Enterprise resource planning connects a company’s financial and operational systems to a central database, helping it manage day-to-day operations, while customer relationship management focuses on managing customer interactions.

Both systems store essential data across multiple departments. Companies can build them on the same platform, but often buy them separately and integrate them as needed.

ERP vs. CRM: Front office vs. back office

When considering the topic of ERP vs. CRM, it’s helpful to think of a restaurant. Enterprise resource planning, known as ERP, is the back office, like the kitchen where behind-the-scenes operations happen. Customer relationship management, known as CRM, is the front office, where patrons are greeted by smiling faces, inviting décor, and pristine menus for a top-level customer experience.

CRM systems

CRM systems manage direct business interactions with customers. These systems were originally created for sales departments and known as sales force automation. Over time, software developers built similar systems to handle customer service and marketing, especially for call centers—which later evolved into contact centers as customer service expanded beyond phone calls.

As software vendors expanded their offerings, they combined these functions under one system, now called CRM. Some CRM software now includes tools for sales performance management and sales incentive compensation, though these features are often sold separately due to their complexity.

CRM benefits

A CRM system acts as a central hub for all customer data, tracking every front-house interaction. For example, a CRM system would help a restaurant send out timely fliers to the right customers, mail menus to new locals, and ensure customer-facing staff knows about current promotions.

By offering a shared view of each customer’s history, CRM helps large teams across sales, customer service, and marketing deliver more personalized experiences, boosting trust and sales.

Notable CRM benefits include:

• Better customer service: CRM centralizes customer data, reducing wait times and improving collaboration across departments. This leads to faster responses, smoother service, and higher customer satisfaction, increasing the likelihood of repeat business.
• Increased productivity: CRM tools automate routine tasks like data entry, freeing employees to focus on more strategic work. Digital channels like live chat and AI-driven chatbots streamline customer interactions, providing quicker responses and improving engagement.
• Refined insights: CRM gathers and analyzes customer data—demographics, preferences, and buying history—to optimize sales forecasting, product development, and personalized marketing efforts.
• Improved customer retention and sales: A full view of customer interactions helps sales teams make better decisions, target high-value customers, and build personalized relationships—all while keeping customer records up to date.

ERP systems

ERP originated from material requirements planning, a system that manufacturers used to manage the resources needed to run their businesses. ERP serves as a shared database for all parts of an organization, primarily handling financial functions like the general ledger, accounts payable, accounts receivable, payroll, and financial reporting.

Beyond finances, ERP systems manage inventory, orders, supply chains, and data for service organizations. They also cover procurement, production, distribution, and fulfillment. Some ERP systems include tools for human resources, customer relationship management (CRM), and e-commerce.

Think of that restaurant—it depends on daily shipments of the freshest meat, fish, and produce to deliver on its menu and feed hungry patrons. An ERP system ensures its supply chain is reliable.

ERP benefits

ERP systems ultimately speed up operations and boost productivity by automating manual tasks that slow down work. ERP systems also:

• Act as a single source of truth: The biggest advantage of an ERP system is its single, shared database for all financial and operational data. This improves both routine monthly reports and on-demand reports requested by leadership. With all data in one place, employees can find financial insights without relying on IT or finance teams. This leads to faster, data-driven decisions that boost profitability, uncover growth opportunities, and improve operational efficiency.
• Enable a fast financial close: Another key benefit of ERP systems is speeding up the financial close process. Traditionally, finance teams manually gather and reconcile income and expenses at the end of each month or quarter, a time-consuming process known as “closing the books.” Using spreadsheets or basic accounting tools often means extra time and coordination with different departments. ERP systems automate many of these steps, helping companies shorten the time needed to close their books—sometimes reducing the process from a week to just a few days.
• Provide greater financial security: ERP systems also enhance financial controls. With centralized access and role-based permissions, only authorized personnel have the permission to view sensitive data, improving audit trails and reducing financial risks.
• Reduce costs: Consolidating multiple functions into one system and automating processes reduces or eliminates administrative costs and redundant tasks. This allows employees to complete more work in less time with fewer resources—so they can focus on growth-driven projects.

ERP vs. CRM—what are the differences?

Front-office and back-office operations are equally important but greatly differ in what they bring to the company. Imagine a restaurant with a beautiful ambiance, offering plush seating and grand views. Customers might be impressed initially, but if the chef and their crew aren’t organized or the food isn’t fresh, none of those factors matter. Conversely, even the tastiest food won’t get repeat patrons if the customer experience is subpar, with disorganized staff or a dining room in disrepair.

ERP vs. CRM comes down to an essential difference in focus. ERP software focus on the entire back office (finance, procurement, accounting, HR, administration, operations, IT, etc.), while CRM software focuses on the consumer-facing side of your business, organizing customer data for sales and service teams.

When it comes to software, some ERP offerings include CRM features, but CRM software does not contain ERP functions. For instance, even robust CRM software won’t manage order history or invoices, but that information comes through integration with an ERP system.

What do they have in common?

ERP and CRM software aim to improve a company’s performance. Both store and analyze data in a relational database. Companies set them up through traditional on-premises systems or as software as a service (SaaS). In the SaaS model, the vendor hosts the software in its data center and customers access it through the cloud.

Features comparison

There are numerous use cases for both CRM and ERP software across lines of business that span industries. Compare the most common areas that each option addresses:

Cost and implementation considerations

CRM and ERP software differ significantly in both cost and implementation.

CRM software is generally less expensive and easier to implement because it requires less customization and fewer complex integrations with existing systems. Many companies purchase CRM solutions, especially cloud-based ones, through a subscription model, making them more affordable for small and midsized businesses. Costs can increase if businesses need advanced features or large-scale integrations, but overall, CRM systems are quicker to deploy and scale.

ERP software, on the other hand, is more complex and typically comes with a higher price tag because it manages a wide range of business functions for broader set of users and roles—requiring more extensive customization to fit a company’s specific needs. Implementation can take months or even years, depending on the size and complexity of the organization, as it often involves integrating multiple departments and systems.

Additionally, ERP software usually requires more ongoing maintenance and support, especially for on-premises deployments, which further increase costs. While ERP software might be more expensive at the start, it offers broader functionality that supports long-term operational efficiency.

Deciding between ERP vs. CRM—do you need both?

From small businesses to large enterprises, any growing company eventually needs both an ERP and a CRM system—or a single platform that combines the two.

Business readiness assessment

Before choosing any system or product, business decision makers should consider the following:

• Core business model: If a company’s success relies on attracting and retaining customers, a CRM offers immediate benefits. If managing resources or assets is the priority, an ERP is more appropriate.
• Potential weaknesses: Software can strengthen a business’s areas of need. Choose a CRM to enhance front-end processes or an ERP to improve back-end operations, depending on which area needs the most help.

After exploring these considerations, it’s easier to break down the choice between ERP and CRM.

ERP vs. CRM software

Imagine a successful restaurant that’s ready to open at a second location. The popularity and influx of business ultimately create growing pains—spreadsheets become cumbersome and time-consuming as financial needs become more complex, prompting the owner to adopt ERP software for better efficiency and stronger capabilities.

Consider ERP software if:

• You need to streamline back-office processes: ERP software helps with everything from hiring and accounting to supply chain management, boosting operational efficiency.
• Your business is rapidly growing. A comprehensive ERP solution manages the challenges of growth by centralizing key data and keeping departments aligned.
• You've got too many tools. Managing multiple systems eventually becomes confusing and expensive. An ERP system consolidates essential information into one database, simplifying operations.

If that restaurant eventually wants to franchise and is managing promotions or loyalty programs through e-mail, it might turn to CRM software for streamlined communications and more reliable customer insights.

Consider CRM software if:

• Your customer relationships are now complex. While some ERP software offers basic customer management, dedicated CRM software is better suited for handling large customer bases, multiple engagement channels, and managing long-term, high-value accounts.
• You need better organization. Sticky notes and spreadsheets only go so far. CRM software is a great starting point for businesses focused on customer data, as it’s typically more affordable and easier to implement than an ERP option.
• You're not planning new product launches soon. ERP software really shows its value in planning and production, but if your focus is on marketing and improving customer experiences for existing products, CRM is the better tool.

The choice between investing in ERP vs. CRM ultimately depends on the company’s needs. A business with a few high-value customers and complex finances may prioritize ERP, while one with simpler finances and a larger customer base might choose CRM first.

In sum, both systems are crucial for companies to manage their growth effectively.

Integrating ERP and CRM software for enhanced efficiency

The best ERP software and the best CRM software aren’t performing at their peak if they’re not talking to each other. They’re meant to be a dynamic duo that brings out the best in each other—like Baskin-Robbins or Ben & Jerry’s. You can’t imagine one without the other.

ERP and CRM software generate the most ROI when they’re sharing data, accomplished most efficiently through technical integration rather than managing two separate systems.

For instance, a sales representative might need to check a customer’s order history, credit status, or outstanding payments during an upsell campaign. Similarly, the finance department might need CRM functionality to calculate sales commissions during payroll or apply bulk order discounts. Integrating CRM and ERP software offers business leaders a unified view of pricing structures and key performance indicators, such as customer acquisition costs and customer lifetime value.

Detailed integration benefits include:

• Enhanced data consistency and accuracy: Centralizing information helps businesses reduce data duplication, keeping operational and customer data up to date across systems. This ensures real-time insights for better decision-making while also streamlining operations, improving efficiency, and minimizing errors from manual data entry or fragmented sources.
• Improved customer experiences and service: Unifying a company’s view of customer data enables faster issue resolution and more efficient sales cycles. With all interactions and details in one place, employees and representatives have the information they need to enhance customer interactions and provide more relevant and personalized customer experiences.
• Simplified processes and increased efficiency: Automating data transfer streamlines business processes and workflows, reducing manual effort. This leads to better resource management and overall operational efficiency.

Potential challenges

Integration has many upsides but also comes with caveats.

Hurdles include:

• Data compatibility and consistency: Data formats or structures might not align during integration, leading to inconsistencies.
• Data migration issues: Transferring large volumes of data from one system to another can result in lost or corrupted information during migration.
• System customization and configuration: Adjusting both systems to meet specific business needs can be complex and time-consuming, requiring careful configuration.
• User adoption: Employees may struggle to adapt to newly integrated systems, so training is essential for smooth implementation.

Seven best practices for a successful ERP and CRM integration

Successful integration requires careful planning and execution. Follow these seven best practices to expertly handle the integration phase and reach a complete view of business operations:

1. Define clear objectives and requirements: Establish specific goals, such as improving data flow between sales and finance or enhancing customer service. Clearly outline the data, features, and functions each system should share to meet business needs.
2. Choose the right integration approach: Decide between direct integration, where systems communicate seamlessly, or using middleware to bridge them. Consider factors like system complexity, scalability, and long-term maintenance when selecting the approach.
3. Ensure data consistency and quality: Audit and clean data before integration to prevent duplication or inaccuracies. Establish data governance policies to maintain consistent, high-quality information across both systems moving forward.
4. Involve key stakeholders: Engage experts from departments like IT, sales, finance, and customer service early in the process. Their input helps identify critical requirements, avoid potential roadblocks, and ensure the plan meets everyone’s needs.
5. Develop a detailed integration plan: Create a step-by-step road map with clear timelines, milestones, and resource allocations. Include contingencies for unexpected issues, and cover all technical, business, and user needs.
6. Conduct thorough testing: Test every aspect of the integration in a controlled environment before full deployment. This includes running data checks, ensuring workflows function as expected, and validating that both systems interact correctly under different scenarios.
7. Provide training and support: Comprehensive training isn’t a one-time exercise for the employees who use the integrated systems. Make ongoing support a priority with documentation, help desks, or refresher sessions to ensure users stay confident and productive.

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