I recently posted a blog article highlighting the extinction of Excel that generated a lot of comments. The headline was intentionally dramatic, but the point was that organizations are realizing the risks of using Excel to support critical corporate processes, and they are reducing reliance on the tool
Microsoft released the first-ever edition of Excel over 30 years ago, back in 1985. Today, it remains the most popular spreadsheet product for business, and is one of the most widely used tools in the Finance department. Just think of all the software that's come and gone since 1985 ... Excel has outlasted Lotus 123, VisiCalc, Multiplan, Symphony and others. Obviously, Excel is doing something right. But there are still major problems with depending solely on Excel for critical Finance processes. Enter, stage right, cloud-based enterprise performance management (EPM) software. Finance departments may still be using Excel in the future, but the heavy lifting is moving to EPM and the cloud, and here's why.
What Excel Gets Wrong
There are numerous problems with using Excel for critical financial processes, and here are a few of the most common:
- It's too easy to create two or more versions of the same Excel spreadsheet, leading to massive inconsistencies among versions.
- Excel spreadsheets can be emailed, printed, copied, shared, and otherwise let out of the hands of the organization or its approved users. This means serious security issues.
- People enter data differently. It is difficult or impossible to instill data governance policies.
- Excel is widely known, so companies spend little time training employees on using it. That means people tend to use it differently, introducing inconsistencies and inaccuracies into the data.
- It's just too easy to make a mistake, and mistakes tend to go unnoticed. For example, one finance person at Fidelity left out a minus sign in front of a $1.3 billion loss, leading to an inaccuracy of $2.6 billion. Ouch.
- It takes too much time to consolidate data, modify, and correct the inaccuracies that get introduced into Excel. It can mean 12 hours or more per month, plus another week for getting things straight for monthly close-out.
What Excel Gets Right
Yet, there are reasons why Excel has dominated the world of business finance for more than three decades running:
- It's easy to learn.
- It's powerful.
- It's flexible.
- It's sharable.
- It's intuitive.
The Cloud Offers Easier Collaboration
What if you could move Excel-based data management into the cloud, eliminate the problems like data consolidation, security, version control, and governance issues, and get all of the positives without all of the negatives? Moving Finance processes such as budgeting & planning, forecasting, consolidation, and reporting to the cloud with cloud-based EPM software helps overcome issues like these, while allowing you to continue to leverage the powerful benefits of Excel spreadsheets on the front-end. Here users can continue to leverage their Excel skills, using it for tasks such as data entry, reporting, and analysis - accessing a more powerful EPM database on the back-end. We call this making "intelligent use of Excel."
That's not all. It makes collaboration around Finance data and processes easier (without the problems with security and spreadsheet version control), not only within the Finance department, but across the organization. Operations, sales and marketing, human resources, and other departments can enter their budgets and forecasts directly into the EPM solution, as well, giving Finance faster access to valuable information and better insight for budgeting, planning, and forecasting.
The Cloud Allows for Easier Data Integration
Not only does the cloud make governance and sharing easier, it also makes it easier to integrate data from other sources, such as ERP, HCM, CRM and other data silos that can be used to budget, plan, forecast and report financial and operating results. Data integration is a key capability of cloud-based EPM platforms, offering numerous advantages over spreadsheets.
Long Live Excel
As Mark Twain once said, "the rumors of my death are greatly exaggerated." And I did exaggerate the point in my prior blog article. Microsoft Excel is not likely to go extinct, but many organizations are reducing reliance on the tool as the primary means of supporting critical processes such as budgeting, planning, forecasting and financial reporting. At the same time, they are finding the ability to leverage Excel as a familiar front-end to cloud-based EPM solutions that handle the heavy lifting.
Want to know more about moving your Finance data and processes to the cloud while leveraging Excel spreadsheets as a front-end? Download our white paper "EPM in the Cloud."