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Why the financial function should finally ditch Excel

From security to version control issues, Excel has issues,

Microsoft Excel needs no introduction, with around 750 million users worldwide, it is the most commonly used analytic tool in the world. However the time has now come when its use to effectively manage a business needs to be seriously questioned, writes Andy Campbell, global solution evangelist at FinancialForce.

The popularity of spreadsheets can be put down to one key reason. Historically centralised legacy ERP systems were clunky and difficult to use, and CFOs found it difficult to get the information that they needed when they needed it. As a result of these inadequacies managers often downloaded a slice of the data for themselves and then started manipulating it using tools that were relatively easy to use. Once they started using them and were happy with the results, they did not want to stop and saw no reason to change.

However, that situation is no longer the case. In fact, for financial reporting, it is time for organisations to move away from Excel as it is simply no longer up to the task and there are too many risks involved in its continued use. Financial reporting involves too many moving parts – users, data, formulas, questions and sources – for Excel to manage effectively.

Is it finally time to ditch Excel in the financial function?
Is it finally time to ditch Excel in the financial function?

Excel’s risks and problems

There are several issues that relying on Excel will cause for organisations.

Human error: this is a major factor in the shortcomings of spreadsheets. Spreadsheets are only as good as the data that is put in them so if a user makes a mistake either in entering data or setting up a calculation, then all of the formulas could be compromised. For financial reporting this can have far-reaching impacts and numerous recent embarrassing revelations in the press are testament to the fact.

Timeliness: Spreadsheets lack real-time data information. They can only represent a snapshot in time when they were originally generated. Any delay, for example sharing and distributing with others, will result in users relying on data that is often out of date and probably inaccurate.

Not built for collaboration: spreadsheets are difficult to share and not designed for collaboration. There have been some recent attempts at rectifying this problem, for example Google Sheets. But data is still too easy to delete or modify, creating complicated version histories and confusion when people work online/offline at the same time and then try to upload their different versions. In order to fix this, what ends up happening is that users lock the financial spreadsheets, so that they can be shared without worry of alterations or edits but people get around this by saving a local copy so that they can edit it themselves.

Security: As well as creating audibility issues (“who knew what and when?”), these locally saved versions create a security issue as now, instead of one document stored on the company’s systems, there are multiple versions stored on employees' separate devices. These copies can then end up outside of your company’s security systems and may even be taken away when an employee leaves the company, intentionally or otherwise.

Usability: despite how many people use Excel, it isn’t actually very easy to use. The design of a workbook may seem very logical and clear to the creator, but it may not be very user friendly for people from other teams who also might need to access and understand the data. Indeed, even for those who are used to looking at them every day – rows and rows of data is not the most visually pleasing or easy to decipher. They are even harder, if not impossible, to look at from a phone or smaller device which makes flexible working or quickly checking something on the go very difficult.

The solution

Excel, and similar spreadsheets, isn’t the only hurdle that companies have to navigate. In many organisations each team often operates within its own silo and has its own platform, none of which are built to interact with each other. Instead, companies should start by embracing the benefits of digital transformation and modern cloud technology by creating a “one-office” approach that brings all of their customer, financial and operational information together in one place.

Modern cloud solutions are quick and easy to deploy and can be updated regularly with new functionality, so they are both future proofed and adaptable. This means that the tools within these platforms are also flexible and agile, providing ready access to information and making slow, clunky spreadsheets a thing of the past. The role of the finance leader is changing over time, with it no longer being confined to a siloed back-office position. Instead, finance leaders are taking a much more central role in the business. Customer satisfaction is a key component in this, and these modern tools are much better placed to offer multifunctionality than static spreadsheets.

Modern cloud solutions also fix spreadsheet’s usability problem. They are simple to use and easy to consume for all users across all platforms. This is because it is possible to design dashboards with specific users in mind whereby key information is highlighted depending on the audience and next steps for additional details are intuitive. The attention to usability makes it much easier for businesses to train their employees in the new software and will continue to save time and increase efficiency.

To counteract the data issues that arise with spreadsheets, namely that data is out of date almost as soon as it is inputted, businesses should invest in modern analytical tools. These provide real time insights into the data and make it possible to review trends, look at predictions and adapt accordingly. Put simply, modern analytics systems can do far more than traditional spreadsheets ever could.

Spreadsheets were a valuable tool for finance managers to address the problems associated with legacy ERP systems. However, given the multitude of issues outlined above and the fact that better alternative options are available, businesses need to form a plan of how to move away from relying on them. A first step could be to carry out a basic review of how many spreadsheets your organisation currently relies upon. Imagine if you stuck a post-it note on your laptop screen, one for each spreadsheet. By the time no one can see their work anymore it should be pretty clear that it’s time to move away from the old way of doing things and embrace the new.

See also: Sol Rashidi, Chief Analytics Officer, Estée Lauder, on messy work, data culture, rugby.