Over just the past few years, technology has created a massive shift in how finance organizations operate and how they’re expected to perform. For more than 20 years Excel has led the field as a business finance tool, but now alternative tools such as Google Spreadsheets and a variety of BI software platforms have matured and begun to edge into Excel’s business. At the same time, new financial modeling, database, and analytics software has entered the market to provide deeper, real-time capabilities that help companies optimize every aspect of their business.
Still, the vast majority of finance operations cling to Excel as the go-to finance tool. The reasons for this are many and varied—habit, training, cost, power flexibility. And so are the many reasons for hating Excel as a business tool—it’s error-prone, time-consuming, and incapable of providing real-time insights.
With the maturity of competitive products and the increasing need for flexible strategic finance tools wedded to a single source of truth, is it finally time to ditch our relationship with Excel? We took an informal survey of online conversations among Finance VPs, CFOs, and Financial analysts, and here’s what they had to say:
Pro: Yes, It’s Time to Move on From Excel
Some finance professionals say that while Excel once served a purpose, it is now eclipsed by much more effective tools. Here are some of the reasons presented:
- Excel is a single-user tool, primarily valuable as a personal finance tool.
- Excel lacks effective collaboration functions, making it obsolete in an environment where collaboration is the rule.
- Excel is terrible at planning, forecasting, and reporting.
- Excel doesn’t have the chops to manage the massive quantities of data our organizations now churn on a daily basis.
- Data stored in spreadsheets run a high risk of loss and corruption.
- Excel can only analyze historical data. Today’s environment calls for real-time analysis, not historical data mining.
- Only finance professionals love Excel—everyone else hates it, limiting its effectiveness as a communication tool.
Con: No, Excel Is Still Our Most Valuable Business Intelligence Tool
Despite potential pitfalls, Excel has plenty of staunch supporters. Many claim that it is still the best tool for many organizations, and the only tool for others. Here are their reasons:
- It’s so easy to use. There’s nothing like having decades of experience using the same tool to make it simple and intuitive.
- It’s cost-effective. None of the latest-generation tools can hold a candle to Excel based on price.
- From pivot tables to look-ups, nothing beats it for ad hoc analysis.
- Everyone understands it. We overheard one Finance VP describing Excel as the “lingua franca” of the finance world.
- It’s flexible. Excel can be leveraged to accomplish almost any task, and can be customized to serve the company’s unique needs.
- It possesses impressive formatting and display capabilities.
- It’s interoperable with accounting and other company systems.
- The cost of retraining an entire enterprise’s finance staff would be prohibitive.
- Why re-invent the wheel? Excel does its job admirably, so it makes little sense to pay extra for something new.
Our Take: Yes, Both
The finance profession is simply not ready to end its long-term love/hate relationship with Excel, nor should it. Yet, it’s clear that Excel alone cannot provide VPs and CFOs with all the tools they need to optimize their organizations and become analytics-driven leaders.
When its risks and weaknesses are understood and managed, Excel plays a valuable role in the finance department for ad hoc analysis, dashboard displays, and some forms of reporting. Linking Excel with a tool like IBM’s Cognos TM1 or similar, thereby connecting it with the company’s other sources of data—especially CRM and ERP—significantly reduces the risk of errors, and provides the ability to analyze, forecast, and model what-if scenarios in real-time based on a complete picture of the company.
When it comes down to it, there is no reason to reinvent the wheel, but if you want to get ahead, you’d better hook it up to a more powerful engine.
What About You?
Is your organization still using Excel? Why or why not? Join our discussion in the comments.