To Excel or not to Excel?  That is the question of our times.  Here, now, in the new roaring 20’s, this 21st century dilemma vexes businesspeople of all stripes.  In the early 90’s Microsoft’s Excel version 5.0 made spreadsheet computing as easy as 1-2-3 and soon captured the market.  Today, while there is a plethora of other spreadsheet options available, Excel still leads the way with over 750 million users worldwide.  

Widespread Excel adoption is why we ask the question at all.  Other spreadsheet software has its own selling points, like Apache’s OpenOffice being open source, or Google Sheets and its native cloud-based architecture, but Excel is still king in its space. This article is just as apt when applied to the use of other spreadsheet software. It will focus on which processes are appropriately done in Excel and which are best done in your Enterprise Resource Planning (ERP) System.

For this discussion, Excel will represent all spreadsheets as we decide to use Excel or not.  

Why Excel at All?

You might be asking yourself why do I need to Excel at all?  Don’t today’s ERP Systems provide all the information I need?  The ERP systems available today have evolved since their early origins in the 1960’s.  Not yet known as ERP systems, the term was coined by the Gartner Group in the 1990’s. ERP Systems have been used by manufacturers from the beginning, but what do they do? The acronym provides some clues.  

What is ERP?

• Enterprise: These systems are enterprise-wide systems that can handle all your business processes. However, not all ERP systems are equal, and some enterprises are bigger and more complex than others.
• Resource: An enterprise’s business resources can be anything from its people to the equipment, essentially the company’s assets.
• Planning: Increased complexity in managing resources and efforts requires planning to run the enterprise as efficiently as possible. This is where MRP (Material Requirements Planning) from the 1970s comes in, now encompassed in today’s ERP systems.

ERP systems also cover accounting, customer and supplier relations, marketing, engineering management, quality management, service management, and human resources.  ERP systems are now very comprehensive in the processes they support, so why use Excel?

Entrenched Excel   

Excel has entrenched itself in organizations worldwide due to its ease of use and ubiquity. Microsoft was and still is at the forefront of making training materials widely available. Anyone with an internet browser can search for a way to do something in Excel, and chances are someone has posted a solution to a similar problem online.

Common Excel Reliance Scenarios

Employees are expected to solve problems and often turn to Excel for help, even when the best practice might be to use the ERP system for the solution. This can lead to:

• Inefficient Processes: These solutions are often undocumented and dependent on tribal knowledge.
• Employee Dependency: Processes that do not endure beyond the tenure of the employee that created them.
• Departmental Silos: Inefficiencies are common in purchasing, finance, sales, and engineering.

Identifying Over-Reliance on Excel

How do you know your organization might be too reliant on processes done outside your business system? You might have a problem if:

• You do not maintain inventory in your ERP system.
• Your accounting is maintained in a separate system, e.g., QuickBooks.
• MRP is not utilized, and all your planning is done outside the system.
• You have a myriad of different software in different areas of responsibility that are not well integrated.
• You route purchase approvals using spreadsheet forms and your email system.

When to Use Excel

There are some areas where Excel beats ERP with the general rule being in ad hoc analysis and reporting. Accountants are Excel power users, and expecting them to relinquish Excel is unrealistic.

Advantages of Excel

• Customization: Spreadsheet reports are easily customizable in layout and formatting.
• Ad Hoc Analysis: Ideal for capturing financial data at points in time for future reporting.
• Flexibility: More judgment-based decisions and calculations are best done in tools that provide flexibility.

When to Use ERP

ERP systems are complex but add rigor to business processes when properly and fully implemented. This does not always occur, and bad implementations can cause lingering problems and undermine trust in the ERP system.

Advantages of ERP

• Comprehensive Data Repository: ERP systems provide a great repository of data.
• Integrated Business Processes: They help in managing integrated processes and improving operational efficiency.
• Scalability: ERP systems can be scaled according to business size and requirements.

Enhance Business Processes with ERP Systems and External Expertise

ERP systems do a lot, but they do not do everything. Consider using outside systems, even Excel, for ad hoc or more complex analysis. Be flexible and use situational awareness when designing your business processes, and consider outside expertise when necessary. As the axiom says, measure twice, cut once. Contact a Meaden & Moore expert to learn more.