Briefly, why did CRM come into being as a distinct element in the first place; couldn’t it have been an extension of the all-encompassing ERP?

During the early days of CRM, the concept was developed by a new set of companies who saw the value in developing a tool for organisations that would centralise their customer touch points – it started with contact management, moving on to sales, service and the upcoming large market of Customer interaction centres.

So, while ERP was well established as a system that could enhance and transform companies’ internal processes, CRM was all about capturing and enabling better customer interactions.

However, customer interactions across sales, service and marketing have significant interaction with organisations’ internal processes as well. Therefore, an integrated CRM system with ERP would increase the benefits of a CRM deployment manifold for an organisation.

This article covers a few points from our experience to illustrate this value and examines the interesting research carried out by a team at Nova Information management that explores the impact on business benefits delivered with a fully integrated CRM system.

Some real-life examples of how ERP integration adds value to a CRM deployment

Achieving a true 360-degree view of customer interaction

Most customer-facing teams spanning sales, service and marketing functions would love to know as much information about their customers as possible. It is very helpful for the salesperson, for example, to know that there is an unresolved customer service query pending for over a week – before the salesperson meets the customer. Or perhaps, the status of a critical order that the customer has placed, and so on.

A standalone CRM system cannot provide a rounded view of customer interactions. Integration with the ERP system is essential to provide this view.

Why re-invent the wheel?

I recall a protracted evaluation cycle for a prospect when they set about to implement a CRM system covering Sales, Service and Marketing. As a wholesaler, their pricing arrangements with customers and vendors were extremely complex. Over a period of years, they had streamlined this process using their ERP pricing Engine.

However, to enable their CRM to be effective, they needed it to have the same features, so sales teams could generate quotes. The thought of replicating the years of pricing development effort in a new CRM system was daunting and not sensible.

We finally ended up with a tightly integrated CRM system that would use the ERP price engine during quoting. The net result was that our client ended up with a CRM system that catered to everything that is typically in the scope of CRM, as well as benefitting from the features available in their ERP system.  This delivered great business benefits which a stand-alone CRM system would not have achieved.

Niche processes like Field Service management

There are some niche business processes that have benefitted immensely from integrating CRM and ECC. Field Service Management processes, for example, use the full power of CRM technology for capturing customer interactions, resource scheduling, mobile integration, job execution and so on. However, for all the logistics and Finance processes, they integrate into the back-end ERP system and use the ERP processes, thus delivering an end to end solution while avoiding solution rework, and multiple data sources.

A lot of the data is used enterprise-wide

When dealing with CRM, a very important facet is data. It is important to understand that data flows between CRM and ERP. A lot of strategically important decisions need to be undertaken to ensure these are in synch. Integration plays a key role in this.

Let us consider 2 key data sets: Customers and Products.

  • Customer: Every time a new customer is onboarded, different parts of the organisation need to setup data relevant for their processes. The salesperson is interested in some basic data and contacts, the Shipping and Billing clerks need to setup data relevant to the logistics and Finance processes and so on. An integrated system will ensure proper data setup in the respective systems and that they remain in synch.
  • Product: Similarly, when new products are added to a product catalogue in ERP, these need to be available for selling as soon as possible. An integrated system setup for 2-way synchronisation of data will be able to deliver these efficiently and keep the data in synch on an ongoing basis.

In addition to these ‘real-world’ examples, we have been interested in academic consideration. Ruivo, Mestre, Johansson and Oliveira explored Defining the ERP and CRM integrative value. In their work, they reveal some interesting insights.

Because of the lower cost and ease of implementation and its use (as compared to ERP), CRMs hold the promise of enabling information made from the CRM to be consumed in ERP and across the extended enterprise. CRM extends the original value proposition of ERP, allowing firms to build interactive relationships with their customers and bring together their previously separated information at very low cost. Whereas CRM encompasses the external part of the extended enterprise, and ERP encompass the internal part.

As more and more firms realize that they need to know deeply their customers in order to compete or survive, integrating CRM with ERP becomes a critical issue.

Integrating ERP and CRM systems could be particularly difficult since it involves not only the local firm itself but also their customers. As the firm develops a new IT infrastructure it develops rules and procedures that go beyond its’ boundaries.

The new business processes supported by ERP integrated with CRM systems are like dominoes in a row; each new transaction sets of a cascade of new events. For example, a marketing campaign generates a new sales order which triggers inventory levels, production order, purchase order, quality orders, invoices, etc. New processes that are valuable for firms to pursue.

The ERP and CRM integrative value is grounded in these reasons: the possibility of imitation and substitution decreases, and new value chains are created, increasing corporate performance

In summary, the research paper concludes, ERP systems still have a direct impact on business value by themselves so they should be kept as a priority to companies. Moreover, firms should take into consideration the integration between business processes and CRM systems as this same integration will impact on the business value extracted from these systems. CRM systems must be part of a broad set of business processes and not just another data repository without impact on business processes or decision making. We found our study to be unique in the way we approached the integration between ERP and CRM systems as drivers of business value but also in the way we brought System and Process Integration to moderate the two IT resource variables. We also hope that this study and the model we developed and tested can contribute to further research in this area.

We are grateful to Ruivo et al, for framing this discussion with their research, and we hope our experiences have something to offer the conversation.

Ruivo et al Procedia Technology 16 (2014) 704 – 709