3 Reasons Using Spreadsheets for Planning and Reporting Are a Drag on Your Business

Posted by  David McAughtrie

Few outmoded business practices have as much inertia as the use of spreadsheets for planning and reporting. While the digital spreadsheet has proved remarkably resilient as a flexible input solution, it's a poor fit for more advanced needs such as financial analysis, business budgeting and general planning.

1. Spreadsheets Don't Scale It's a common belief among businesses that they simply don't have enough data to pursue an alternative to spreadsheets. However, chances are that isn't true, and it certainly won't be true if the business continues to expand. Spreadsheets are purely linear, so each new entry must be added manually, and will bloat the size of the spreadsheet on a one-to-one basis. The downsides quickly become clear, especially as users are forced to wade through reams of unrelated data to pull out the small portions that are relevant to any given task. By contrast, a good reporting database will scale behind the scenes, allow the automatic entry of many types of data and be able to provide only relevant data for report generation, no matter how big the database becomes.

2. Spreadsheet Tracking is Archaic When it comes to concerns like auditing and workflow management, spreadsheets are wholly inadequate. Even the most advanced shared spreadsheet setup will, at best, only be able to track which users opened the spreadsheet or saved data to it. The ability to track user activity on a granular level to keep records of every character entered or changed is absent. What's more, only one discrete version of a spreadsheet can exist at any time, and trying to coordinate the work of multiple employees can quickly lead to mass confusion. Worse, it can lead to data being overwritten or omitted entirely from the most up-to-date version of the spreadsheet.

3. Spreadsheets Magnify Errors Any spreadsheet that is being used as a proto-database will quickly become a dense web of hidden formulas and linkages, such that an input error in a single cell can negatively impact data throughout the entire document. Tracking down those errors is difficult, and the very fact that they happen so easily guarantees that they'll need to be found and remedied again in the future. A spreadsheet makes no distinction between one cell and the next, while a proper database can maintain the integrity of separate data modules to ensure that errors don't spiral out of control. Ultimately, modern spreadsheets are often being asked to accomplish tasks they were never intended to handle. The absence of good controls for workflow and data integrity amounts to a liability waiting to happen, and negatively impacts the day-to-day operations of the company. To find out how finance managers can find a better alternative to spreadsheets, visit UNIT4 today.

David McAughtrie

David McAughtrie

David is the global head of content development at Unit4 and is specialized in the fields of accounting, finance and HR. Prior to joining Unit4 David was the editor and head of content development for Press Association.