a comprehensive real-time feed of data, ensuring they’re empowered to make decisions, with risks monitored and planning altered as needed, based on this data
Clear data tracking means compliance teams have a much easier time monitoring the statistics vital to maintaining industry standards
When should you use ERP?
ERP software solutions are primarily used by large (enterprise) companies. In fact, the larger the company, the more they stand to save using ERP – due to the numerous complicated factors involved it can be almost impossible to coordinate a supply or value chain without a centralizing hub.
Other good signs you should be considering ERP solutions include:
- Your current software system is limiting growth
- You’re starting to find that the current systems you have in place don’t mesh and data transfer between teams is becoming a hassle
- Your teams aren’t equipped with the tools and oversight to meet your customers’ needs
How does it work?
The goal of ERP is to collate data relating to the internal operations of the entire business, with all sectors of the organization contributing to data input.
With this oversight, an ERP tool can flag up delays or issues that may affect different teams, such as manufacturing issues, difficulties in finding staff to fill certain roles in the company, etc., allowing teams to identify problems before they become a serious issue.
ERP also includes many features specific to particular areas of the business:
- With a constant feed of up-to-date information, trends can be spotted and changes made on an organizational level to help improve the running of the business
- Automation of various processes, such as setting up billing and fulfillment alerts depending on what data has been input to the system
- Detailed information about each stage of an order, of manufacturing, logistics and more
- Management of employee information, such as payroll, individual benefits and anything else pertinent to the business, as well as giving you control over any recruitment processes underway
- Risk assessment associated with implementing new processes to improve productivity by providing you with data on the existing process and a real-time assessment of the transition
Unlike CRM, ERP isn’t specifically targeted at fulfilling a few goals. It’s a localized information source for each department and location in a business that tracks the running of the company, its ability to fulfill its deals and the underlying costs of running the business.
Although both the CRM and ERP tools are used to increase profitability, ERP systems excel at identifying unnecessary expenses and cutting costs, while a CRM focuses on increasing sales and the amount of revenue your business can make.
ERP and Sales and Marketing
While not tailored specifically to the sales or marketing team, ERP can offer a variety of insights to help these departments.
Your sales process can be managed using ERP software, though to a far lesser extent than CRM software. The data you collect will reflect what’s happened in your pipeline but may not have the information surrounding your leads, communications and key sales metrics your reps need.
A better way for ERP to be useful to your sales and marketing efforts is by making use of data to determine the historic trends around your most valuable customers. With this data, your marketing and sales drives can be timed to correspond to when prospects are most interested in buying.
ERP is a powerful asset that can contribute to your data-driven sales but ideally shouldn’t replace it.