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5 reasons why Excel is no longer an appropriate FP&A tool for modern organizations

When Microsoft Excel was first released it was a revelation in the financial community, but times have changed. 

If recent years have shown us anything it’s that modern challenges require modern solutions and those embracing digital transformation through the Cloud have more efficient processes than those entrenched in legacy systems.

 

In today’s blog, we will discuss some of Excel’s inefficiencies and why modern organizations must move on to remain competitive and efficient.

1. Excel presents an obstacle to collaboration

Excel creates a roadblock for collaboration in two areas, both collaboration within a finance team, and collaboration with other departments. Both kinds of collaboration are necessary not just for operational efficiency but for informed strategic decisions.

Firstly, an Excel spreadsheet cannot be accessed by multiple team members at one time. This can lead to version control issues, or siloed data sheets that have discrepancies. Accurate data is paramount to the performance of the financial function, and when your systems lead to error they should be reassessed.

Secondly, the nature of Excel can lead to a compartmentalized financial function. A cloud-based FP&A tool can create a single source of truth for data, rather than data siloes, which allows a finance team to take other departmental and operational data into account. 

This 360-degree view of organizational data allows for better forecasting and far-reaching analysis for reports. Research has suggested that a modern financial function should be strategic and not just supportive, and Excel’s system discourages this holistic view of finances and wider strategic analysis.

2. Excel has limited data handling capabilities

A huge misconception about Excel is that it isn’t a database at all, its capabilities fall short of the term. In other words, Excel isn’t great for managing larger data sets. As an organization grows and gains larger data analysis requirements Excel will again fall short.

Moreover, as data analysis requirements grow with an organization, accuracy and efficiency must be prioritized and it’s clear that Excel won’t be able to satisfy these needs. 

Modern FP&A solutions are designed to handle large data sets and provide advanced analytics capabilities, enabling the financial function to be strategic and accurate. Excel can struggle with the most basic data management issues when data sets grow.

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3. Data consolidation time is greatly increased with Excel

As we mentioned, efficiency and accuracy are pivotal to the success of a financial function. If basic data entry tasks take up most of the working hours of your finance team, it can present a serious blockade to strategic tasks like forecasting and reporting, not to mention analysis.

Consider that Excel is a simple spreadsheet application, which puts most of the work on the user. In the modern day, there are many modern FP&A tools that can allow for modern innovations such as AI and other automation to make small tasks quick, easy, and accurate, and even offer other capabilities on top of this.

With a global shortage of qualified accountants, we must use our current resources better, and simply hiring more accountants isn’t an efficient solution, or even possible in the current talent market. 

Moreover, the modern talent that exists expects more advanced capabilities of the software they use, and it can be hard to attract this talent with basic data entry tasks, rather than opportunities for strategic analysis.

4. Excel has limited reporting capabilities

The collaborative ability of a finance team is clearly inhibited with Excel, and this is even more clear in its limited reporting capabilities. Other teams in an organization require timely reporting capabilities on finances for things like budgets, and even sales opportunities can be lost due to slow data processing times.

Creating reports from Excel is already time-consuming but when aggregated with already time-consuming data entry tasks, it’s hard to ensure reports are insightful, or even accurate.

Moreover, the modern FP&A tools that already exist can create reports automatically with intelligent AI and even update budgets in real-time, allowing the financial function to be strategic, as well as accurate.

5. Excel can create security vulnerabilities

Sure, accuracy and efficiency are paramount to success, but without secure systems, the whole process is undermined. 

Excel is made for single-user use so for other key members of a team to access the same spreadsheet links must be shared constantly which creates a huge risk, rather than the ability to track trusted users and audits through the Cloud. 

Excel files are often stored on individual computers, which can lead to security and control issues. Excel files can be easily shared, leading to data breaches and other security risks. FP&A tools on the Cloud are often secured by trusted Cloud servers that protect information.

How Unit4 can help you swap Excel for a modern FP&A function

It’s clear that Excel is no longer compatible with the modern working world. Cybersecurity has surpassed it, it causes workflow issues, and it’s not made to be collaborative.

Unit4’s integrated and cloud-based FP&A product can solve these issues, provide security for your finances, allow teams to collaborate seamlessly, and automate manual data entry tasks to allow your current finance personnel to use their expertise to inform corporate strategy. 

Consult any of our assets to hear more about our FP&A product or hear from impartial analyst BARC why they have ranked our FP&A among the top 3 for customer satisfaction.

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