Excel is a useful business application – in truth, enterprises across the business world use Excel on a daily basis for a myriad of tasks.However, the problem with Excel is when companies start using it for things it wasn’t really designed for - like tasks that could be accomplished much more efficiently with a dedicated application. In a recent survey we conducted of CFOs, we found that almost 90% still use Excel for business budgeting, even though nearly half felt that they needed better financial forecasting and what-if scenario testing. If budgeting and forecasting tasks are accomplished more accurately and easily with software designed for that purpose, why do finance teams still rely on Excel? And if there are positives, do the negatives outweigh them?
The Pros of Excel
Why do so many companies default to using Excel?
Nearly every employee at every company has a copy of Excel available to them, thanks to Microsoft Office. The Office application package can be found on roughly 450 million desktops today, making it easy to include various members of your team in the budgeting process without additional onboarding or license.
High User Adoption
Because it’s so available, most users are familiar with Excel’s interface. They may not be power users, but they know how to navigate the program quickly as well as how to add and delete cells. Even novice users can quickly figure out how to do computations and create formulas.
“We’ve always done it this way”
Probably the most common reason for why Excel is used, especially for budgeting and forecasting, is that it’s what a company has always used. Team members are used to working in spreadsheets and have their workflows already set. Even if it’s more time consuming, using Excel doesn’t require change.
The Cons of Excel
Excel presents a low barrier of entry for companies, but that doesn’t make it the right tool for the job.
Errors, Mistakes and Wasted Time
Mistakes and errors are easy to make in Excel, especially when importing data or when using complex or unfamiliar spreadsheets. And the features of Excel – like hiding data – can cause huge issues, as it did for Barclay’s in 2008.Going hand in hand with errors and mistakes is the time it takes for knowledgeable accounting teams to review and correct problems. Because issues are so common in Excel, organizations must set aside time for teams to review important work, or run the risk of sharing incorrect financial data.
Companies of almost every size rely on input from multiple people to plan budgets and complete forecasting. But Excel doesn’t offer collaboration access. This means either each person is working on their own version of the budget, causing the headache of combining and reconciling the data later, or many people are working off of a single document, risking overwritten data.
Issues with Privacy and Security
Like other Microsoft Office programs, you can protect an Excel spreadsheet with a password. And while these documents are encrypted when protection is added, many people choose a password that they and their colleagues can easily remember.There is also only a single password for an Excel document, meaning that it must be shared instead of each user having their own access. This also means that there is no role-based security in Excel. If you have the password, you have access to everything in it.If you’ve been using Excel for a long time, the idea of switching to something else for your business processes, like budgeting and forecasting, might seem daunting. Licensing might be a concern, or your team could simply have a fear of change. But the negatives of using Excel go far beyond the simple inconvenience of needing to learn a new product. Mistakes and even data access can put your company at risk.See how you can build a driver-based budget model in days. Test multiple scenarios, generate accurate and automated forecasts, and enforce your chart of accounts.