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when embarking on a digital transformation journey companies are often torn between whether to implement a new erp system or a crm system but what is the difference between the two that's what i want to talk about here today [Music] my name is eric kimberling i'm the ceo of third stage consulting we're an independent consulting firm that helps clients through their digital transformation journeys and one of the common questions we get from clients and others in the industry is what is the difference between an erp system in a crm system and there is no one-size-fits-all answer for organizations and there's a lot of overlap between the two but in today's video i want to talk a little bit about the difference between the two types of systems as well as how to determine which is the right for you [Music] so let's start with the definition of crm crm software stands for customer relationship management another way to think about it is it's a way to automate your sales activities it's also referred to sometimes a sales force automation and in summary or in general what crm software does is it helps you manage your sales pipeline so when you have a new lead or a new prospect that you capture either through your website or perhaps you have a sales rep that captures the lead or the contact information that will be entered into your crm system and the crm system is a way to manage that lead through being pre-qualified as a potential customer and ultimately through the entire sales cycle until they become a paying customer and there's a lot of different functionality and different business processes and workflows that go into this including pipeline management managing where in the pipeline different opportunities are if you're a business owner or an executive with a large sales team or multiple sales reps it's a way to have visibility into what your sales team is doing in addition to managing that sales pipeline it also can help with things like managing territories if you're a larger organization with a big sales team and a big region that sales reps are covering it's a way to manage who owns what territory and that sort of thing it also is a way to manage commissions so companies that are trying to track what commissions they owe their sales reps that's something else that is managed in crm and crm depending on which one you use can also help configure a product or service so if you're a company that sells complex products or services that require sort of a custom estimate it can be a way to provide those bids or estimates in a way that makes sense for your organization now when looking at crm systems there's two different paths you can go down you can go with a focused crm system that only does crm and maybe it just barely touches some of the other functions within your business like inventory management or maybe some light financial capabilities or you could go with an erp system which i'll talk about here in a second but that's a broader system that can cover more functions including crm but also other things as well so that's one of the big questions you have to ask yourself is do you want a system that specializes in crm or are you looking for something that does something a little bit more for your business now let's shift gears and talk about erp which stands for enterprise resource planning and the origins of erp started in the manufacturing space so it was a way for manufacturers to track their inventory to track what was happening on the shop floor to track their warehouses the back office financials and eventually over time it started to expand into other areas as well things like crm human capital management and other areas were areas that were added to the functionality over the years over time erp software has been used not just in manufacturing but really any type of organization whether you're for-profit or non-profit government whatever type of business you're in there's probably an erp system out there for you there's hundreds of different erp systems that we help our clients select and implement but the main summary of what erp software does is really a single system to tie together all of your functions and capabilities across your entire business the main difference between erp and crm that you should be aware of is think of crm as something that's very focused and specific to one part of your business it's typically going to entail software that is designed specifically for your sales force and for managing sales and customer service and marketing types of activities whereas erp software is meant to provide broader capabilities across your entire business everything from financials to your inventory management to your accounting your warehouse management your service ticket tracking anything you can imagine within your business chances are there's an erp system out there that can do what you need it to do so determine which is the best fit for you it really comes down to a couple of things one is are you looking for something that's very focused on sales force automation and customer service or are you looking for something that's broader can handle a diverse set of capabilities that's one question the second question to ask yourself is are you equipped to handle a best of breed multiple system type of environment so in other words if you go with a single crm system chances are you're going to need to tie that to some sort of erp or financial system to tie together your entire business erp on the other hand is meant to be more of a single erp system it can be easier to manage so it really depends on your business to determine whether or not you're looking for a focused crm system or a broader erp capability there is a plethora of erp and crm systems out in the marketplace and there isn't necessarily a distinction between erp and crm in that a lot of erp vendors also provide crm capabilities and a lot of crm vendors are starting to provide more erp capabilities but if we look at some of the top systems in the marketplace on the erp side of things some of the leading systems include sap s 4hana microsoft dynamics oracle erp cloud netsuite those are just a few examples of some of the leading erp systems in the market on the crm side you also have stand-alone crm systems like salesforce that's probably the most popular or well-known stand-alone crm system you also have some erp vendors that provide very strong crm capabilities either as a stand-alone system or as part of a broader erp offering and those vendors would include examples like netsuite sage microsoft dynamics those are some erp vendors that provide pretty strong crm capabilities now to better understand what your options are i highly encourage you to download our 2021 digital transformation report and the reason that report is so important is because we actually objectively rank the top 10 systems in a number of different types of settings including the top 10 cdrm systems in the market as well as the top 10 erp systems so for more on that i highly encourage you to download that report and i've included links to that in the information field below [Music] so what are some of the risks and pitfalls with implementing erp and crm software both technologies can be game changers in terms of improving your business making you more efficient more productive more effective more profitable all those things but getting there can be difficult for a lot of organizations and some of the challenges that organizations face are first of all it can be very complex to go through this sort of change as an organization if you're talking about changing a wide variety of employees and asking them to adapt to a new erp system that can be very difficult for many organizations if you're implementing crm software on the other hand it can be very difficult to change what the sales reps do and sales reps are typically good at selling but they're not necessarily eager to change their business processes or the technologies that they use so no matter what you're implementing whether it's erp or crm it's important to recognize that there's a lot of organizational business process and people related pitfalls that a lot of organizations face [Music] i hope this has provided a general introduction and differentiation between erp software and crm software i have a whole plethora of other videos on my youtube channel that talk about erp systems and crm systems as well as implementation best practices on my youtube channel so i encourage you to search for many of those videos that will help you through your journey and i've also included a link to our 2021 digital transformation report which again i've included links to that as well as other resources that i think will help you through your transformation i've included links to that in the description field below so i hope you found this information useful and i hope you have a great day you