ERP vs CRM: The Differences, What Each Costs and Which to Get First

Business owners often ask us for "an ERP or a CRM, whichever is better". They are not alternatives. They do different jobs, and most growing companies end up with both. The useful question is which one to get first, and how to stop them turning into two versions of the truth.

What is the difference between ERP and CRM?

An ERP, short for enterprise resource planning, is the system the operation runs on. It records what you hold in stock, what you have ordered from suppliers, what you owe and are owed, and what each order cost you to fulfil. A CRM, short for customer relationship management, is the system the sales and service teams run on. It records who your prospects and customers are, what was said to them, what was quoted, and what should happen next.

Where ERP and CRM overlap

The two meet at the customer and the order. A salesperson creates a quotation in the CRM. When the customer accepts, that quotation becomes a sales order, which the ERP has to fulfil, invoice and collect. Both systems therefore hold customers, prices and orders, and unless one is clearly in charge of each, they drift apart: a price updated in one place and not the other, a customer with two spellings, an order that sales thinks is confirmed and stores have never seen.

This is why many ERP products include a CRM module and why some CRM products add invoicing. It is also why we usually build the two as one system with a shared customer record when a client needs both. More on what each replaces is in ERP versus accounting software and CRM versus a spreadsheet.

Which do you need first?

Look at where money is being lost today. If enquiries come in and nobody follows up, quotations go out and are never chased, or you cannot say which salesperson is working on what, the problem is before the sale and a CRM comes first. If orders are won but go out late, stock runs out without warning, invoices contain errors or month end takes two weeks, the problem is after the sale and an ERP comes first.

What does an ERP or a CRM cost?

A CRM is usually the smaller project. It has fewer modules, touches fewer departments and involves less historical data. An ERP is larger because it reaches into stock, purchasing and accounts, and because wrong opening balances make everything after them wrong. For both, the licence or build price is only part of the bill.

• Users and roles. Packaged systems charge per user per month, which grows with the team. A custom system has no per-user fee but costs more to build.
• Modules. Each one adds design, build, testing and training.
• Integrations. Connecting to accounting software, an online store, WhatsApp or a courier is often the largest single item.
• Data migration. Cleaning years of customer and product records takes longer than anyone expects.
• Training and change. A system people do not use is the most expensive kind.
• Running costs. Hosting, support and updates continue after launch. See what software costs after launch.

For a packaged product, compare the per-user cost over three years rather than one month. For a custom build, ask for a fixed written quote by module, so you can start with one and add the next when it has paid for itself.

Using both: who owns what

If you run a separate CRM and ERP, decide in writing which system is the master for each kind of record before connecting them. A common and workable split is below.

Common mistakes

• Buying a CRM to fix a delivery problem, or an ERP to fix a sales problem.
• Rolling out every module at once. Start with the one that removes the most pain. The ERP implementation roadmap sets out the order.
• Letting both systems edit the same customer record with no rule about which wins.
• Choosing on a feature list, then finding the team will not use the screens.
• Skipping data clean-up. Duplicate customers moved into a new system are still duplicates.

We build custom ERP and CRM systems as one platform with a shared customer record, one module at a time. If you are unsure which side your problem sits on, describe a normal working day to us and we will tell you where we would start, including when the answer is a packaged product.