• September 1, 2015
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Integrate CRM and ERP for Better Intelligence

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As an example, when their packages arrive late, 52 percent of consumers blame the company from which they purchased the items, according to a survey by Accenture's Acquity Group. Of the 69 percent of respondents who had online purchases arrive late, 63 percent stated the experience affected their future shopping with the brand or retailer.

If these percentages aren't convincing enough, consider Aberdeen Group's position on the matter. Its research outlines just how much companies stand to gain from a unified CRM and ERP deployment. Companies that have adopted what it calls "customer-centric ERP" have 15 percent higher customer retention rates than those that haven't; 27.8 percent higher year-over-year revenue growth; 27.5 percent higher year-over-year profit margins; a 3 percent higher rate of complete and on-time deliveries; and 10 percent greater improvement in time-to-decision. Additionally, the proportion of satisfied customers is 6 percent higher (83 percent versus 77 percent); the time it takes to respond to customer requests is 21.6 percent lower; and customer care costs are 12.1 percent lower per year. The sales cycle is also 5.8 days shorter.

"Integration is definitely a good idea. There are a lot of business benefits to be gained," says Nick Castellina, a research director at Aberdeen Group. "People can make better decisions across the entire organization. They can align demand planning and supply chain with customer information, which will make them a more cost-efficient organization."

Industries that stand to gain the most from this kind of integration, experts say, include the manufacturing, retail, financial services, healthcare, professional services, technology, and food sectors. But the benefits are in no way limited to those.

"I can't see any organization having a reason to avoid this kind of integration," Castellina says.

McGeever agrees. CRM-ERP integration will benefit "any company that has transactions with customers, especially repeat transactions," he says. "The more interactions and the greater the volume, the more important it is for information to flow back and forth between systems."

One of the factors that had gotten in the way of such integration was that many of the legacy CRM and ERP systems tended to be architected as large, complex systems that could be used only on premises. As more companies begin to store data in the cloud, however, vendors are responding with systems that are available via the software-as-a-service model. That has democratized the technology for a larger number of companies, particularly smaller and midsize organizations.

"There has been an acceleration of CRM and ERP integration down market," Keenan observes. "It was [once] only in the providence of larger firms, but with the reduction in costs and the availability of apps through the cloud, it's much more available at a much more reasonable price to smaller organizations now."

In fact, smaller and midsize companies might have an easier time integrating systems than their larger counterparts, many experts contend.

"The bigger the firm, the more difficult it can be to integrate systems," Petouhoff says, "because of the amount of data and the number of different systems involved."


Still, integrating CRM and ERP systems is not an easy process for any company, experts agree. No matter the size of the company or the type of industry in which it competes, there can be real challenges in trying to connect data from multiple systems across multiple departments, geographic locations, business units, and product lines.

"If you do this kind of integration, be careful," Palmarini warns. "Take a look at all the processes within your company. You cannot do this type of integration without taking a look at all the processes involved."

Because of that, "it takes a real commitment from the entire organization," Castellina advises.

It starts, though, at the top. "It takes a very strong leader," Petouhoff says. "Then you need to know your available resources and the limits of your IT department."

In general, companies can take one of three basic approaches to CRM-ERP integration. The first is a full rip-and-replace process, in which all existing software is abandoned in favor of completely new systems that are linked right out of the box. The second option is a partial rip-and-replace, involving only a few systems. The third option, and probably the preferable one for most companies, is installing software connectors that allow existing systems to work together and share information.

Which method is right depends on a number of factors. "Even though rip-and-replace is probably the most difficult, it could be the best option for some companies because you get to the end goal a lot quicker," Petouhoff suggests.

Admittedly, that's probably not possible for most organizations. More than likely, firms have already invested heavily in multiple systems capable of performing different CRM and ERP functions, and they can't afford—or are unwilling—to replace them all.

Instead, companies can pare down the number of systems they use over time.

The goal, McGeever says, "should be to reduce the number of systems, to have your key data in as few systems as possible. You want to streamline so that you can do all that you need to with just two or three systems of record."

"When you have many heterogeneous systems, you increase the complexity of the integration," Aptean's Keenan says. "The spider web of systems can get incredibly complex."

One way that companies can get around this issue is by linking only a few systems directly together. "Not every system needs to integrate with every other system," Keenan says. "You can have one or two hubs and have every other system linked to those."

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