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How integrating CRM and ERP can increase revenue and profitability

(Image credit: Image Credit: Zaozaa19 / Shutterstock)

It’s well known that many ERP projects fail. According to research firm Gartner, as many as 75 per cent of such undertakings fail to deliver the expected result.

And yet, despite the problems, many manufacturers still turn to the software when it comes to updating their infrastructure.  The reasons are clear: the use of ERP is an excellent way to ratify business processes by improving collaboration throughout organisations and pulling separate strands together.

The business process element is key here. One of the main reasons that ERP implementations fail is that businesses try to lever ERP into a system that it’s not been designed for.  They fail to consider all the ramifications of the software, in particular how it fits with other aspects of the business.

What ERP isn’t designed for is managing growth; converting those sales leads into revenue – and maintaining good relations with existing customers. It’s true that ERP systems can bring some insight to bear but it’s an expensive way of going about things, ERP licences aren’t cheap and equipping sales and marketing staff with access to ERP software smacks of overkill. And even if a company were to go down this route, production teams are often reluctant for their sales and marketing colleagues to have access to the ERP system.

This all makes sense when we consider the typical sales and marketing workflow. Driving sales involves the use of marketing tools, a sales pipeline, sales targets, website and marketing ROI- going from leads to prospects to opportunities to quotes to sales orders, to customers and contracts.

This has taken on a different dimension in the last decade or so. The rise of social media and the growing importance of real-time data access mean that some of the more traditional sales channels are being by-passed. Pulling the different elements of the sales process together is a challenge, but one that could bring great benefits to any organisation.

Reacting to customer interactions

That’s all some contrast to the operations workflow which involves stock management, logistics, just-in-time production, credit control with shipping, processing quotes to purchase orders, deliveries and invoices: they are two different worlds.

But what would make sense, however, is for these two worlds to coincide. Given the complexity of modern organisations, there needs to be some sort of platform to gather all relevant information in one place: companies can’t rely on a collection of spreadsheets from everyone involved in the sales process. And they certainly can’t rely on information stored in the salesperson’s head – that may have worked 50 years ago but we’ve advanced considerably since then.

Using a CRM system enables a company to know about – and act upon – every single customer interaction.  The use of a shared repository gives a wider, more holistic view.

But organisations don’t just want collaboration within teams, they seek wider co-operation across departments. Production and operations need to be pulling in the same direction as sales and marketing, so there should be closer integration with their respective systems.

This is easier said than done; production systems and sales systems are two very different beasts, with their own architectures, with their own sets of tools and no way of exchanging data between the two systems.

If, however, CRM and ERP systems could be fully integrated then a whole new world could be opened up.  After such an action, a company has a single view of all customer interactions including contact details, meetings, emails, quotes, orders, products purchased and warranty details.

With this synchronisation of data, businesses can also significantly reduce the possibility of errors, for example, when a customer tells their sales contact about a change of address, the change will be reflected in the ERP system as well as the CRM platform, meaning a much more efficient process.

Without the need for two separate data repositories and with organisation-wide information, it becomes possible to gain insight into trends, allowing your business to forecast more accurately.

It sounds straightforward enough but, as is often the case, the simplest approach is not always the best one. Most ERP vendors provide a ‘bolt-on CRM module’ enabling customers to tie the two systems together.  It makes it sound so easy... but there’s a catch. To do this, the vendor has used a lowest common denominator approach and, while there is a CRM platform, they tend to be nowhere near as feature-rich as those provided by dedicated CRM vendors.

There’s also a philosophical issue; ERP vendors are not really geared up to handle responses to customer interactions, that’s not what their software does. ERP is very analytical in nature as it’s been designed to handle processes; CRM software is much more creative in its approach; cold logic isn’t necessarily the best way.

There’s also an operational issue. These integration ‘modules’ often offer a pre-configured transfer of data and expect the customer to modify workflows to suit the integration rather than the other way around. This is not the way forward: if companies are modifying their processes to suit the software, something has gone very wrong.

Working together

So, in order to get the best out of the two types of software, the most efficient approach is to take an example of each and get them working together. It is certainly possible to adopt this approach.

It’s the only way to approach the issue. A single vendor may have the intention of producing the best software for every type of business process but it can’t. Even large, global software vendors will have one or two products that it does brilliantly, several that does pretty well and few more that are just functional.  Other smaller and nimbler companies will fill those gaps.

ERP vendors often fall into this category and try to be all things to all people.  According to Gartner,  ‘Although enterprise resource planning (ERP) vendors offer numerous enterprise applications and claim that their integrated system is a superior solution, all modules in an ERP system are rarely best-of-breed.’

As an example of how the two technologies can work together, industrial filtration and sieving systems manufacturer, Russell Finex, connects Workbooks CRM to its Epicor ERP system to ensure a reliable data flow between the two systems. According to Rob O’Connell, Sales and Marketing Director at Russell Finex, this approach has saved a great deal of time. “We are no longer keying any data twice which is saving a lot of people a lot of time,” he says.

As a result of sharing this data, O’Connell believes that his colleagues, from sales people to Group level and the board, will have better visibility of where their business is coming from, and will lead to an increase in sales performance.

The company had tried using the bolt-on module approach but found it failed to meet its needs. O’Connell said the company had tried to migrate from its legacy Goldmine CRM database to the Vantage CRM add-on proposed by Epicor, but after this failed to deliver the desired results, switched to Workbooks.

It’s important to realise that integration is not just about transferring data more efficiently. It should be used as a key component of many workflows throughout a business; it then becomes an opportunity to enhance workflows that improve revenue generation, reduce costs and produce more insightful and useful reports.

And the integration itself has become a lot easier to do. Companies can use web services and a range of tools from the likes of Zapier and Tibco to build integrated systems.

Two simple examples of how an ERP integrated with CRM, when used effectively, will enable the sales team to identify order history and status of work-in-progress and help the support team to quickly validate a product warranty during a service call.

It’s important that there’s a degree of planning involved and there needs to be an understanding of how the CRM and ERP implementations are working. Get them up and running and then add the workflows afterwards so that businesses are not integrating parts of the software or processes that don’t need integrating. A planned approach can save a good deal of time and money.

Above all, it’s important to realise that CRM and ERP are two very different beasts. But it’s apparent that with some timely and effective integration, a company can draw on the best of both systems and produce an efficient and cost-effective way of working.

John Cheney, CEO, Workbooks
Image Credit: Zaozaa19 / Shutterstock