There is growing discussion among analysts and industry-watchers over whether the traditional terminology of ERP and CRM software still aligns with market needs. These terms are not about to drop off a cliff, but as businesses demand higher levels of industry-specific functionality, expert perspectives vary on where the market is going and how quickly.
The overlapping of ERP and CRM isn’t new. While a customer’s place is clearly carved out in the traditional CRM systems, more firms are examining the core data elements (i.e., the customer data records in their ERPs) and asking themselves: How do we extend that data to help us better manage high-value businesses processes?
“CRM is moving fast because our concept of a customer is also moving quickly,” says Joshua Greenbaum, principal at Enterprise Applications Consulting, . Concurrently, CRM use is extending into marketing departments, supply chain operations, and other areas of the typical organization.
“Companies aren’t just selling and executing sales; they’re offering services, handling product development through their customers, and using social media to garner feedback about products and services,” says Greenbaum. “Similarly, those companies are building and distributing new products but they’re much more interested in doing something that’s relevant to the customers. That’s why CRM and ERP systems are converging on a bigger picture of the relationship between a company and a customer.”
Unique industry needs
A discussion of the future of ERP and CRM will vary by industry. For example, service-based companies may approach the ERP-CRM intersection with a focus on order management and accounting capabilities.
“Oftentimes, service businesses are more likely to have the first application that’s ever implemented be CRM, because they’re trying – particularly in small companies – to increase top-line revenue,” says Cindy Jutras, president at enterprise business systems consultancy Mint Jutras. “ERP is more useful in impacting the bottom line by controlling costs and improving efficiencies.”
When it comes to industry-specific solutions focused on the customer experience, Greenbaum says that ERP’s status as a compliant application that grew up mostly in response to regulatory requirements across various industries – starting with financial management and moving into areas like healthcare and automotive manufacturing – positions it well, even as CRM’s popularity grows.
“Obviously, Microsoft is doing a good job of getting in there when these systems need to be renewed and updated,” says Greenbaum, “particularly in the small- and medium-sized business space, and when up-selling AX, NAV, and GP.”
Thus far, much of Microsoft’s approach to industry-specific ERP and CRM needs involves a few possible routes. The Dynamics CRM team has created industry templates – typically a collection of configuration changes and minor customizations – that use Dynamics CRM 2013 process flows and industry-specific terminology. These templates are unsupported but offer a way to go to market. By contrast, Dynamics AX has long invested in building industry-specific features into the core product in retail, manufacturing, distribution, public sector, and professional services.
For more specialized ERP and CRM needs, Microsoft has turned to a select group of Global ISVs, which it has grown over the last two years to cover “white space” in the product roadmap. Companies that become GISVs will “either re-platform on top of AX or CRM, or if they don’t have to, then they can tightly integrate,” explained Microsoft VP Doug Kennedy last year in an interview.
And Microsoft has invested in newer efforts in the small and mid-sized ERP channels for Dynamics NAV and GP with its “Road to Repeatability” program, which aims to help resellers focus on (among other things) building out industry-specific versions of NAV and GP that can be deployed rapidly via the cloud and with little to no customization.
But remember, says Greenbaum, that at the end of the day companies will be doing the same X number of customer activities: find them, qualify them, sell to them, deliver a product, invoice them, service them, and then come back and resell to them. “Those are real fundamental processes,” he notes, “that don’t change from industry to industry.”
Here’s the Buzz
At a recent industry event, Cindy Jutras says she was hearing a lot of buzz around the need to eradicate acronyms like CRM and ERP and instead offer up such solutions in a platform-like format. “I’m not a big proponent of doing that,” she’s quick to point out, “but I do see that there’s a lot of confusion right now as to where different functions should reside.”
CRM vendors have been talking for years about providing “360-degree customer views”, Jutras says. And ERP, traditionally defined in terms of an integrated suite of modules that provides the operational and transactional systems of record for a business, still provides data and controls that organizations can’t achieve otherwise.
“With customer relationship management, you have to control everything from the pipeline to the lead to the interactions to the engagement of the customer,” says Jutras. “But you also need to have a system of record (i.e., the ERP) otherwise you’re only dealing with part of the relationship. How is the customer paying you? How much are they buying from you? Are you supporting them? Those are ERP questions.”
CRM analyst Denis Pombriant of Beagle Research has also been tracking the changing nature of how customers and business interact. He wrote recently about the term RBM or Relationship Business Management. The economy is moving into a “new era of accounting and finance,” the thinking goes, where companies will transition their business models toward subscriptions, thus requiring a new approach to business software that “unites back office subscriptions with front office customer centricity.” Pombriant is excited about the idea that companies with strong leadership really can transform themselves by embracing the new subscription economy. He wrote:
“It’s the message of a new economy, new ways to market, sell, and service but also, new and more collaborative approaches to dealing with customers. Every recovery is led by a new, new thing and I think the subscription culture provides that.”
From Ph.D. to Service Rep
Greenbaum says IT acronyms like CRM and ERP are ripe for an upgrade based on the fact that most don’t necessarily reflect how customers actually use the products. “There’s always been an overlap with CRM and ERP,” says Greenbaum. “We have the concept of the ‘customer’ clearly spelled out in the CRM, but what’s changing is that companies are more and more looking at the core data elements of CRM and saying, how do we use and extend that to do a better job of dealing with high-value business processes?”
The lines between CRM and ERP will continue to blur, says Greenbaum, in some part because the latter no longer revolves solely around planning out cycles and because the former revolves increasingly around customer-centric business processes that require participation and visibility by more roles in the organization. For example, organizations are getting into more granular details of marketing processes and exploring customer demand at a micro-level, says Greenbaum. And they are finding the information they’re looking for in their CRM, ERP, or both.
“Ten or 20 years ago the only person who looked at supply chain management systems were Ph.D.s who handled [all] of the planning,” says Greenbaum. “Today, you want the service rep working in a call center to be able to open up a CRM tool and have visibility across the supply chain to get, say, the logistics fulfillment details for a particular product.”
by Bridget McCrea, Contributing Writer