This episode of CRM Talk features two special guests: Daryn Reif of CRM Switch and Craig Smith of Liberty Technology Advisors. Daryn specializes in vendor-independent CRM selection, while Craig focuses on ERP selection.
The discussion centers on the similarities and differences between CRM and ERP systems. The panel defines each technology, identifies the business units that benefit most, and outlines the typical stakeholders who drive these selection projects.
Both guests share their multi-step methodologies for selection, revealing significant overlap in their processes, including stakeholder interviews, requirements gathering, workshops, and structured vendor demonstrations.
The conversation also explores factors for a successful implementation, such as management and user buy-in, the evolution of cloud-based ERP, and the critical processes and common challenges of integrating CRM and ERP systems.
Full Transcript
STEVE: Welcome to CRM Talk, the show that brings you the latest in CRM and CRM related news and information. This is Steve Chipman along with my co-host, Mr. Sam Biardo. Today we have two special guests joining us, Daryn Reif of CRM Switch and Craig Smith of Liberty Technology Advisories. Daryn specializes in vendor independent CRM planning and selection, while Craig’s company provides vendor independent ERP selection services. Today we’re going to discuss the similarities and differences between the selection processes for each technology and multiple topics around the two technologies.
STEVE: So guys, while we in the industry take the differences between CRM and ERP for granted, many people, many business people out there may not know the difference between the two. In fact, one of the most popular posts on our blog site, in fact, the most popular post is one that’s called CRM versus ERP, what’s the difference? So a lot of people are Googling what’s the difference between those two. This the post actually has 35,000 page views in 2017 alone. So for our audience who might not be familiar with all the differences, let’s briefly define CRM software and ERP software. So Daryn, maybe you could start by giving us what your definition of of CRM software is.
DARYN: Sure. Well, I can understand why that blog post is so popular because it’s not a simple answer. In general, we find that people interested in CRM software for what you’d expect, tracking, managing, reporting, and responding to information in and or about their customers or their sales leads. But where it gets a little tricky is what you define a customer as because customers can be consumers, maybe if you’re in the e-commerce business, can be your dealer network if you’re a manufacturer, can be funders and members if you’re a nonprofit, or could just be partners and influencers even. So the software typically is used ultimately to drive sales and improve service to one of those constituencies.
STEVE: Perfect. And Craig, maybe you can define ERP, starting by what the acronym stands for and then what the software does.
CRAIG: Sure. So ERP software, or Enterprise Resource Planning, ties all functional areas of an enterprise from accounting, front office, back office, all the way down to the shop floor through production. So really helping align all of the various functional areas of a business.
STEVE: Great. So Daryn, let me swivel back to you and and ask you, what business units within an organization typically see the most benefits from today’s CRM technologies?
DARYN: Well, I’d say sales is probably number one. Sales automation, that functionality is typically what we see most. And that’s that’s in terms of account and contact management, keeping all your all your contacts in one place where everyone can share them with the most accurate information about them, as well as pipeline management or opportunity management, as people might call it, where all your deals are are being managed. Service is probably a close second. I don’t know, that can be customer service, that can be tech support, it could be any kind of service, dispatch even where folks are calling in and you need to have information at your fingertips about what you’ve sold them or what they’re buying from you and what their environment is. And then a third, I guess the the third one would be marketing, where marketing can benefit from all of that, all that information about what we know about our customers and how to segment them and how to talk to them and work with the sales team to deliver the right message at the right time to those customers.
STEVE: And Craig, I’m going to ask a slightly different question than what I just asked Daryn, and that question is, who are the stakeholders who typically drive change for ERP? As Daryn mentioned, there are a lot of different departments that can be involved with CRM. Perhaps ERP is a little bit more singular, but who do you typically see getting involved in that in that change process?
CRAIG: Sure. And we typically see a split almost 50-50 between finance and operations. So, generally the decision point comes from either the CFO or the COO viewpoint. Many times the change itself begins at the user level. So in which case a department head, controller, or VP of some sort may be the individual initiating the change.
STEVE: Now, these are both enterprise, mid-sized business, small business software, and in each case, there should be some sort of selection process that a company follows. So what I’m really interested in hearing is what you two see as the respective processes or ideal processes for selecting CRM or ERP. And Daryn, maybe I’ll start with you.
DARYN: Sure. Well, at CRM Switch, we have a seven-step process that we use regardless of industry, regardless of of company size. It’s just sort of our our proven go-to methodology for getting to the bottom of of what the needs are and finding the right solution. And those seven steps start with stakeholder interviews, which is really talking to users, talking to management, talking to the folks that are feeling the pain currently and and getting the real requirements down as to what the business requirements I should say, what they’re after, what they can’t do, wish they wish what they wish they could do. Documenting those requirements is always a good recommendation. If you’re doing this on your own, having a document of some form where everyone can kind of sit around the table if necessary and agree or disagree to what those requirements are, what we’re trying to do, what’s what’s in scope and out of scope. We usually do that through a workshop. That’s our third step is a workshop where we get everyone together. I kind of call it a cage match. Nobody gets to have lunch until we all agree on what is and not what is in scope and what’s out of scope. Our fourth step is we develop some vendor scoring tools, and that really depends on the type of organization, the culture of the organization. It can range from a scorecard of some kind. Sometimes it’s use cases, some core use cases that are really important to the organization. And sometimes it goes as far as a proof of concept. And that’s something that the customer ultimately decides what’s best for them as far as their evaluation process.
DARYN: Then comes the fun part, everyone’s favorite part is the dog and pony show. So the vendor demonstrations where a select number of vendors come in and and they demonstrate against the scorecard or against the use cases. So so you can really see what the when when the CRM’s exercise, how it’s going to fit your needs and your environment as opposed to some sort of a canned demonstration which will look perfect and work perfect every time. And then lastly is sort of the negotiation and procurement process, which is a process in into itself. Usually it’s finance, and that’s where you’re determining exactly how you’re going to buy the CRM in terms of licenses and in terms of options and all those good things. So that’s sort of our seven-step process that that we find and I think it would work for anybody in any size company.
STEVE: So regardless of whether it’s you delivering the service, you’d recommend this as a process for anyone out there to follow?
DARYN: For sure, because before we started doing this or I started doing this for a living, I had done this as a manager in two or three different companies using a loose version of this process.
STEVE: And Craig, I’m very curious to hear how your ERP selection process differs if if at all from what Daryn just described.
CRAIG: Well, actually, you know, very very much in line. Our approach is to really take a a holistic view of the operations and truly understand how they do business today. So, I guess the initial upfront assessment often times is extremely valuable for our clients. With that solid understanding of of the project goals and the current future state business processes across the organization, we’re able to really help them map out a solid scope of the project, and put together those realistic timelines and the estimated resources throughout the engagement, those estimated budgets. You know, it’s important to remember that with the introduction of any new system, whether it’s a CRM, ERP, an inventory management system, old processes may need to change with the new automation and functionality of a new software. But really understanding the business objectives and as I mentioned, those business processes along the way and how those might change is really key. And of course, being an independent and objective consulting firm, you know, finding the not only the best system out there, but the right implementation partner as well. So we’re really really weighing both sides. Both looking at the best system that’s going to fit their, as Daryn mentioned, those specific requirements and documented needs that we find up front, making sure it’s a good match, but also making sure that the implementation team has had success in the past. And then we help our clients with also the contract negotiation and determine the best deployment options as well.
STEVE: In the CRM business, we often joke about the usual suspects, which might include Salesforce, Microsoft, Sugar, BPM online. Would you say in the ERP business you have a set of usual suspects, or does that can that list vary greatly depending on industry, manufacturer, for example, versus some other type of business? Or or is there is there a pretty common go-to short list for each engagement?
CRAIG: Yeah, it’s a good question. And I I say yes, there’s there’s definitely the usual suspects out there and if you were to pull up Gartner’s magic quadrant, I’m sure you’d see a lot of them listed there. But there are certain system, and that and that has changed over the years, right? You know, with as often as a lot of these software companies are being acquired and changed or marketed differently under different names, might be the old same old technology, but their their marketing team’s pretty incredible with what they do. There are a lot of a lot of different companies out there that have different strengths. You might have one system that excels in a process manufacturing environment where another might be better suited for more of a discrete manufacturing environment, for instance.
SAM: And wouldn’t it also be true by just the size of the company? I I I would have assumed like in the CRM space, there are companies who play very well in the small business and there’s other companies who play very well in the enterprise, but very few crossover.
DARYN: Yeah, I’d say that’s true, Sam, for sure. There are and there’s been a big blossoming of these CRM companies down in for the mid-tier or even the small business that are now really up to the task. I mean, it used to be, you know, Salesforce was the big gun on the block and they had all the functionality and everyone else was sort of a pale second. And now you see some of these other tools like a BPM online and such where a small and medium business can really get a whole lot of punch for a very reasonable price.
STEVE: A question that I had for both Craig and Daryn. Daryn, as we know in the CRM business, often add-ons come into the picture, whether it’s CPQ or other associated things with CRM. And of course, as a consultant, you can’t just say I’m going to give you the same service, the same number of hours is going to cover three different add-ons. So you have to kind of be aware of that possibility. But I was going to ask Craig a question about add-ons in the ERP business. I I remember from working with people back with MAS 90 that there was a plethora of different add-ons. So my question for you is, does that does the does the concept of additional software on top of the core software come up a lot, or is ERP so evolved right now that usually the ERP system in and of itself is the full solution?
CRAIG: You know, based on, yes, I mean, we do consider other technologies, especially during that initial assessment. We’re taking the the enterprise as a whole into consideration here. So we really want to learn not only we want to try and give them a best match for the for the whole organization. And if we can get that functionality out of an ERP system and get them 95% of the way, there might be there often times is another component that might need to be introduced. So we definitely account for that up front during the initial assessment when we’re putting those budgets and timelines and resources and considering all the different departments to be considered for the project and all the related technologies, whether it’s a a CRM system, a warehouse management system, maybe the client has a direct store delivery requirement that needs to be a focus for the project that needs to be considered. Absolutely.
STEVE: So Craig, what would you say are some of the factors that can cause an ERP implementation to exceed expectations? Of course, you know, in the software world, we all want to exceed expectations. But what including your process can be done to make sure that that more can be gotten out of ERP than anyone expected.
CRAIG: Sure. So, I guess for the for our clients, it’s always there’s always value in having the project go as planned, right? Our job is to actively manage the risks and project scope, the timelines, the budgets, and hold all parties accountable. I recently spoke to one of our clients in Grand Rapids, Michigan and you know, I said, you know, based what are your thoughts? How’s it going? How’s the project going? And he was just so happy that it was on schedule and going as planned. So, you know, after that initial assessment, we are delivering what we promised and what we had helped them during that initial assessment phase. And I guess you you see a lot of these a lot of organizations that try to take on these projects themselves, there might be a lack of appropriate project management or maybe they’re not defining the business processes or all the specific requirements up front like they should be. That’s when you start to see this kind of sprawl out of control. So I guess our success is coming from keeping these projects on schedule, on scope, on budget. That makes people really happy.
STEVE: I used to tell people that that our process is sometimes we’re slowing things down in order order to ultimately speed things up and no one quite got that juxtaposition, but I think Craig, what you just said is as a result of a structured planning process, timelines fall in line a lot better compared to the traditional way people buy CRM or ERP, which is they buy the software, then they figure things out. And if you take that approach, your timelines can can go much, much further than if you took a structured approach. And I guess Daryn, would you would you say that’s the case with CRM as well, that slowing the process down ultimately can speed it up?
DARYN: Sure. I I don’t even think about it as slowing it down because it’s kind of the right pace that it should be attacked. I mean, my answer to the question is a little different about exceeding expectations. The formula that that I found to be successful is including it requires contribution from both the users and management. And the users, getting them involved up front and making them part of the process of defining the requirements and hearing what they really need as opposed to maybe what some business analyst thinks that they need, that’s critical. And that and that gets that pride of authorship and ensures that the target that we’re aiming at is the right target. And then on the other side, and this is the hardest one, is the management side. And that is management will often be happy to sort of write a check and have a consultant find a system and and much to their chagrin, a lot of times when I first come in, I’ll we’ll talk to them about the ongoing commitment they’re they’re going to make. They’re going to, for example, need to use the system in a way where they lead by example. So, if we want the sales people to get excited about using a CRM and tracking their their sales and everyone being on the same page about what we’re doing, then, you know, management needs to look at those dashboards and needs to consider the information being put in into the system and using that for business decisions. And that a lot of times is the hardest buy-in for me to get. But when you have the users handed a system that’s actually going to save them time and or help them identify opportunities, and you have management looking at that information and using it to drive the business, that’s the secret sauce to success for CRM in my mind.
STEVE: Very true. You really need those those two levels of of buy-in and pride of pride of ownership to to succeed to the greatest extent. So, I wanted to ask a question of both of you, and this is maybe my skewed perception as a CRM guy, but CRM to me is often a system that can can address a whole wide range of issues because you have this concept of XRM where you can turn a CRM system into any database application or applications you want it to be. You can you can consolidate multiple databases from around the enterprise simply by building out your CRM database and making it your de facto main database outside of CRM. So, would you guys agree, disagree that ERP is a little bit more focused in scope and a little bit more single purpose? Maybe starting with you, Craig.
CRAIG: That term focused, that’s interesting when you consider you know, all the aspects of a business from accounting to purchasing, to sales and marketing, inventory, manufacturing, distribution. I guess it really depends on the client’s needs and what’s driving that project will determine how focused in we’re going to be looking at at the system.
STEVE: And a related question is, now you have ERP systems that have some level of CRM in them. And do you ever have people asking you whether they should be implementing CRM at the same time as ERP? Do do people ever question whether the CRM within the CRM or ERP short-list vendors is sufficient for the needs? So what how does that conversation go when CRM comes up in the context of ERP? How do you guys handle that?
CRAIG: So that’s a good question. If the CRM capability is of one of is part of the key requirements up front that we’ve discovered, we really want to during that initial assessment when we’re evaluating potential systems and vendors is really taking a deep dive and understanding the different functionality of those systems and make sure there’s a good match. We do factor that into the into the project. In more cases than not, I guess, it gives gives back to defining those business needs. The primary reason is many ERP solutions offer some degree of CRM functionality. But whether or not that level of functionality meets those specific business needs, we don’t know if it makes perfect sense. We really want to get a good understanding of that before moving forward.
STEVE: Okay, and I’ve got a slightly different question for you. Again, being more of a CRM guy, but it it seems to me that cloud software was to a large degree pioneered by a CRM vendor. And it took a while for people to get over this idea of having their data up in the cloud when it comes to CRM. My perception is when it comes to ERP, there was a lot more resistance to moving data to the cloud, and that’s been a slower evolution. So, can you speak a little bit to where we are in the evolution of ERP moving to the cloud? Can is a given company potentially evaluating both an on-prem ERP and a cloud-based ERP as part of the same selection process?
CRAIG: Sure. That’s a great question. The conversation is definitely getting easier for a lot of organizations to have, Iguess from the sheer popularity of cloud. And if you look at our own personal lives, you, you know, we’re we’re using a lot of these companies that we’re working with are using cloud-based technologies today, whether it’s Google Drive or a Slack channel for internal communications. There’s a lot of companies already using cloud technology, but for the enterprise as a whole, there is that risk. There there’s that perceived notion that there’s less security around a cloud solution. And rightfully so, they should be concerned, especially this day and age with cybersecurity threats. What we’re finding, a lot of clients are leveraging more of a hybrid approach, both on premise and leveraging cloud technologies with some of the functionality modules that come with it.
STEVE: And would would you say another factor is that with some of the more legacy ERP systems, they were a product of 20 years of iteration and you can’t just start up a cloud company and be where that company with 20 years of iteration was. It takes a while to build enough functionality into a new cloud-based system to really catch up with the traditional players in some cases, right?
CRAIG: Yes, absolutely.
STEVE: So let’s talk a little bit about CRM and ERP integration. Maybe we can bring Daryn back into the conversation. But a scenario is that we’ve got a company that implements a new CRM system for their sales team to manage leads and to manage their sales pipeline, but the ERP system holds a lot of information critical to to selling and servicing their customers, such as sales order history, invoices, inventory, some of the main items they might purchase on an ongoing basis, all good information for sales. So how are you seeing both of you, I guess, how are you seeing CRM and ERP interact? And what what’s the process for really defining integration? Because you talk to a lot of people and they just have a checklist item that says integration, but as we all know, it’s a lot more than that and you’ve really got to dig in on integration needs. So maybe starting with you, Craig, what are you seeing on the on the integration front?
CRAIG: Again, I guess when it comes to understanding the objectives of the project and how all of the all of the technologies within the organization, it goes back to the key the key requirements and the objectives for the project. You know, if their objective is to have more handhelds at the shop floor or in the hands of their delivery drivers, then we’re wanting to all of these integration points need to be considered and addressed up front. So when we’re going through that initial validation and evaluation of implementation partners, that these areas are being discussed up front and can be accounted for and planned for accurately as we move into and through the project.
DARYN: And Daryn, from the CRM side of the fence, what would you say is the best approach to eliciting what the needs are, what the ERP vendor is potentially capable of, and getting everybody to nod and agree that this is this is worth spending the money on.
DARYN: I always start with, you know, a non-technology discussion about this. And in your scenario, talking about sales people and information they might need to make to support their customers, figuring out what the sales methodology is. Is this sort of a farming exercise? Is this new business? Do we have a lot of repeat orders? I mean, how important is sales history? Just having the having the conversation with the sales teams, speaking their language about how they’re going to prep for a call, what’s going to happen when they’re on a sales call, what the follow-up needs to be, that uncovers a lot of the information that they are going to need because it may be in the ERP or it may be in the ERP and other systems. I I never know. So, kind of mapping out, okay, well, this is what we need to properly prepare for a call. This is what we need to be able to see the white space in the account of what what we haven’t sold them or what they’re buying a lot of. And that then dictates which information is available from which system or was necessary from each system. And then we can kind of create a map and go back to the ERP vendor because I sort of treat ERP as a black box when I’m doing a project like this. It doesn’t really matter what system it is and or what systems the information are in. The sales people need X, Y, and Z and they’re going to need it at this time in the sales process. And with that map, we can go back and then work with the ERP vendors to determine whether or not it’s something that’s exposed in a window or it’s some information that’s maybe copied to the CRM nightly because that’s maybe sufficient. All of those details get worked out sort of secondarily after we ensure we’ve defined what information is required and when by the sales people because in the end, that’s the whole game.
CRAIG: Yeah, and really it’s simply a matter of making making sure the data aligns between the systems upon transfer and guess defining where the core data is stored.
DARYN: That’s a good one, Craig, because there’s always an arm wrestling match about, you know, is the address for the customer correct in the ERP or in the CRM? So we always have to we always have toaddress sort of as you just said, where’s the master? And it’s different sometimes. The customer information may be, you know, maybe the master may be the CRM from the sales people’s perspective, but from the billing people’s perspective, they don’t let touch let sales touch certain addresses or pieces of customer information. So, who’s going to update what information and where and how they’re going to interpret that as being sort of the gospel, that is also a big discussion that happens when ERP and CRM are to be married.
SAM: Wait, let me throw this out. A lot of CRMs are now overlapping some functionality with ERPs. For example, I’ve seen a CRM recently which does invoicing. When do you decide to use an ERP module versus a CRM module when you have overlap? Do you guys have a rule of thumb?
DARYN: As far as a rule of thumb, I mean, the the question again is is rooted in what are the other requirements? Because invoicing, I mean, I actually have a client that’s using CRM to do their invoicing. It’s pretty straightforward, but they don’t have any, for example, inventory control requirements, so they’re not like decrementing inventory and allocating it to orders and that sort of stuff. So it’s easy to kind of keep it in the CRM. But it’s I I would think, and Craig’s more of the expert here than I am, but when you have some of those other needs, you have maybe it’s a SaaS company and you have repeatable billing or you’ve got the need for a dunning system or a GL, you don’t have a GL anywhere else and the sales and the credits and all the things that happen with sales are hitting the GL in a way that, you know, you need that all in one system. Those sort of things to me would dictate the need for a CRM, or I’m sorry, an ERP. And then it becomes a fine line about or I’m sorry, an ERP, then it becomes a fine line between which system is generating the invoice and which system is holding all the other enterprise information.
CRAIG: And with today, especially, you know, a lot of our clients that we’re working with may already come into the into the project with having done their own due diligence and and research on their own. And they might have an idea of a few different systems that they want to look at. So that needs to be considered as well. We’ve run into that a number of times where they’ve done their their part and they’ve looked into a few different systems that look like good fits and as long as it makes sense, we’ll certainly entertain those options as well. But we really want to be objective in the process. I think that’s important.
STEVE: Well, yeah, sometimes the short list is comprised of not only the legacy system, but as you say, a system that someone’s investigated and they they put time into looking at that system and you don’t want to just be dismissive of it. So sometimes your short list maybe is a little bigger than you initially planned because you do have to be inclusive of some of those those other systems.
STEVE: So the last question I wanted to ask just to tie tie together the integration. And Sam, you you’ve obviously know a thing or two about technical CRM and integration. And sometimes it’s easy, sometimes there are out-of-the-box products for tying CRM A and ERP B to get together. Other times it’s not so easy. Could you just generally speak to the ease and difficulty of connecting what are really disparate systems?
SAM: Sure. It’s not easy. Let’s start with that. Or cheap. Yeah, or cheap. But, you know, if one an integration is built and as long as you don’t need that integration changed, you know, it’s a pretty straightforward process to get up and running. The problem is I rarely meet people who want don’t want to change. And I’ll take the simplest CRM and the simplest ERP and so I’ll take something like Act to QuickBooks, something very simple, or Salesforce to QuickBooks, also very simple. And you’ll find that people will want things like, well, I’ve got an order but it needs to be a job. And then the same a different company will be I want an order in in Salesforce to opportunities in Salesforce rather to turn into an estimate. And some people want it turned into an invoice. And so you’ve got these mutually exclusive use cases for literally the exact same integration. And that’s the problem with integration. They’re people process, you either you either you buy the integration and change your processes to fit it or expect to spend some money tweaking the integration.
STEVE: Well, great. Thanks everyone for joining today. And just to let our listeners know if they want to reach Craig or Craig’s company, his company is LTAdvisors.com. And Daryn’s website is CRMswitch.com. So whether you’re looking into CRM selection, ERP selection, strategy, or both, these are the companies to help you. So thanks again, gentlemen. Appreciate everyone’s time.