Outgrown the spreadsheet
There is a day the spreadsheet stops being clever and starts being a risk.
Nobody notices it happen. The spreadsheet that ran the business beautifully at four people is the same file at fourteen, except now three people need it at once, two of them have their own copy, and the version that is right depends on who you ask.
Here is the honest test, including the outcome where you keep it. Plenty of spreadsheets are fine, and replacing a fine spreadsheet is a waste of money.
The four signs
Two or more, and it has stopped being a tool.
More than one person needs it at once. The moment a file has to be locked, queued or copied, the business is queueing behind a document. Everything downstream of that is somebody waiting.
There are copies with names. Final. Final v2. Final REAL. Each one is a fork of the truth, and reconciling them is a job somebody now has.
One person understands the formulas. This is the serious one. The exceptions in those formulas are business rules that exist nowhere else, and they leave when that person does.
Nobody can tell you who changed what. When a number is wrong, there is no history, so there is no way to find out what happened. That is fine for a shopping list and not fine for anything with money attached.
The outcome nobody sells you
Sometimes the answer is: keep the spreadsheet.
A spreadsheet used by one person, for a task that changes constantly, where a mistake is easily spotted and cheaply fixed, is an excellent tool. Replacing it with software makes it slower to change and no more accurate.
We say this because it is true and because we would rather not take a project that makes your business worse. Excel is not a failure state. It is the most successful business software ever written, and most of the time it is doing its job.
The one that is not on the list
Xero is a different problem, and worth naming.
Plenty of businesses describe themselves as having outgrown Xero. Almost none of them have. What they have outgrown is the space around Xero: job costing, project profitability, inventory, the operational reporting that accounting software was never meant to do.
The fix is almost never replacing Xero. It is building the operational layer that feeds it, which is smaller, cheaper and considerably less risky than moving your accounting.
Common questions
Answered plainly.
How do I know if we have outgrown our spreadsheets?
Four signs: more than one person needs it at once, copies with names like final v2 exist, only one person understands the formulas, and nobody can tell you who changed what. Two or more and it has stopped being a tool and started being a risk.
Should we move to a database or a real system?
Depends on which sign you hit. Concurrency and history are solved by any real system. Complex logic held by one person is the expensive one, because that logic has to be read out of the formulas before anything is built.
Have we outgrown Xero?
Almost certainly not. What you have outgrown is the space around it: job costing, project profitability, operational reporting. Build that layer and keep Xero, because replacing accounting is expensive, risky and rarely the actual problem.
What does it cost to replace a spreadsheet?
From $5,000, three to eight weeks. The variable is how much logic the spreadsheet holds rather than how many screens it becomes.
Will you tell us to keep the spreadsheet?
Yes, and we do. If it is one person, on a task that changes constantly, where mistakes are cheap and obvious, keep it and spend the money on something that matters more.
Where to next
Bring the file and count the signs.
Twenty minutes with the real spreadsheet open, tabs and all. If it is fine, we will say so and you will have lost twenty minutes. If it is a risk, you will know exactly which part.