Finance Transformation
ERP vs Spreadsheets: When to Make the Jump
1 March 2025
Most growing businesses stay on spreadsheets too long. A few implement an ERP too early. Getting the timing wrong in either direction is expensive, in different ways.
This is not a straightforward question and the answer depends on the business. But there are clear signals that indicate when the balance has shifted and a decision is overdue.
What spreadsheets do well
Spreadsheets are flexible, fast to build, and cheap to maintain. For a small business with a contained finance function and a competent person running it, they are often entirely adequate. They can be adapted quickly when the business changes, which early-stage businesses do constantly.
The problem is not spreadsheets themselves. The problem is spreadsheets that were built for one set of circumstances being asked to do a job they were not designed for.
The signals that you have outgrown them
You have more than one person maintaining the same data. Spreadsheets become unreliable at the point where multiple people are entering data into different versions of the same file. Errors multiply and reconciling them takes longer than the analysis they were supposed to enable.
You cannot answer a basic question quickly. If a straightforward question about stock, debtors, or margin requires an hour of pulling data together before you can answer it, your reporting infrastructure has a structural problem.
Month-end involves significant manual reconciliation. If closing the books requires matching data between systems by hand every month, you are paying a recurring cost for a structural gap that a properly integrated system would eliminate.
You have more than one legal entity, currency, or jurisdiction. Spreadsheets can handle this, but not well. The consolidation process becomes a project in itself every time it happens.
An audit has flagged controls. Spreadsheet-based finance functions are difficult to control. If auditors are raising issues around data integrity, access controls, or audit trail, they are telling you something that needs to be addressed systemically.
What holds businesses back
The most common reason businesses stay on spreadsheets too long is the implementation fear. understanding why ERP implementations fail matters, because they have a reputation for running over time, over budget, and under-delivering. That reputation is often earned. But the fear of a bad implementation is not a reason to avoid implementation indefinitely. It is a reason to plan one carefully.
The second most common reason is cost. ERP licensing and implementation costs are real. But they need to be weighed against the ongoing cost of spreadsheet-based finance: the manual hours, the error risk, the management information that is slow or unreliable, the audit exposure.
When not to implement yet
If your business is changing rapidly, an ERP implementation can be destabilising. Understanding the systems integration requirements before committing is essential. A system implemented for your current structure may not fit the structure you have in 18 months. In fast-change environments, it is sometimes better to wait until the shape of the business is clearer.
If your processes are not yet defined, implementing a system to run undefined processes produces a more expensive version of the same problem. Building processes before systems is the order that works.
The question worth asking
Before committing to an ERP, ask what you actually need the system to do. Not in general terms, but specifically. The answer to that question will tell you whether you need an ERP, which one, and when.
Maebh Collins is a Chartered Accountant (FCA, ICAEW) and finance transformation specialist with Big 4 training and twenty years of operational experience as a founder and senior finance leader.
Maebh Collins is a Chartered Accountant (FCA, ICAEW), Big 4 trained, with twenty years of experience building and running international businesses. She specialises in finance transformation, ecommerce operations, and digital strategy.