When the spreadsheet is the right answer
For a team of eight, where one manager knows everyone personally and the point is a single view before planning next quarter, a spreadsheet is the correct tool. It costs nothing, it takes an afternoon, and buying software instead would be the worse decision.
Worth saying plainly, because the usual version of this page does not. If that is your situation, do not buy anything. The rest of this is about what changes when it is not.
The three things that break
Freshness, first. A matrix is accurate on the day it is compiled and decays from then on, quietly, while continuing to be quoted with confidence. Nobody maintains it, because maintaining it is nobody in particular, and no moment in the month forces the update.
Verification, second. A typed cell records a judgement — usually a self-rating, sometimes a manager impression. Neither is a measurement, and the distance between what someone claims and what they can demonstrate is consistently wider than expected. Third, history: a spreadsheet shows the current state, so the question a development conversation actually turns on — has this moved, and when — has no answer in it.
What a platform adds, specifically
Levels defined once, in writing, so two managers reading the same rung look for the same evidence. Verification through short timed assessments, so a level is demonstrated rather than declared. And a record that accumulates, so movement is visible rather than inferred.
The part that matters most is that the data maintains itself. Levels change because people take assessments as part of normal development, not because somebody was asked to refresh a file. A skills record that depends on an annual chore has already decided how current it will be.
The honest threshold
The switch is worth making when the matrix has started being wrong in ways that cost something: a project staffed on a capability nobody actually holds, a promotion argued from an out-of-date cell, or a training budget spent against gaps that were guessed at.
If none of those has happened yet, the spreadsheet is still doing its job. Tools should be bought against a problem that exists, and a skills platform bought before the problem arrives is one more system nobody opens.