Warning: long term use of Excel is lethal for CFOs trying to make data-driven decision-making. Discover how Excel can’t excel when it comes to managing data and what can be done about it.
The troubles with Excel are only beginning. Excel not only caps out at a million records, but it also rounds off large numbers using imprecise calculations which compromises the accuracy of your data.
Excel is a single-user system. That means it only allows one person to input data at a time. There’s a high chance that someone entering the data does it without regard for storage, backup, and processing best practices.
They lack IT expertise, so they hyper-personalise it for themselves leaving no room for collaboration and control.
Working with real-time data in such an environment where there is no room for collaboration and control becomes cumbersome and time-consuming. Your employees are spending their valuable time putting together different versions of data that are scattered over different workstations in different departments.
Excel cannot be integrated with data from other departments to get insights and make decisions. This creates a situation where finance managers don’t have consistent visibility of data throughout the operations.
When you operate in different locations throughout Australia, the only way to share such files is through emails. Different versions of your data are flying around back and forth with different versions of truth in them. Anyone who tries to alter logic can do so without any accountability.
Missing data and incorrect formulas introduced by human errors can easily be propagated throughout your organisation because of the links in the worksheets. The links tend to break creating a cyclic version control nightmare that is very difficult to troubleshoot. Even if someone can get all the files together, it becomes impossible to trace the logic behind the personalised formulas that only the creator could understand. If the creator of the file is not available or has left your organisation, everything comes to a halt.
Anthony, head of Client Relations at Octane, tells this story about a CFO from the construction industry, who is moving away from Excel to a modern budgeting and forecasting tool:
“They wrote their excel sheets over a period of 15 years. No one knows where the person who started writing it is today. The logic is buried so deep inside the excel spreadsheets that it breaks very easily. When other people make calls to such links it breaks everything and now nobody knows what to do next.
Worse, people often have to input their numbers in a sequence. If Jack doesn’t enter X, then Jill cannot enter Y. It’s a joke that is played out in finance offices all over Australia.”
Intentional and fraudulent manipulations are very easy to do with Excel. The company files with financial logic into it should never fall into the wrong hands. But with Excel, your data can be easily copied and updated with faulty values and dependencies without being detected.
Further, in case of any mishap or disaster, there is no way for full data recovery with Excel. Without the company’s financial data, customer records, inventory data, and sub-contractors' accounts it becomes very hard for the company to make a quick turnaround after such events.
Consolidation of data to prepare reports while cross-referencing it with different versions from different departments takes a lot of time and effort from your employees. A lot of times your executives can even miss the timelines for a proper course of action.
Meeting regulatory compliance from the Australian government is a very good example of how things can go downhill with Excel. The Australian government is tightening regulations and you would have a timeline to meet while submitting your worksheets. There’s a high chance that your spreadsheets will take a lot more time and effort to put together missing the deadlines and exposing you to official scrutiny.
Excel is not going away. Despite the pitfalls, Excel remains best friends with CFOs. According to NetSuite Brainyard’s whitepaper, CFOs spend an average of 2 hours in spreadsheets every day. That’s more time in spreadsheets than any other software in their toolkit. [1]
Most finance people will keep using Excel because they have grown with excel sheets. Even when they face all these problems with Excel, they simply can’t get over the user interface and the flexibility that Excel provides.
That’s why TM1 was developed by IBM. It is a modern budgeting and forecasting tool that still uses an Excel interface.
Amendra Pratap, Managing Director at Octane, says:
“In spreadsheets, you cannot form a repeatable and reliable process. Every time you do something, you must do it over and over again. You can’t perform to your fullest potential when your employees are doing process work. Platforms like IBM Planning Analytics then eliminate the repetition of effort, freeing your managers to do the job that needs their actual attention.”