After 31 Years of Spreadsheets, It’s Time to Move On

7 Min Read

The spreadsheet isn’t going away anytime soon. But the reliance on it as a standalone tool is waning, as the use of enterprise performance management solutions rises.

The spreadsheet isn’t going away anytime soon. But the reliance on it as a standalone tool is waning, as the use of enterprise performance management solutions rises.

It was 31 years ago this September that the world was introduced to Excel. As one of the first killer apps, there’s no question the spreadsheet changed the way everybody works – not just the finance department. Today, Excel remains ubiquitous among finance and accounting pros. In fact, 43 percent of them report that Excel still plays a significant role in their jobs, according to a recent survey conducted by Radius Global Market Research and sponsored by Host Analytics.

We can all agree that spreadsheets are far from perfect and that over the past three decades, more efficient ways to budget, plan, model, and forecast have arrived on the scene. Specifically, fast forward to the cloud era and with it, the rise of enterprise performance management (EPM) solutions. Designed to provide more control and accuracy in supporting strategic financial processes such as budgeting, planning, forecasting, financial consolidation, reporting, and analysis, cloud-based EPM solutions fill the wide gap that spreadsheets leave behind.

That’s because spreadsheets, by their very nature, were never meant to handle the complexities of corporate financial processes. Nor are they able to support the finance’s team’s need to sufficiently draw insight from non-financial big data that comes from other business functions such as sales, marketing, and the supply chain. Yet a full 57 percent of finance professionals are using spreadsheets as a standalone tool or as a front-end to other systems so they can meet EPM requirements for planning and budgeting, financial reporting and disclosure, and analytics, according to the survey. This begs the question of whether our collective reliance on spreadsheets is out of habit, necessity or fear of change.

Looking at the upside of spreadsheets, there’s the low cost, ease of use, intuitiveness, and almost no learning curve required. Now, weigh those benefits against lack of version control, audit trails, and security as well as tedious data entry, and human error inherent in spreadsheets. The scales are increasingly tipping toward the need for more control, scalability and functionality that goes beyond the traditional spreadsheet.

Considering the pros and cons of spreadsheets, the evolving finance function, and survey data showing 71 percent of businesses planning to tap into non-financial Big Data over the next one to three years to help with the planning process, expect spreadsheets to shift from center stage to a supporting role.

The Future of Spreadsheets
The spreadsheet isn’t going away anytime soon – though the reliance on it as a standalone tool is likely to wane. This is being driven by three significant factors. First is the evolution of finance into a more strategic function across the organization. There’s a growing need to support more collaboration among finance and various LOBs, job functions, and divisions for financial and operational planning and modeling. This has given rise to a number of cloud-based software platforms that support EPM, sometimes referred to as corporate performance management (CPM). With familiar spreadsheet-like interfaces and functionality, these platforms scale in ways that an Excel file simply can’t.

On the topic of scaling, the second driver is globalization. No longer exclusive to large companies, even small and medium businesses (SMBs) are expanding into new markets and territories. From finance’s point of view, globalization requires vision into the company’s performance across the board. It also demands more than a spreadsheet can deliver in terms of supporting daily and monthly activities such as currency conversion, intercompany eliminations, and accurate data consolidation and reporting. For businesses that are expanding through M&A, spreadsheets can belabor the process of integrating data from multiple systems and supporting more complex workforce planning, operational forecasting, and modeling whereas cloud-based EPM platforms address these challenges and streamline processes so that finance can spend less time on data manipulation and more time on value-added analysis.

The need for real time analysis and answers is the third factor that’s impacting the use of spreadsheets. As a culture, we’ve all become conditioned to expect immediate answers to our questions. This is often easier said than done when it comes to getting insight into understanding profitability of various products and customers, understanding the impact of a potential acquisition, or making a go/no go decision on capital expenditures. While spreadsheets provide the ability to collect data and perform rapid calculations, they lack the scalability and control needed to support strategic business decisions. Today, arriving at the right decision at the right time for the business requires accurate insight, real time collaboration between finance and LOBs, and the ability to see the potential impact of a decision before any action is taken. Spreadsheets can’t offer this functionality but they can complement a company’s investments in EPM solutions to support business decisions.

While we blew out 31 candles for Excel last month, it’s clear that the tried-and-true spreadsheet is morphing into a new role as it enters its fourth decade in the organization. While it will continue in its role as a powerful personal productivity tool for corporate processes, its primary role going forward is likely to be as a familiar front-end that works seamlessly with a more powerful and scalable back-end that ensures data is secure, accurate, and auditable.

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