How do you know when it’s time to leave Excel?
We love Excel. Its ’a great tool on many ways – flexible, powerful and relatively user friendly if the users have the necessary knowledge. Few planning tools can measure up with Excel’s strengths when it comes to calculations and flexibility. So why isn’t it a suitable tool for all budgeting, forecasting and planning?
When more and people become involved in the process more problems and challenges arise since it’s not a collaborative tool: Excel doesn’t have a workflow, the version management isn’t good enough, there’s no routine for attestation and it’s virtually impossible to troubleshoot when the complexity is too great. In addition, the process is often person dependent if the company’s “Excel guru” built the process – this becomes very evident when he or she leaves the company and someone else takes over.
Excel is a good tool for smaller companies without a complex or business critical planning process, but when more users get involved and the complexity increases your company have a lot to gain by using a more modern and integrated system that can automate and streamline your process.
Which companies are Excel suited for?
Excel works fine for smaller companies with a somewhat flat growth curve, that has a few simple processes or few people involved in the process – as long as the employees have the knowledge and skills needed for building sufficient Excel processes that can support the business.
Even so, these companies can still encounter problems with their Excel process when the market and reality changes quickly and new forecasts need to be updated – for example this year when Covid 19 struck the world. During these circumstances there’s great value in having a system that makes it easy to quickly and effectively get an updated financial overview.
In addition to small companies, businesses that lack an overall picture of how the planning process should function can wait to invest in a system for budgeting and planning. For these companies, we recommend that they at least begin working this out before investing in a platform to support their process.
When should you leave Excel?
Of course the answer to this questions varies based on a company’s situation, but below are 7 common reasons to leave Excel:
When the external data needed for the budget and forecast process is in many pre-systems
When a number of individuals are to be involved in the planning process
When the complexity increases and the management of Excel files becomes time-consuming
When your company have high ambitions for growth that demands fast decisions and changes, continuously updated plans and overviews
When the financial department spend all of their time preparing, and consolidating and have too little time for analysis
When you want to increase understanding and ownership within the business
When you want to work more frequently and data-driven with financial planning
Budgeting, forecasting and planning should be a value-creating process – a process that makes the business, employees and units pull in the same direction and help the company evolve in accordance with the set goals. Excel if often an obstacle when you need to delegate and increase ownership of the budget or forecast. Also, the financial department often have to spend an unreasonable amount of time on administration instead of supporting the business with value-creating analyses.