Use (continue to use) Excel or buy an ERP system anyway? 

Satisfied with Excel? Or are you thinking about switching to ERP software?

Check out our article and make an informed choice!

Is Excel the same as an ERP system?

No, Excel and ERP software are not the same thing. 

However, Excel can perform some of the (basic) functions of an ERP system, such as: 

• Capturing and maintaining financial data. You can also generate reports in Excel. Think about your cash flow statement.
• Keeping track of inventory levels.
• Capturing purchase orders, supplier information and payment statuses. 

ERP software goes beyond these above functions. This type of software is many times more advanced, as you are about to discover.  

Below we go into more detail about the difference between the two programs. 

The difference between ERP systems and Excel

Excel is a spreadsheet program (most likely you know it!). Excel consists of rows and columns in which you write down your data. 

You can also run all kinds of formulas on your data and you can visualize your data. Excel is widely used for data analysis, reporting and budgeting.

ERP software, on the other hand, is made to keep track of your business processes. This type of software is integrated with all your business processes. As a result, in your ERP system, you see real-time data about your business. 

Table with the biggest differences between the program Excel and ERP software. 

Below is a table with, what we see as, the biggest differences between Excel and ERP software: 

As you can see in the table, ERP software offers you many more options than Excel. 

When to use Excel? And when exactly to use an ERP system? 

Despite the fact that ERP software offers many advantages, there are also situations in which Excel suffices. 

Below we discuss situations in which Excel is sufficient for you. Then we give you insight into situations in which it is better to choose an ERP system.

Situations in which Excel suffices

In these situations, Excel will suffice:

• When you are a small business with limited budgets.

Excel is cost-effective and does not require large investments like ERP systems.

• When your business processes are simple

Companies with simple, non-interconnected processes can easily manage their data in Excel without the complexity of ERP.

• When you have a limited number of employees

For small teams, Excel is easy to share and edit without the need for advanced access control or multiple user levels.

• When you want to print out Ad-hoc reporting and analysis.

Companies that only need sporadic data analysis and reporting can use Excel's flexibility and powerful features to cover their needs without the rigid structure of ERP.

• When you are a Startup or work with temporary projects

Startups and companies with temporary or short-term projects can use Excel to operate quickly and flexibly without the long implementation time and cost of ERP systems.

Situations when ERP software is best for you

In these situations, we recommend you choose ERP software: 

• When your business is growing

An ERP system grows with you and provides you with support for increasingly complex business processes. 

• When your processes are complex

ERP integrates different business functions (such as finance, HR, procurement and inventory management) into one system, which improves efficiency. 

• When your organization has multiple departments and locations 

ERP software facilitates coordination and communication between different departments and locations, improving your operational efficiency.

• When you value real-time data and reporting

ERP provides real-time insight into business data. This is essential for fast and informed decision-making.

• When you need to meet strict compliance requirements.

ERP helps you comply with regulations and standards by giving you automated controls and extensive reporting capabilities.

This is how Microsoft's ERP “Business Central” looks like:

Major disadvantages of Excel + the number one advantage

In our opinion, Excel has some major drawbacks. We explain these below:

When you use Excel, chances are you will make mistakes. Generally, you manually add data to Excel. Again, everyone works in his or her own way within this program. Also, you generally don't have live access to Excel. This causes you and your colleague to work with different versions of your data. 

In addition, Excel does not use real-time information. As far as we know, you cannot link Excel to your business processes. 

Despite these disadvantages, Excel also has 1 very big advantage. Namely, it is an (almost) free program!  

Lesser points of ERP systems

ERP software is very powerful, in our opinion. Nevertheless, there are some disadvantages to mention. As far as we are concerned, these disadvantages are fairly easy to overcome.

The biggest disadvantage compared to Excel is the cost. ERP systems quickly cost you 2.5% to 8% of your total turnover. On this page you will find an ERP system cost calculator. Fill it out and see what your cost picture looks like. 

It can also be difficult for people to learn to use ERP software. This can create resistance within your organization. 

Excel barely requires any implementation time. Do you want to use an ERP system? Then a good ERP implementation is essential. Such an implementation can take a long time at worst. At least assume about 3 months! 

Want to know more about the disadvantages of ERP software? Find out now on our page about the 5 biggest disadvantages of ERP systems. 

Risks of using Excel, an example

Company X is a small manufacturing company that supplies parts to various industries. They have a warehouse with 1,000 different products and a monthly revenue of €100,000. Company X is currently using Excel for their inventory management.

Scenario When Using Excel Instead of ERP Software

1. Inventory Data Error: A typo is made in Excel, causing the inventory level of a popular product to be displayed as higher than it actually is.
2. Delayed Reordering: Due to this error, a reorder is placed too late, causing the product to run out of stock during a peak in demand.
3. Consequences:
   • Emergency orders from suppliers to replenish stock (€2,000 in additional costs due to rush fees).
   • Delayed deliveries to customers, leading to canceled orders (estimated revenue loss of €5,000).
   • Loss of customer trust, resulting in a 5% decline in returning customers over the next six months (estimated revenue loss of €3,000).
   • Extra hours of staff to correct the errors and handle customer service (estimated additional personnel costs of €500).

Total Estimated Costs Due to Errors in Excel: €10,500

So, will you keep using Excel or will you buy an ERP package anyway?

Are you hesitating between continuing to use Excel or switching to an ERP system? 

While Excel works fine for simple tasks, an ERP system offers significant advantages for growing companies with complex processes. 

Convinced of the power of ERP software? 

Fill out our ERP comparison tool and find out which system best suits your specific needs. 

Within 5 minutes you will receive tailored advice on which packages are best suited for your business.