4 Reasons to Stop using Spreadsheets for Planning, Budgeting and Forecasting
Posted by Alberto Chiang
4 reasons to stop using spreadsheets for planning, budgeting and forecasting
According to a study done by FEI Canada, 71% of U.S. companies and 69% of Canadian companies rely on spreadsheets for budgeting and planning. While spreadsheets have proved to be extremely flexible and easy to use, there are a lot of challenges that come from using Excel. Here are 4 reasons why you should stop using spreadsheets for financial analysis, planning, budgeting and forecasting:
- Spreadsheets don’t account for change – Excel can be an effective way to manage your budgets and forecasts, but only if nothing changes and you have time to manage it. Constantly updating and consolidating numbers restrict you from responding quickly to new opportunities and challenges. Considering the constant change that shifting demands, priorities and expectations throws at us, it’s unrealistic to expect Excel to cope. A financial information system should allow you to quickly make changes only once, then the entire system changes in real-time.
- You spend more time collecting data than analyzing it – The New York Times reported that data scientists tend to waste between 50 percent and 80 percent of their work hours in data collection. The reason we collect data is to have visibility into it, analyze the data and improve upon results. But when you have to manually input all of your data, and create templates and formulas in multiple spreadsheets, collecting data will take you longer. There is no reason the process needs to be so tedious given current technology.
- Spreadsheets magnify errors and you can’t trust your financial data – Any input error in a single cell can negatively impact data throughout the entire document. Typing in the wrong numbers is hardly the only way people screw up figures. Errors can be made when employees type what they thought was the right amount into an auto-generated field in Excel or accidentally erased a formula while making their own improvements. There are lots of mistakes people can make while transferring information between programs, and this is why an enterprise suite capable of handling seamless data integration is so important.“Organizations often devote extra time to validating financial information because of the widespread use of manual tools, including Excel spreadsheets, in the reporting process.” – FEI Canada
- Spreadsheets don’t allow for effective collaboration – Spreadsheets don’t allow auditing and workflow management. With Excel, you can only track which users opened the document or saved data to it. This can lead to data being overwritten or omitted entirely from the most up-to-date version of the spreadsheet. No CFO succeeds in isolation. It takes collaboration within the finance department and across every part of the company. Everyone should have access to evidence and documentation into a single, shared location instead of navigating a fragmented system of local storage, server folders and emails. This way, everyone from the CFO and down is seeing data as fresh as it comes, and can collaborate on high-value tasks rather than managing data streams.
Organizations that go beyond spreadsheets are able to make faster and better decisions by reducing manual routine work and human error. Simply put, spreadsheets have no future in the post-modern ERP era. It's time to start self-driving your organization with smart and predictive back-office technology.