“The whole world runs on Excel. Name a data-intensive critical industry: deep-sea oil drilling? Power grid management? International finance? All powered by Excel at critical junctures.”
— ng12 on HackerNews
On the face of it, the implementation of dedicated budget/forecast software for finance sounds like a good idea. Practically speaking, if this were indeed the case, the market should have already moved away from spreadsheets to dedicated solutions. But the matter of fact is that this hasn’t happened, and FP&A professionals continue to rely on Excel.
Excel is an integral part of most departments within an organization, particularly finance. Its simple user interface makes it easy to understand and use, and years of usage within organizations has fostered a hard-wired dependency amongst users.
Despite the existence of spreadsheet alternatives, people continue to stay in and depend on Excel and it remains the most popular spreadsheet software to date. There are a few good reasons why 85% of the market is still relying on spreadsheets. We dive into the top reasons below:
Every company is unique, and each one has built financial models over the years that help them perform better. If you’re working on Excel and want to boost its performance, R1C1 Reference Style is a great option to try out. A company that has been holding its forecast/budget process on spreadsheets for years has built its financial IP (Intellectual property) into its spreadsheets.
On the flip side, any budgeting/forecasting software comes with a built-in model. This means that users are expected to adapt themselves to the software, not the other way around.
This issue is one of the biggest problems of CFOs in taking the decision to move away from the good old model to a new one. No one is promising that the new system will work as well as the old one, so why fix something if it ain’t broken?
Training employees to work with a new software is hard. People don’t like change, and making a budget/forecast software implementation successful requires that everyone use it. This ranges from the finance team, to the end-users who are filling in templates, to management.
In many cases, users from different departments and sites find the process of learning a new system to be a “chore.” If they don’t really want to work with a new system and don’t care to learn it, the implementation process is doomed before it even gets started.
That’s why in many cases, implementation processes fail and companies go back to working with spreadsheets.
People love Excel. They use it all the time and try to find ways to improve excel performance. A company that is used to working with Excel for maintaining the budget/forecast process sometimes just wants to keep it that way.
“There are always some people who have their routines, and they just don’t want to change,” says Michael C. Mankins, a partner in Bain & Company’s San Francisco office and the leader of the firm’s organization practice in the Americas. “That [attitude] persists as long as the organization permits it.” (Harvard Business Review).
Additionally, despite the existence of dedicated systems, you’ll often find employees exporting data to Excel and working with it there. Data manipulation and examination is easy to conduct in Excel, so why not? Well, for starters because working with dedicated systems+ exporting + importing back into the system often leads to mistakes, that’s why.
Budgeting/forecasting software is usually expensive and is around the $50K mark per year for a Small/Medium Enterprise.
An important aspect of the cost is implementation- implementing a budgeting/forecasting software usually costs a couple of dozens of thousands of dollars, and sometime even more than $50K.
Excel rules, but how can FP&A work be improved?
Since Excel doesn’t seem to be going anywhere in the near future, there is much to be said about platforms that can allow end-users to keep using Excel and simultaneously improve processes. Datarails is one such platform.
With Datarails, finance work remains unchanged as professionals continue working with Excel as they’re used to. At the same time, organizations benefit from an enterprise-class platform that lets employees use Excel, a tool built for personal use, on an organizational scale without running the risk of inaccuracy, unnecessary errors, or data loss. With Datarails, Excel is enhanced into a database-centric organizational solution.
Datarails’ patented technology consolidates and stores all Excel-based data on a cloud-based centralized database. It allows finance professionals to optimize processes with automation, all without changing the way work is done.
Finance professionals can access and leverage financial and operational data independently, regardless of technical competency. This means the finance team can easily support planning, analysis and reporting needs on-the-go to drive faster and more effective decisions.
End-users keep using Excel while executives benefit from superior access to data and novel insights. With Datarails’ effortless, automated, and accurate solution, employees can spend less time putting the numbers together and more time thinking about what they mean, all without leaving Excel. Now that’s what I call win-win.
Datarails’ FP&A solution revolutionizes the way FP&A analysts work. Our technology automates spreadsheet work that is all too often done manually, allowing you to save time and prevent errors. With Datarails, gain newfound insights and finally have confidence in what your numbers are telling you. This is done without changing the way you work on Excel so you can keep doing what you’re doing, just better.