There is nothing wrong with managing working hours in a spreadsheet when a company is small. A handful of employees, predictable working days and a limited number of projects can be handled surprisingly well with a simple table.
The problem appears gradually. The company grows. More employees are added. Projects begin to overlap. Working arrangements become less predictable. Employees work at different locations. Someone works overtime, somebody swaps a shift, another employee is absent and a manager needs to correct a working-time entry.
The spreadsheet itself still works. What stops working is everything around it.
Managers begin collecting information through messages and phone calls. Multiple versions of the same file appear. Some information is updated immediately while other information is entered days later. Project hours may exist separately from employee timesheets, and payroll receives yet another version at the end of the month.
The problem is context, not calculation
The biggest weakness of this approach is not that spreadsheets cannot calculate hours. They can. The weakness is that they do not naturally represent the entire context around those hours.
A workforce system can connect a working-time entry to a specific employee, project, point in time and relevant work process. Planning information can exist alongside actual work. Rules can be applied consistently. Changes can remain traceable. Reports can use the same source of information that employees and managers already use during the month.
The goal is not to replace Excel because Excel is bad. Excel remains an excellent tool. The goal is to stop using a spreadsheet as a workforce management system when the company has clearly grown beyond what a spreadsheet was designed to manage.