Explainer
ERP runs the back office and CRM runs the front office. Here is the difference, where they overlap, how MRP fits in, and how to decide what to put in first.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
ERP, enterprise resource planning, manages what happens behind and after a sale: finance, purchasing, stock, fulfilment and production. CRM, customer relationship management, manages what happens before and around a sale: leads, opportunities, contacts, marketing and service. ERP is the system of record for money and goods; CRM is the system of record for customers and pipeline.
| Area | ERP | CRM |
|---|---|---|
| Main users | Finance, operations, supply chain | Sales, marketing, customer service |
| Core data | Ledger, orders, stock, suppliers, costs | Leads, contacts, opportunities, cases |
| The question it answers | What did we sell, make and spend, and what is left? | Who are our customers, what is in the pipeline and how are we serving them? |
| Typical products | Dynamics 365 Business Central and Finance, NetSuite, Sage Intacct, SAP S/4HANA | Salesforce, HubSpot, Dynamics 365 Sales, Zoho CRM |
Both hold customer records, and both touch orders and pricing. That overlap is where the trouble starts: two customer masters, two price lists and two versions of what a customer owes. Decide which system owns each piece of data, then integrate so it flows one way. Typically the CRM owns prospects and opportunities, the ERP owns the customer account, credit limit, pricing and invoices, and the quote to order handover is the integration point.
A business with a simple sales process and complex operations often starts with ERP and uses its basic sales features. A business with a long, consultative sales cycle and simple fulfilment may start with a CRM and an accounting package. Most growing businesses end up with both. Some vendors sell suites that cover both, such as Microsoft Dynamics 365, which can reduce integration work but rarely removes it.
MRP, material requirements planning, works out which materials a manufacturer needs and when, from the production plan, the bills of materials and current stock. It came first, in the 1960s and 1970s, and ERP grew out of it in the 1990s to cover the whole business. Today MRP is usually a module inside an ERP system rather than a separate product, although some manufacturers still run specialist planning or shop floor systems alongside their ERP.
Follow the pain. If you cannot close the month, control stock or see margin, ERP comes first. If you are losing deals because nobody knows the state of the pipeline, CRM comes first. Either way, design the customer data model for both from the start, so the second system does not force a rework of the first.
Related reading: what ERP is, CRM implementation consultancy, independent ERP consultancy, HubSpot vs Salesforce.
A CRM. Salesforce runs sales, service and marketing; for finance and operations it is normally integrated with a separate ERP, sometimes one built on its platform by a partner.
SAP is best known for ERP, with S/4HANA for larger organisations and Business One for smaller ones. It also sells customer experience products, so some businesses run both from SAP.
For simple sales, yes: most ERP systems handle customers, quotes and orders. For pipeline management, marketing and service at any scale, a dedicated CRM usually does the job much better.
MRP plans materials for manufacturing. ERP covers finance, purchasing, stock, sales and operations across the whole business, and normally includes MRP as a module.
If your ERP and CRM disagree about who your customers are, the fix is usually a data ownership decision and a cleaner integration, not another system.