Integrating ERP and CRM: Why you can increase
Customer Satisfaction
with the “2-in-1 Principle”

Historical Reasons for the Separation of Front and Back Office

Traditionally, the automation of front office and back office in a company are two separate topics. There are also historical reasons for this: in many companies, the first ERP systems were installed sometime in the 1980s, while most CRM systems were implemented in the 1990s. The “original version” of Microsoft’s ERP solution Dynamics 365 Business Central, for example, was developed in Denmark in 1984. It is exciting to see how it has evolved over time and how more and more functions have gradually been added.

What is the Difference between ERP and CRM Software?

But back to the topic. In fact, there is still confusion when it comes to the differences and similarities between ERP and CRM systems. What applies to both is that they are designed to centralize data and processes in your company and thus contribute to a greater overview and more efficiency. But how do they differ?

ERP Software: Focus on Resource Planning

“ERP stands” for “Enterprise Resource Planning” and focuses on data and processes from the backend - those departments without direct interaction with customers. These include manufacturing, warehousing, purchasing and accounting. ERP systems are generally more complex than CRM systems and essentially are to improve collaboration within the company and thus reduce costs.

CRM System: Focus on Customer Activities

“CRM” is the abbreviation of “Customer Relationship Management” focusing on customer management. The system manages all customer contacts and data and primarily supports the work of sales, marketing and business development - i.e. the front office.

Heterogeneous IT Landscape: still common Practice despite its Disadvantages

ERP and CRM solutions each have their own functions, which are nevertheless linked. In practice, they are often still operated as isolated solutions or separate silos, which are linked via simple interfaces in the best case. Although it is possible to trace how this has developed historically, this is completely irrelevant for your customers - after all, they do business with your company and not with your front or back office. Today, your customers expect you to have the expertise to handle processes seamlessly across the entire organization.

Non-integrated systems remind of a modular system: they require manual data entry, which means that order processing takes longer - not to mention the risk of accidental errors.

If you use non-integrated CRM and ERP software in parallel, this can lead not only to redundancies, but even to “system breaks”. Marketing employees are usually only familiar with the CRM system and have difficulties finding their way around the ERP system in exceptional cases. This results in dysfunctional business processes, which in turn can lead to dissatisfaction among your customers.

All of this sounds perfectly logical, right? Yet many of the world’s leading cloud service providers continue to build their applications and services on this outdated model. They offer either stand-alone ERP solutions or stand-alone CRM solutions. It’s high time the both worlds were integrated!

Industries are evolving very quickly: Data must be captured in Real Time - a global Challenge

The topic “Integration of ERP and CRM” is a global challenge. Alysa Taylor - Corporate Vice President for Industry, Apps, and Data Marketing at Microsoft - was asked some time ago about the “relative priority” of investments in front office and back office applications. She commented:

The borders between front office and back office have become blurred because the traditional CRM and ERP systems never really communicate with each other.

Taylor continued:

Think about how fast the individual sectors are developing.

One example from the retail sector is the so-called “curbside pickup”, a service that every retailer should actually be offering by now. If the term doesn’t mean anything to you yet, the concept is that customers order goods online and pick them up on site without having to get out of their car - like the drive-thru principle, which you are familiar with from McDonald’s.

But such a concept would not work with separate front office and back office systems. After all, retailers would have to be able to record their stock in real time - so that they can forward the data directly to the employees who look after the customers.

If successful, this would amount to the complete merging of the digital and physical worlds. Taylor:

You must […] know your customers in a virtual environment and be able to transfer this knowledge to the physical world.

The Pioneer Microsoft Dynamics 365: Functional model ensures greater Efficiency

According to Taylor, customers today expect that it doesn’t matter whether they interact with the companies they buy goods or services from online or in a store. The expectation is that you know them in both environments. This is why it is not possible to work effectively with two isolated systems and on two levels of service.

For this reason, Microsoft has moved to a functional model.

The key and secret of Microsoft Dynamics 365 is that we offer individual services by function: Sales, Service, Marketing, Finance, Supply Chain, Operations and Retail.

“Dataverse”: central Data Storage Location for seamless Transparency - instead of separate Silos

In this context, she talked about “Dataverse” - a cloud-based service at the heart of the Microsoft Power Platform, which allows you to seamlessly integrate your supply chain visibility across your trading systems into your sales and service applications. Think of it this way: with Dataverse, you store all your data in one centralized place that Microsoft Dynamics 365 apps can access. That’s part of Microsoft’s value proposition:

We want to break down these traditional silos and enable data-based and AI-driven applications that are available for and support all business needs.

2-in-1: greater Efficiency and Customer Satisfaction through Integration of ERP and CRM

So much for the theory and the background at Microsoft. How do you actually benefit from the holistic “2-in-1 approach” of an integrated system in your everyday work?

1. Process Optimization through transparent 360° Data View and smooth, timely Data Exchange

   All in all, the integration of ERP and CRM systems enables smooth and prompt data exchange between the ERP and CRM software.

   Imagine the following scenario: If an employee in the processing department enters a new order in the ERP system, he or she would have to gather all the required customer or order data from the CRM system and transfer it manually if there was no integration. However, if the systems are linked or integrated with each other, the information is automatically transferred from the CRM system to the ERP system at the touch of a button - which significantly reduces processing time.

   Employees in other departments - in sales, for example - also benefit from the greater transparency. For example, they can check the order status or get information on delivery delays at any time.

2. Lower Costs and Time Savings thanks to efficient Data Management

   This real-time data exchange enables efficient and productive work with lean processes across the entire supply chain. The shorter processing times and elimination of complex interfaces save you time and money.

3. Improved Data Analysis enables better Decisions

   You can also better analyze and evaluate your data. You can link complex CRM reporting functions with ERP data and thus gain new insights. The company management can then make even more targeted decisions.

4. Cope with Technical Difficulties more easily

   Another advantage: it is easier to identify and resolve technical problems in an integrated system than if you have to “turn two individual systems upside down”.

5. Less Effort for Training and IT Support

   Effective integration of ERP and CRM also reduces the amount of IT support and training. Your employees need only training for the combined system and not for the individual systems. This saves you time and money.

6. At the end of the chain: higher Customer Satisfaction

   Ultimately, system integration contributes to higher satisfaction and therefore also to customer loyalty. For a retail company, this holistic system means: you can deliver ordered goods faster, generate additional turnover through cross-selling and upselling and shine in sales with detailed specialist knowledge. And the customer service can also process customer concerns more quickly as employees have all the information they need, e.g. on payment behavior, delivery times and returns. This also means that further sales potential can be exploited.

Stay competitive with the Integration of ERP and CRM - but avoid Pitfalls

It became clear: with the integration of ERP and CRM according to the “2-in-1” principle, you can initiate a chain of positive effects on your company processes and workflows. This results in synergies, you ultimately achieve increased customer satisfaction - and you save costs in some places.

However, it is important to ensure that possible pitfalls during integration are eliminated in advance. Firstly, it must be clarified which data is maintained in which system. After all, your employees should not have more work with the integrated systems than before - for example, because they then have to enter data twice. It is also important to determine which information is exchanged between the systems because the two systems should remain clear and not be flooded with information.

Microsoft Dynamics 365 Get rid of your Patchwork
Solution once and for all

Also remember: effective integration takes time: a high level of development effort is often required to connect the two systems. Standard interfaces make the task easier. However, the requirements for an interface are usually specific and many companies deviate from the standard in their ERP implementation.

Good cooperation between the different user groups in the company is also very important for integration. In principle, you should therefore also ensure that you have sufficient employees with the appropriate specialist knowledge and experience. If you still need support, it makes sense to look for a competent and reliable partner.

Your Advantage with Dynamics 365: ERP and CRM from a the same Vendor

Ideally, the ERP and CRM systems come from one and the same vendor - for example, it is a great advantage if both are from the Dynamics 365 series . In this case, you benefit from a complete integration of your data and processes right from the start.

Mike Morton - General Manager for Dynamics NAV and Dynamics 365 Business Central - had already emphasized that Microsoft is striving to make Business Central even more seamless and user-friendly. In combination with the financial strength and the enormous innovative power of the software giant, this gives us great confidence for the future, doesn’t it?