Is Microsoft Excel Still Fit for Finance Departments in 2021?

Microsoft Excel has been the spreadsheet for Finance Execs since its release in 1985. Let’s set the scene: The year of the Brixton riots, EastEnders made its debut, and Roger Moore played Bond one last time in A View to Kill. Excel arose thanks to its versatility, its speed, and its sharp visuals and has ingrained itself into everyday Finance and has since evolved alongside it to such an extent that many question whether it will ever be replaced.

After all, Excel is familiar, intuitive, and scalable, offering something for both experienced users and novices. It’s also inexpensive.

However, there are a number of issues presented by clinging to Microsoft Excel in today’s world of Finance. While the software has evolved dramatically since 1985, in response to the developing needs of the finance function, many organisations we’ve worked with have expressed frustration at the many constraints of the application. Businesses across sectors need to be able to pull financial data from multiple systems and make more informed insights with advanced analytics and predictive outcomes.

The whole point of a financial reporting system is having access to, and making informed decisions via an enterprise-wide integrated database with a single source of truth. However, data frequently becomes fragmented and decentralised when multiple systems are in the mix, and both the IT effort and cost of consolidating that data manually becomes highly frustrating.

Excel – a manual and siloed software – has a limited capacity to handle large data sets, and can produce long processing times and more steps than other database tools. As well as this, its vulnerability to human error through manual data entry in one or more spreadsheets can compromise speed, transparency, and efficiency. This has been never more clear during the pandemic, where demand for agility and real-time insights rose dramatically.

Some argue that the staying power of Excel has actually hindered the evolution of a number of finance processes, including Accounting, which still involves manual processes.

In fact, we recently published a blog about the 10 biggest complaints our clients have had about Excel use, which have included:

  • The time wasted – accessing important information can be a long and drawn out process, slowing down the reporting, consolidation and closing cycles.
  • The pain of manual financial consolidation – where you have to compile siloed data from different departments (which is never truly up to date, calling to question decision-making)
  • Excel’s fragility – in a shared ecosystem of spreadsheets, it’s all too easy for people to delete rows and cells and break formulas and links
  • Lack of real-time insights – you’re always chasing after “the latest number”
  • Data entry – it’s long, boring, and vulnerable to error
  • The lack of predictive ability – You can’t create ‘what-if’ scenarios
  • No single source of truth – complicates decision-making
  • Collaboration is hard – with so many versions of the same spreadsheet
  • Security risk – Data is uncontrollable and files are always at risk.

So, who or what can replace Excel?

In the last year, the focus and pressure on Finance teams to close the books quickly, and to generate accurate and agile reporting has been immense. We’ve also seen greater focus on better planning to achieve predictable outcomes and support organisational agility in times of uncertainty.

The speed with which businesses across sectors were expected to transform in order to achieve business continuity made out-of-the-box and rapid ROI solutions especially attractive in the market.

INSIGHT for Finance Departments, for example, offers best in class SAP-cloud technology. It combines ERP, EPM, and Business Intelligence to meet the demands of the entire finance cycle, including:

  • Transactional Accounting
  • Budgeting
  • Planning
  • Forecasting
  • Consolidation
  • and Predictive Analytics.

The Intelligent Enterprise of tomorrow requires an advanced platform that can combine data mining, predictive analytics, and visualisation. The ability to allow executives to collect large, diverse data sets better and analyse them in real time makes the drawbacks of Excel in many ways redundant.

Excel is no doubt a strong, flexible, and affordable application, and will probably have a decently strong user base in the years to come. But until it can match the extensive data mining, machine learning, predictive analytics, and visualisations offered by other business intelligence tools, it will remain suboptimal.

Financial planning, consolidation, budgeting, and predictive outcomes are new priorities for the world of finance. Learn more about how INSIGHT for Finance Departments is helping organisations evolve into intelligent enterprises, supporting data-driven decisions, streamlining manual processes, and saving time and money.

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