Recently the Wall Street Journal (WSJ) started a firestorm when they published an article titled “Stop Using Excel, Finance Chiefs Tells Staffs” (https://www.wsj.com/article_email/stop-using-excel-finance-chiefs-tell-staffs-1511346601-lMyQjAxMTE3NjMzMDQzNDA4Wj/).
The response was predictable enough: finance professionals responded angrily that they would never give up Excel! I believe the image of “Cold dead hands” was invoked.
While this exchange makes for great click-bait, it completely misses the point, which is:
- YES there is a problem with Excel
- BUT it is not the problem described in the article
- AND there IS a very good solution
The problem with Excel is that it is an excellent tool … that has long been used for purposes it was not designed for!
It’s a bit like my favorite chef’s knife: it is always sharp, has a great 8 inch blade, and was worth every cent of the $80 I paid 20 years ago because I use it for everything: cutting, carving and slicing (which it was designed for), peeling and mincing garlic (which it can do, but not as well as specialized tools) and mincing nuts and herbs (which is painfully slow but I do it anyway).
Similarly, Excel can do many critically useful things for a financial analyst or accountant. It’s a great presentation tool – you can lay out your financial statements exactly as you like, and format the fonts and colors to perfection. It’s a powerful financial modeling tool, and invaluable when you are tasked with doing a quick analysis, especially when you don’t know exactly what the answer will be. It is effectively an ad-hoc programming environment that empowers finance people. There is no substitute for Excel for a lot of day to day that accounting and finance have to do.
Excel becomes a source of pain and distress when it becomes the primary tool for data management. This is not what it was designed for, and even though it has some features that allow you to do some work with data, these should never be used for anything more than an ad hoc data exploration as a first step towards something else much more robust. The pain is amplified when formulas for business- critical metrics are copied from Excel file to Excel file, without any controls or governance protocols.
It is about time that many companies are starting to use other tools for financial planning and analysis, as described in the WSJ article, but all of these companies still use Excel as well. There will always be requests from your Finance Chief or CEO that involves new data, a new analysis, a new allocation, a new organizational structure idea that needs to be fully flushed out and understood before it can be put into a tool like Anaplan (which was mentioned in the article) or IBM Planning Analytics (the premier tool in terms of speed, large data volumes and calculation complexity that – full disclosure - QueBIT delivers a large variety of financial analytical applications in).
Deploying a tool, and being able to use it in an integrated way side by side with Excel gives you the best of all worlds. With IBM Planning Analytics, think of the tool like a centralized database for raw data, roll-ups and aggregations and other complex commonly used formulas that sits behind Excel. You can use it for all kinds of budgeting and planning, financial reporting, customer and product profitability modeling, and even your global financial consolidation! You can adopt it in phases, or you can have it all in one very good solution! Unlike many of its competitors, IBM Planning Analytics is also a complete reporting solution and the best thing about it is that it can be owned by finance – this is key! To be effective the tool needs to be empowering to Finance and Accounting the same way that Excel is. Finance professionals cannot do their jobs if they are always dependent on IT or consultants.
The other thing to keep in mind if you are exploring tools to help with the Excel problem is to make sure that your implementation partners understand both the technology AND the needs of the finance professionals, and have the experience to help you make sure your implementation is successful.
For more information, visit us at https://quebit.com/business-planning-solutions or email us at info@quebit.com.
Other Resources:
https://blog.quebit.com/blog/five-benefits-of-an-integrated-financial-model
https://blog.quebit.com/blog/three-ways-to-justify-an-investment-in-budgeting-planning-software
