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ERP vs CRM: Which Business Software is Right for Your Business?

In this post, we’ll break down the key differences, strengths, and use cases for ERP and CRM software to help you decide which is right for your business.
  • Natasha Scott
  • January 2, 2025

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Two of the most talked-about business software options? ERP and CRM. These powerful tools promise to streamline your operations, boost productivity, and help you make smarter decisions. But when it comes to choosing the right one for your business, things can get a little tricky.
Think of ERP and CRM as two sides of the same coin: both are designed to help your business run smoother, but they focus on different things. One manages your back-end processes like inventory and finances, while the other keeps your customer relationships on point.
So, which one should you choose? Or do you need both? In this post, we’ll break down the key differences, strengths, and use cases for ERP and CRM software to help you decide which is right for your business.

What is CRM?

ERP vs CRM comparison
Customer relationship management (CRM) software manages the entire customer relationship lifecycle.
Many software leaders think of CRM as a sales tool, but its capabilities expand far beyond sales. CRM software is the heart of any software business, with capabilities ranging from customer service and communication to analytics and reporting.
The most impactful benefit of CRM is the centralized platform for customer data. The right CRM software allows you to track customers as they move through the sales pipeline, run effective marketing campaigns, and gain valuable insights into your sales process.

So, What is ERP?

What is ERP?
Enterprise resource planning (ERP) software is the older sibling of CRM software. It was developed in the 1960s to enable manufacturers to better manage resources.

Today, ERP software handles inventory management, supply chain management, procurement, fulfillment, accounting, financial reporting, and other key business management functions.

The best ERP software streamlines data management and various business processes so that different departments can coordinate and work toward shared goals.

Related: The Two Most Impactful Ways To Improve The Odds Of A Successful ERP Implementation

CRM vs ERP: Business Software Comparison

Decision makers often confuse CRM with ERP or try to use them interchangeably. However, they have very different roles within a business.
First, let’s look at the key differences between the two types of business software:

CRM focuses on growing sales and engaging customers, whereas ERP software focuses on cost reduction and streamlining processes.

CRM is used for ‘front-office’ operations, while ERP is a ‘back-office’ tool.
CRM pulls data from your sales and marketing teams, whereas ERP pulls data from your inventory, supply chain, accounting, and other organizational functions.

A CRM is used almost exclusively by your sales and marketing team, whereas an ERP is a broader tool used by financial and operational teams.

There is some crossover between CRM and ERP, but as you can see from this business software comparison, they carry out different organizational functions.

Simply put, CRM is for increasing sales; ERP is for increasing profitability.

Do I need a CRM, an ERP, or Both?

A growing company will eventually benefit from both CRM and ERP software. If you’re currently outgrowing your marketing software or your goal is to increase sales, CRM software is the tool to get you there.
On the other hand, if you’re using manual processes for inventory management or experiencing growing pains with your current disparate systems, ERP software will streamline the entire process and help you find areas of improvement.
But how do you decide what to invest in first and prioritize if your technology budget is limited?
How you invest in ERP vs CRM depends on your business goals. For example, if you are a relatively new technology business with a few high-value customers on your books and a simple service model, you probably don’t need ERP software, but CRM will be a game-changer for growth.
On the other hand, if you have complex manufacturing processes and financial systems and a warehouse full of inventory, ERP will transform your business.

That said, it’s important to set up your business for now and the future. The sooner you implement the right systems, the better you set your business up for growth. Consider integrating these two impactful systems from the start if your business will need them for your future technology roadmap goals.

Get Expert Advice on CRMs vs ERPs

If you’re struggling to figure out whether CRM or ERP is right for your business, you’re not alone.

Software is expensive, and no business has an unlimited technology budget. It’s up to you to determine how to prioritize your spending to maximize ROI.

But you don’t have to do it alone.

A dedicated tech advisor will assess your business operations and give you detailed, tailored advice on what software is best for your business. They’ll work with you to create a technology plan and support you right through the software implementation process.

If that sounds like the initiative your business needs to succeed, head to our vetted tech advisor directory to find the right expert for your business.

ERP vs CRM: It’s Up to You

Choosing between ERP and CRM comes down to understanding your business’s priorities. ERP might be your best bet if you’re looking to streamline internal operations like inventory, finances, or supply chain management. But if building stronger customer relationships and managing sales pipelines are your top goals, a CRM system is the way to go.
For businesses aiming for a complete solution, integrating both ERP and CRM could unlock even greater potential. The key is to evaluate your needs, consider your budget, and think about your long-term goals.
Whichever path you choose, remember: the right software isn’t just about features—it’s about how it empowers your business to grow and succeed. Now that you know the differences, you’re one step closer to making a confident decision.

Head to the next article for an in-depth guide on choosing the right CRM for your business.

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