Why Excel is no longer sufficient: The limitations of conventional cost calculation in industry

For years, Excel has served as a central tool for many industrial companies to calculate quotations, evaluate parts lists, or create cost overviews. Fast, flexible, available everywhere – and seemingly sufficient. But what began as a pragmatic solution is increasingly becoming a strategic risk. The requirements for industrial calculations have changed dramatically in recent years: product variants are increasing, material prices fluctuate in short cycles, and customers expect precise quotations within hours – with a transparent cost structure. At the same time, calculations today must be audit-proof, traceable and consistent across the entire company.

Excel can do a lot – but not everything. At the latest when several people are working on a calculation at the same time, when hundreds of variants have to be managed, or when data from ERP and CAD systems has to be incorporated, the spreadsheet programme reaches its limits. What used to be a tool for quick solutions is now becoming a source of errors and a time trap.

So the key question is: when does Excel go from being a helpful all-rounder to a risk to efficiency, accuracy and competitiveness? The following article examines this question and shows why it is necessary to rethink costing in industry.

It is no coincidence that Excel is ubiquitous in industry. Hardly any other tool has become so deeply ingrained in everyday office life. Almost every employee knows how to use it , the software is available on almost every computer – and it allows complex calculations to be performed without the need for extensive training.

In the industrial environment in particular, Excel seemed to offer the perfect conditions for a long time: it was flexible enough to map individual calculation logic and at the same time inexpensive compared to specialised systems. Whether in mechanical engineering, plant construction or the supply industry – over the years, companies developed their own calculation templates.

In many companies, Excel is therefore more than just a tool – it has become part of the corporate culture. Calculations are "passed on" from employee to employee, tables are copied, adapted and optimised.

But this increased flexibility comes at a price. What was once considered an advantage becomes a problem as the company grows and becomes more complex. Spreadsheets become confusing, formulas difficult to understand, and versions get mixed up. Excel's former strength of being able to customise everything often leads to a lack of transparency, redundancy and error-prone processes in industrial reality.

Today, industrial calculation is much more than simply adding up material and manufacturing costs. It is a strategic management tool that has a profound impact on almost all areas of a company – from product development and purchasing to sales.

The reason for this lies in the increasing complexity of modern industrial companies. Products are becoming more individualised, variants more numerous, and supply chains more global. Today, a mechanical engineer no longer calculates a standard product, but dozens of customer-specific configurations that differ in terms of materials, manufacturing steps and additional services. At the same time, raw material prices fluctuate within a few weeks, wages and energy prices change dynamically, and customers are increasingly demanding binding, fast and transparent quotes.

Added to this is the networking of systems: calculation data must be consistent across ERP, CAD and PLM systems. Material master data, work plans and parts lists flow together from different sources. A small change in design can have an impact on prices, margins and delivery times – and must remain traceable in real time.

The pressure is growing: anyone who continues to use Excel for calculations in such an environment risks errors, delays and competitive disadvantages. Modern calculation processes today require a high degree of automation, data integration and transparency – requirements that Excel alone cannot meet.

As versatile and familiar as Excel is, it is becoming increasingly apparent that the tool has reached its limits in industrial calculation. The requirements for data quality, speed, collaboration and traceability have increased enormously in recent years. Where individual engineers used to maintain spreadsheets, entire teams now work in parallel on complex, company-wide calculation processes.

The following five weaknesses illustrate why Excel is no longer sufficient for this task:

Excel spreadsheets exist in countless versions in many companies: "Calculation_new_final_v5.xlsx", "Copy_SalesVersion.xlsx", "Update_July2025.xlsx". Each department maintains its own files, often with different formulas, rounding rules or cost rates. The result: no one knows exactly which file is valid – and which figures are actually correct. Audit-proof traceability, as required for internal audits or customer reviews, for example, is virtually non-existent.

Excel is designed for individual users and manageable amounts of data. However, as soon as hundreds of variants, complex parts lists or many users are involved at the same time, performance suffers noticeably. Files become slow, formulas break, memory limits are reached. Simultaneous work leads to version conflicts, and coordination takes time. This can have serious consequences, especially for project-oriented industrial companies with tight quotation deadlines.

In times of ISO certifications, data protection requirements and company-wide security guidelines, Excel becomes a risk. Access rights can only be controlled to a limited extent, and confidential calculation data is often stored unencrypted on local drives or shared via email. Furthermore, there are no audit trails: it is usually impossible to trace who changed which figure and when. This means that Excel conflicts with common compliance and quality standards, such as ISO 9001 or TISAX®.

Another bottleneck is the lack of connection to other systems. Excel works in isolation – it has no native connection to ERP, PLM or CAD systems from which calculation data originates. This leads to media breaks: material prices have to be transferred manually, parts lists copied, working hours added. This manual data entry not only costs time, but also increases the risk of errors and makes end-to-end process automation more difficult.

Every Excel file is a universe unto itself. Even within a single company, every employee calculates slightly differently – using individual formulas, assumptions or structures. This makes it nearly impossible to objectively compare quotations, projects or product lines. It also makes post-calculations – i.e. checking how accurate the original calculation was compared to the actual costs – extremely time-consuming. As a result, decisions are not based on consistent data, but often on experience or estimates.

While Excel primarily serves as a flexible tool for individual calculations, professional costing software takes a fundamentally different approach: it creates structure, transparency and automation in an area that is crucial for the competitiveness of industrial companies.

The difference is already apparent in everyday work. Whereas Excel generates countless individual files, a specialised costing solution works with a central, consistent database. Material prices, wage rates or overheads are maintained there once and are automatically available to all users. This eliminates duplicate entries and makes errors due to outdated information a thing of the past.

Another advantage is the automation of calculation logic. Professional systems use stored rules and formulas to automatically calculate complex products, variants or project structures. Where Excel still requires manual calculation and copying, costing software generates precise results in seconds – traceable and reproducible.

A specialised solution also offers clear advantages in terms of collaboration and traceability. Multiple users can work on projects simultaneously, changes are automatically logged, and approval processes can be digitally mapped. This ensures transparency, security and compliance – especially in companies that are certified according to ISO or TISAX® standards.

A key point is integration into existing system landscapes. Modern costing solutions communicate directly with ERP, CAD and PLM systems. They automatically retrieve material master data, parts lists or work plans and return results. This not only saves time, but also ensures consistent data throughout – from design and calculation to post-calculation.

Ultimately, it's all about speed and competitiveness. In markets where quotes are expected within hours rather than days, automated costing can become a real competitive advantage. Companies respond more quickly to enquiries, calculate more accurately and can base pricing decisions on sound figures rather than gut feeling.

In short: Excel calculates; professional costing software controls, integrates and optimises.

The move from Excel to professional costing software is not a radical break – it is a gradual process. Over the years, many companies have built up valuable expertise, proven calculation logic and internal structures in their Excel files. This experience is not a burden, but the ideal basis for the transition. The key is to approach it in a structured and gradual manner.

The first step is to take stock. What calculations currently exist? How are the formulas structured, where are the data sources, and what processes are associated with them? This analysis not only reveals weaknesses, but also shows which elements need to be transferred to a professional solution – such as certain calculation logic, cost structures or quotation templates.

Switching does not mean having to start from scratch. In fact, much of the data can be transferred directly from Excel. Modern systems offer import functions that allow master data, cost rates and parts lists to be imported in a structured manner. It is important to carry out this step in a planned and controlled manner – with clear data cleansing and defined responsibilities. Because only clean data leads to clean calculations.

The transition is best achieved in stages. First, selected product groups or projects are piloted to gain experience and optimise processes. This is followed by a gradual expansion to other areas. This approach reduces risks, creates acceptance among users and allows the calculation software to be tailored to company-specific requirements.

Technology is only part of the success – it is crucial that employees are on board. Training courses, internal workshops and clearly communicated benefits help to overcome reservations. Employees need to understand that the new solution does not mean more work, but rather less.

A professional costing system only reveals its full potential when it is connected to the existing IT landscape. Interfaces to ERP, PLM and CAD ensure consistent data flows. Workflows – from quotation creation to post-calculation – are thus accelerated and standardised.

Excel has been a reliable companion for decades – and will remain a helpful tool in many areas in the future. But in industrial costing, its time as a central solution is over. The requirements are too complex, the data flows too networked and the consequences of errors too serious to continue relying on a system that was originally designed for individual users.

Modern industry operates in an environment where speed, accuracy and transparency are decisive factors in winning orders. Quotations must be precise, comprehensible and quick to prepare. Only those who know their cost structures, calculate variants accurately and use data across systems can remain profitable and competitive in the long term.

Professional costing software is much more than just a calculation tool. It is a strategic instrument that brings together technical, commercial and organisational data. It creates the basis for reliable decisions, enables sound pricing strategies and provides clarity on margins, costs and potential.

Switching from Excel to a specialised solution is a necessary step towards future viability. Companies that actively embrace this change not only benefit from more efficient processes, but also gain a new level of control over their profitability – and thus a decisive competitive advantage.