Back in the day when computers first became common in businesses, accounting was the first part of the business that became “computerized”. Many reasons caused this, but as time passed and computational complexity increased, these first accounting systems morphed into “Enterprise Resource Systems” (ERP) that allowed businesses to build on top of these first accounting systems in order to automate their other functional areas. Inventory, Sales Order Processing, Purchasing, Service Management, Manufacturing and Professional Services functions were added as modular pieces of functionality that used the core accounting system as its base. ERP systems proliferated and became the automation standard for businesses to scale, become more efficient and glean visibility into complex costing and other financial metrics.
Some companies with unique functional needs that ERP systems could not fulfill, built, from the ground up, their own “line-of-business” (LOB) applications when EPR systems did not have enough “out-of-the-box” functionality for them. Building a custom application is initially very expensive and then even more expensive to maintain over the life of the system, so there had to be a strong case to build a unique, custom business application instead of purchasing an ERP system. From the dawn of business “computerization”, these were businesses only options, ERP or built.
About ten years ago, a new business application technology, focusing on the customer, called “CRM”, became the choice for sales and marketing teams to use. These systems were designed for sales people, to be very configurable, so that the systems focused on the end user sales staff. Their views (user’s screens) were easier to use, configured to the business and the sales team, so that only the required information and data needed was presented; this increased user adoption. After a few years of these CRM systems, they began to offer more functional modules, just like the early accounting systems, to allow other non-sales staff functionality, like orders and professional services (projects).
The genesis of these systems is quite different: one built for sales staff and one built for accounting staff. You now have three choices when choosing LOB functionality: ERP, build or CRM. There are four major differences when choosing between ERP and CRM (leaving out the build from this discussion for now) that you should keep in mind as you go through your selection process:
1. Complexity of your reporting/costing requirements
3. Nimbleness of your business
4. Are you “Client Centric” or “Project Centric”
The first is easy- if you have complex reporting or very detailed costing needs, ERP systems beat CRM systems hands down. ERP systems have financial reporting tools that can easily create whatever report your heart desires, plus all of the expense side of the GL is already in your ERP system. You would have to expense data over to CRM to produce complex reporting.
The second is easy also – the cost for a CRM professional services system is less than an ERP system. So if you have budget issues, and cannot afford an ERP project based system, maybe consider a CRM project based system.
Businesses change, and your systems should allow, not impede, your ability to automate new business practices. If your business requirements change frequently, you would need that same nimbleness in your business systems; CRM systems are more nimble. If your industry has standardized practices and processes that really don’t change that much, ERP systems are fine for you.
Are you Client Centric or Project Centric? If your projects don’t involve much from the client, (once you have a signed contract, you produce what the clients want without much else from them), or if your project teams are internal and subcontracting resourcing, than you are project centric, and either system can work for you. If you work in conjunction with your clients to complete projects together, where you both have deadlines and share information, than you are client centric, and CRM professional services would suit better than ERP professional services.
It is nice to have choices, and now there are multiple options for professional services firms to choose from. If you need any additional help in defining what your do or differences in these approaches, please contact me at KTL Solutions.
STEVE HAMMETT | Director of Sales
Steve graduated from University of Maryland, Baltimore, with a Bachelor of Science (B.S.), in Economics and a few years later, a Master of Science (M.S.), in Information Technology. He has helped organizations for over fifteen years to solve business problems using technology. He is well informed with all Microsoft Business Solutions and is a Solutions Certified Sales Representative. For fun he looks to the outdoors, whether water, where he is a sailor (Coast Guard certified in Costal Piloting and Navigation), a PADI certified scuba diver, and a certified Red Cross Water Safety Instructor, or land, where he is a skier, hiker and mountain biker.