CRM or ERP: what does a small business actually need?

“We need a system” usually means one of three very different needs: keeping track of customers neatly, managing stock and finances, or automating a process that no standard software covers. Let us work out which one is yours.

How CRM and ERP differ

CRM (customer relationship management) answers the question “what is happening with my customers”: contacts, enquiries, sales stages, reminders. ERP (enterprise resource planning) covers the whole business: stock, purchasing, production, accounting. CRM can usually be up and running within a few weeks and is paid as a subscription per user. ERP implementation takes months and needs licences and configuration, so the price difference is just as large.

When CRM is enough

If the main problem is lost enquiries, forgotten follow-ups and an Excel sheet that three people fill in differently, you need a CRM. A small service business often does fine with a standard CRM, for example Pipedrive or the free version of HubSpot. When choosing, check that it can be linked to your email and the enquiry form on your website: then a new enquiry reaches the CRM by itself, without retyping.

When to think about ERP

When goods move through a warehouse, production happens or you buy from several suppliers, CRM alone is no longer enough - stock, cost price and accounting have to be in one place. Then ERP is worth a look, but soberly: for a small company an ERP package with every module is often too complex and too expensive. Quite often an accounting program with a stock module is enough - and it is far simpler to introduce.

The third way: a custom system

Sometimes a standard CRM is too narrow and ERP too broad. In that case it is worth considering building a custom business system. It is a tool that does exactly what your process needs, without licences for modules you do not use. Bookings, client portals and order management are typical examples. Such a system needs a larger initial investment and maintenance, so it pays off most when the process is distinctive and repeats every day.

How to decide in one afternoon

Write down the 5 most common actions your staff perform every day and mark where time is wasted or mistakes happen. If most are about customers, you need a CRM. If they are about goods and money, you need an accounting program with stock, or ERP. If they are about your own distinctive process for which there is no ready-made solution, you need a custom system.

Frequently asked questions