Similarities between IT and the automotive industry are often the subject of jokes and teasing[i], but when comparing Microsoft Excel with any ERP system, it is hard to avoid the analogy between a bicycle and a car. Both are used for transportation, but evaluating the advantages and strengths of one over the other is not so obvious. There are places, circumstances, and goals where nothing can replace a bicycle; it is cheaper to purchase and maintain, but over longer distances, in difficult conditions, and where time matters, a car is unrivaled. The same applies to Excel and ERP systems. Can Excel replace ERP software?
Microsoft Excel was launched in 1985. It could be said that it is almost a decade older than ERP systems. Time passes, and with each edition, its capabilities grow, built-in functions increase, and thanks to macros and the Visual Basic language, its automation potential expands. However, this does not change the fact that Excel remains only a very convenient tool for individual work, within a narrow scope of competence for individual users, or at best, small teams. The situation is completely different with ERP software, which processes and shares data in an integrated way with all stakeholders across the entire organization. Modern database technologies, high levels of data security, performance, and process automation capabilities unequivocally indicate that ERP systems are unrivaled when compared to the modest capabilities of Excel in these areas. Excel cannot replace ERP software due to fundamental differences in structure, operation, and application. Yes, in some aspects it may prove to be a more effective tool – after all, you can ride a bicycle into narrow alleys, but not necessarily a car. Very often, Excel serves as a specific supplement to the functionality of ERP systems, especially those with somewhat poorer functionality and less flexibility. Excel often reigns supreme in controlling, budgeting, or analytical departments. 93% of controlling practitioners and specialists use spreadsheets, mainly Excel
[ii]. It also happens that Excel performs basic functions of
ERP systems related to production planning, or work scheduling
[iii].
Excel vs. ERP – the most important differences
Microsoft Excel is a great tool for single-user work that organizes data in tables and presents it in charts in a simple, clear, and visually effective way. ERP systems are by definition designed for multi-user work, and just a few years ago, their presentation capabilities were less than modest. However, recent years have shown tremendous progress in this area and the emergence of solutions offering interactive data manipulation
[iv]. Since effective data processing in Excel requires considerable knowledge, familiarity with formulas and their syntax, not to mention Visual Basic for writing macros, it means that the spreadsheet is a tool very susceptible to human error. Researchers estimate that about 90% of spreadsheets in use contain more or less significant errors
[v]. The price of these errors can be very high
[vi], and sometimes they even cost human lives, as happened in the UK
[vii]. It is different in ERP systems – all data, as a rule, is entered only once. Its processing takes place according to repeatedly verified and tested algorithms, and most importantly, they are the same for all users. ERP software is therefore a single, consistent, and reliable source of data available in real-time for all users. In Excel, the same task can be performed in many different ways, which in itself is not a major inconvenience, but it happens that the final result varies. Most often, the cause is differences in data types, their format, or rounding methods. Excel users easily enter new data, modify formulas, and circulate subsequent versions of the same spreadsheet. Which one, then, contains current and accurate data? Any glitches or errors in this area, especially in the area of production planning or supply chain management, can be very costly for the entire company. ERP systems have very extensive rules for access, permission control, logging, and identity verification. In practice, they ensure a
very high level of protection for business and personal data. With Excel, it is exactly the opposite. The only built-in protection mechanism based on a password stored with the spreadsheet does not pose any barrier even for a beginner hacker
[viii]. The lack of central oversight over spreadsheets can lead to costly mistakes, as Boeing found out
[ix]. Excel also carries the risk of accidentally deleting data in a cell or, worse, damaging the spreadsheet file. Auto-save or file recovery mechanisms do not provide a full guarantee that the most recently entered data can be recovered. Most often, this ends in the loss of a few minutes of work, but there are much more serious situations. ERP-class applications operate in a transactional system where no database entry can be lost. The level of file and data protection is also at a completely different, significantly higher level. In Excel, there are serious difficulties with teamwork mechanisms and ensuring data currency. Once a spreadsheet is opened, it remains read-only for others. Updating data in one spreadsheet usually requires making changes in others that contain the same data. This is a very time-consuming and error-prone solution. Performing repetitive activities and automating tasks in Excel is advanced territory – it requires knowledge of macro construction and the Visual Basic for Excel language with its complex syntax and interpreter. Few Excel users possess such skills. Users of ERP systems are in a completely different situation, as they receive ready-made bots working in the background that are based on machine learning, text recognition, or artificial intelligence. They can focus solely on their work without thinking about how to perform their task in the system.
When is it time to switch from Excel to ERP?
Dilemmas related to switching from Excel to an ERP system concern, in practice, only small organizations with uncomplicated processes. Their information, data storage, reporting, and analysis needs can be easily satisfied using Excel functions. However, after exceeding a certain scale of operations and number of employees, this solution is completely ineffective due to the increasing time spent searching for errors, updating spreadsheets, or writing formulas and macros. If a company already has an ERP-class program, but some specific processes are handled using an extensive system of spreadsheets, then for the same reasons, a decision is often made to purchase and launch additional ERP system modules.
Modern ERP solutions, such as Kinetic by Epicor
[x], handle practically every aspect of a company’s operation. So, if Excel starts to become a burden and its maintenance becomes troublesome and cumbersome – it is time for a change. A divorce from hundreds, and sometimes thousands, of spreadsheets is not as painful as it might seem.
How to switch from Excel to ERP software?
The first step is a detailed and reliable analysis of operational processes and data processing – what, where, and how employees do with data, where they use it, and how they store it. This is also the right moment to improve the organization’s efficiency and find solutions that guarantee the satisfaction of future information needs as well. Excel produces a lot of redundant historical data – you must therefore consider whether all of it is needed so as not to unnecessarily complicate and prolong the data transfer to ERP. The implementation must be planned so that the transition from Excel to the new system ensures constant access to current operational data – business continuity cannot be threatened for even a moment. These quite complex issues require extensive knowledge and experience. Fortunately, an ERP software provider usually has an appropriate team capable of carrying out such a change. A necessary condition for success in moving from Excel to ERP is the reliable execution of the process of selecting a system suitable for a specific company.
How much does it cost to switch from Excel to ERP?
Excel owes its popularity, among other things, to a low barrier to entry. It is available in practically every version of the Microsoft Office suite, and a significant part of its functionality can be used after basic training. Numerous macros from various fields are available, and its data storage capabilities most often exceed the needs of even advanced users. Excel files can be stored and shared practically anywhere – in the cloud, on drives, or sent via email. The necessary IT infrastructure also does not impose any excessive requirements, so everything is simple and cheap. These very low costs, however, are paid for with a high risk of errors and data loss. The situation is different with ERP systems. The total cost of ownership for such a solution consists of database licenses, servers, the system itself, plus service and update costs, salaries for specialists and consultants, plus all the necessary network infrastructure, storage, etc. The difference, as you can see, is huge. ERP system implementation budgets in large corporations can reach amounts counted in hundreds of millions of euros
[xi]. Furthermore, without a guarantee of success. However, in conclusion, one thing must be absolutely emphasized – if no significant mistakes are made at the
stage of selecting a specific solution – an investment in an ERP system will bring many times greater benefits and provide opportunities for development for many years. This does not mean, however, that Excel will disappear from the organization.
[i] https://www.dowcipy.pl/k/informatyka/
[ii] https://www.controlling-systems.pl/wp-content/uploads/artykuly/CiRZ%2012.2010.pdf
[iii] https://www.psi.pl/blog/psi-polska-blog/post/planowanie-produkcji-w-excelu-wady-i-zalety/
[iv] https://newdatalabs.com/
[v] https://www.wired.co.uk/article/spreadsheet-excel-errors
[vi] https://www.bbc.com/news/uk-scotland-edinburgh-east-fife-53893101
[vii] https://obserwatorgospodarczy.pl/2021/12/19/blad-w-excelu-kosztowal-w-zeszlym-roku-zycie-1500-brytyjczykow/
[viii] https://www.cetnarski.com/jak-zlamac-haslo-w-excelu/
[ix] https://www.theregister.com/2017/02/22/boeing_employee_emails_personal_info_36000_colleagues/
[x] https://www.epicor.com/en/industry-productivity-solutions/manufacturing/platforms/kinetic/
[xi] https://myerp.pl/marek-mac/najwieksze-porazki-wdrozenia-systemow-erp/
