Firstly, spreadsheets are a generic tool. They can provide basic reporting but do have major limitations. For example, applications built around spreadsheets are rarely easy to use.
Spreadsheets will normally be the best way to provide a one-off solution but they are not usually convenient to use. For any application that has to be run regularly they are not an efficient solution. They are also very error prone (see below).
The staff costs in using a spreadsheet do need to be balanced against the cost of bespoke software. In the long term, a bespoke solution will almost always be better value. It may cost more initially but the costs will be recovered over time.
Spreadsheets are error prone
A year or so ago, I advised a software company who are spreadsheet experts. It was interesting to say the least. Studies from academics and the European Spreadsheets Risks Interest Group (http://www.eusprig.org/) have found that most spreadsheets contain at least one error. Problems occur when rows are inserted or deleted and formulae are not adjusted properly. How do you check the results of a spreadsheet calculation? One man told me he checks by adding up the column with a calculator. You have to wonder about the point.
Your staff are not IT experts. They will take longer to develop a solution than the professionals will. They often don’t know what can be achieved so won’t come up with the best solutions.
And while staff are developing apps, they are not doing the job they are paid to do.