CRM vs. ERP – What’s the right focus for your selection project?

We recently worked with a manufacturing organization that looked to select enterprise technology to improve a range of sales, operational and finance processes. In this specific case, what we saw was a “CRM vs. ERP” focus disconnect.

Due to the challenges the team faced with the current state of the organization’s internal sales processes, the project team began with a “CRM-centric” approach to the selection.  In other words, the team started their selection journey with a narrow focus on available customer relationship management (CRM) systems to streamline functions on the sales side of the business.

Fortunately, the organization asked Ultra ERP selection consultants for guidance as the selection got underway.  We took the chance to remind the team that while CRM technologies would help track the company’s customers, prospects, business opportunities and leads, taking a narrow “CRM-centric” approach to the enterprise technology project wasn’t a best practice.  In fact, some of their early research may have lead them to misunderstand what they really needed from CRM.

An Integrated Approach

Instead, when entering an enterprise technology selection, our team guides companies to take an ERP-centric approach.   So, when a project team begins a technology evaluation, the desired future state involves integrating and standardizing processes within ERP.

In this case, Ultra’s ERP consultant team guided the company that it is the ERP system that will perform all an organization’s transactions, including Order to Cash (customer orders), Procure to Pay (purchase orders), Plan to Produce and Financials.

These are key processes that are managed within ERP.  All customers, suppliers and items are owned by the ERP system, which cuts down on redundant systems and manual handling.  The desired state is that all customer interactions will be owned by the ERP.

The desired state is that all customer interactions will be owned by the ERP.

Improving Business Processes

Standardizing on an integrated ERP platform transforms and improves business processes.  As an example, when the organizaton’s customer calls with a problem with an active order, the issue will be recorded in the ERP so that the company can handle the request.

The issue then automatically flows and links to customer orders within Accounts Receivable, all purchase orders in Accounts Payable, and the related service orders within Accounts Receivable.  These transactions are tightly tracked and linked within the ERP system.

If CRM stands alone from ERP, it is inefficient to separately manage all the items, costs, and customer records in multiple systems.  The ERP must own these transactions, because they tie out to accounting.  Therefore, ERP is the center of that universe.  Otherwise the plumbing costs of integrating all items and costs, service orders etc., would be too costly long term, and would never really be in sync as releases change.

CRM vs. ERP? Look to Streamline Business Processes

For this manufacturing organization, at the core was how best to manage prospects and quotes.  Sometimes the ERP is not as atractive as other systems and the sales team would like to use “their” tool.  While we understand the desire for sales to have their own tool to develop quotes and proposals, it’s key to tie pricing information and sync it directly from the ERP. This insures accuracy and effective data tracking and reporting.  Therefore, quotes should be managed within the ERP system as well.

So where does that leave CRM?  We guided the company to integrate ERP and CRM functionality, so the CRM system would be used to manage the sales funnel, lead and prospect management, and customer relationships through the quoting process.  The quote would be tracked and managed within the ERP and automatically link back to the CRM for ease of visibility and reduced chance of error.

Next Steps

What we saw with this manufacturing ERP project team is not so different then what most project teams experience.  When the focus becomes too narrow, or there is a disconnect when it comes to CRM vs. ERP, the outcome suffers.  Instead, when entering an ERP selection project, the companies we team with are advised to keep in mind the desired future state and the advantages that stem from integrating and standardizing processes within ERP.

Confused about the right approach to ERP selection criteria for your selection project?

Contact Ultra to gain valuable insight.