Sooner or later the request comes from sales: “We need a CRM.” The contacts are in Outlook, the call notes in a spreadsheet, and who spoke to which customer when is known only to the sales rep. At the same time there is an ERP in which the customers were set up long ago - with address, terms and open invoices.
Before yet another program arrives, it is worth looking at what the two actually do and where they get in each other’s way.
What a CRM does
CRM stands for customer relationship management. A CRM is the sales team’s tool, and it revolves around everything that happens before the order:
- Contacts and people, including companies that are not customers yet
- Call notes, phone calls, emails, so everyone can see what was last discussed
- Opportunities, meaning enquiries and quotes that are still open, with their status
- Follow-ups and tasks: who calls whom back, and when?
- Sales reports: what is in the pipeline, what was won, what was lost?
What an ERP does
An ERP is the tool for everything from the order onwards: order, purchasing, stock, delivery, invoice, open items. It knows the customer as someone who orders, receives goods and pays. Which items they bought, which prices apply to them and whether they pay on time is in the ERP. How it differs from inventory management is covered in Inventory management or ERP.
Where the two overlap
The overlap lies in two places, and that is exactly where the trouble starts:
The customer. Both programs need name, address and contacts. If the customer is maintained in both, the data drifts apart. Sales know the new address; the invoice goes to the old one.
The quote. In the CRM a quote is an opportunity. In the ERP it is a document with items and prices that turns into an order. If the quote is written in the CRM and entered again in the ERP, that is double data entry in its purest form.
A further question often comes up later: in a customer meeting, sales want to see what the customer has ordered and whether invoices are open. That data is in the ERP, not the CRM.
Three common set-ups
1. The CRM is part of the ERP
Many ERP programs include sales functions: contacts, notes, follow-ups, quotes. The advantage is that the customer exists only once and sales see orders and open items directly. The drawback: these functions are often simpler than a standalone CRM and not always convenient for field sales on the road.
Fits when the sales team is manageable and most customers are repeat customers.
2. A separate CRM connected to the ERP
The CRM is the sales team’s working tool, the ERP the one for fulfilment. An interface makes sure both know the same customers: when a prospect becomes a customer, the CRM creates them in the ERP, and orders and open items flow back so sales can see them. Whether that works depends on what interfaces both programs offer. Check this before choosing, not afterwards. What an interface does is explained in What is an interface?
Fits when sales carry a lot of weight, many prospects are looked after and long sales cycles are normal.
3. Outlook, spreadsheets and memory
The most common set-up is none at all: contacts in Outlook, notes in a spreadsheet, the rest in people’s heads. That works as long as there are two people in sales who talk to each other. It stops working when someone is off sick, the team grows, or a rep leaves and takes their contacts along.
The key question: which system leads?
Whichever set-up you choose, it must be settled for every kind of data which system leads. Leading means: this is where the information is maintained, and every other system takes it from here.
| Data | Often leading |
|---|---|
| Prospects and contacts without an order | CRM |
| Call notes, follow-ups | CRM |
| Billing address, payment terms, customer number | ERP |
| Prices and terms | ERP |
| Orders, deliveries, open items | ERP |
What matters is not that the table looks exactly like this, but that there is a table and everyone sticks to it. More in our guide Master data in one place.
Signs that something is wrong
- Customers are set up in two programs, with different addresses.
- Quotes are written in one program and typed again into the other.
- Sales ring accounts to ask whether a customer has open invoices.
- When someone is ill or on holiday, nobody knows what was last agreed with a customer.
- Nobody can say how many quotes are open right now.
Before you choose a CRM
- Which sales functions does your ERP already have, and why are they not used?
- Which data do sales need from the ERP, and which does the ERP need from sales?
- Where is the quote created, and how does it become an order? See also Creating quotes faster.
- Which system leads the customer data?
- Does the CRM have an interface that fits your ERP, and who sets it up?
If a CRM and an ERP are already in place and simply do not talk to each other, connecting them is often the shorter route than switching. How we connect systems where possible is shown on our page about ERP integration. Whether customising, extending or replacing your ERP makes more sense is something our ERP guide helps you weigh up.
