Whether a business needs both systems largely depends on the size and complexity of the business. Even for a small business, a CRM system is better than a haphazard collection of customer data stored on hand-written notes, in numerous emails, or, worse yet, contained solely in the head of a sales rep.
Customer relations are the lifeblood of any business—CRM exists to keep that blood pumping freely.
ERP is an invaluable tool for streamlining complex business processes. Many small businesses start in a single room or small office. All of the “departments” may be within earshot of each other. At that point, software that can provide a real-time snapshot of every department may be overkill. As the business grows, the need for, and benefits of, ERP become clearer. If, at any time, a manager or executive doesn’t know what’s going on in the departments they are responsible for, the time for ERP has long since arrived.
Deciding which system is more important is like deciding between having an engine or having a steering wheel in a car. CRM is the engine that drives a business. It improves sales and increases profits. ERP is the steering wheel—it allows a business to be guided with precision, and to steer around obstacles well in advance. ERP and CRM working together make it much easier for a business to increase profits while reducing costs.
Which Comes First?
A business has to have processes before it needs to worry about streamlining them. And it needs to have profits before worrying about cutting costs. The most streamlined, efficient business in the world is still bankrupt without sales. That’s why CRM is often the best bet for a business’s first investment. Generating and maintaining sales is usually what makes everything else possible. By helping to maximize sales figures, CRM can enable a business grow to the point that ERP becomes a necessity.
Increased capital comes about in two ways: more sales or fewer expenses. Using ERP and CRM systems allows a business to pursue both of these avenues. The CRM system brings in more revenue through better sales figures, while the ERP system reduces overall operating expenses. Together, these systems can help a business pursue growth through efficiency and expansion simultaneously. Used separately, ERP and CRM can still be very helpful, but could potentially limit the business to a narrower avenue of growth.