Is it time to say goodbye to spreadsheets?

Spreadsheet

CFOs and Finance Directors have long been warned against the inaccuracies of spreadsheets when it comes to financial planning and analysis. However, as with everything in life, change can often be difficult to accept and this is often the case when it comes to businesses and their financial tools. Sometimes this is because they are reluctant to try something new, but alarmingly, more often than not, it is because the businesses are not aware of the different options available.

Research from Accountagility shows that 72 percent of CFOs consider their firms to be too reliant on spreadsheets. The larger the company, the more spreadsheets are deployed, and the greater the issues and headaches that occur. While Excel is clearly a central tool in many offices, businesses must also consider finance-friendly alternatives that address these risks whilst also respecting the need for control.

The stress of spreadsheets

There is no denying how beneficial spreadsheets have been to the business world, with many financial departments relying on them for reporting and data analysis. However, errors in spreadsheets are all too common, especially as processes often don’t always work as well as expected.

Spreadsheets are at their best when used either as a tactical tool, or as a prototype for a more formal process design. The flexibility of Excel allows users to create a template very easily, but there is a danger that problems will occur if the program is relied upon too heavily.

One issue that many businesses face is that a spreadsheet is often started by one employee and then modified by another. There are many different ways of inputting data into a spreadsheet and so it can quickly become difficult to manage, maintain and understand the original process, meaning there is a greater risk of hidden errors. Companies can address this problem by choosing an alternative to spreadsheets for projects or processes that are particularly complex or involve very large amounts of data.

Sourcing a solution

The number of spreadsheets being used can vary from business to business, but it stands to reason that a large organization which uses Excel as its only financial software will have a vast number of spreadsheets on their systems, creating an issue for staff when it comes to analyzing data for regulatory requirements such as Solvency II. As such, businesses need to consider introducing flexible tools for financial planning or analysis that can cope with the vast amount of data that the majority of them need to store.

New advances in technology are boosting the adoption of more sophisticated planning tools that eliminate version control issues while offering greater consistency, built-in back-up, and compliance support. To stay ahead of the competition and ensure compliance with industry regulation, businesses will, therefore, need to consider how they can best use Excel in combination with new software that allows users to manage large numbers of complex spreadsheets and reduce the risk of errors.

Looking ahead

Excel has now been on the market for over 30 years, which is a testament to its popularity and success. However, as new technology becomes available, businesses will need to review their planning, forecasting and reporting tools very carefully in order to ensure they have the most effective means of analyzing their data. Finance Directors, in particular, will need to consider what the business needs from its software before deciding which tools will be best suited to their needs.

As the technology in this area develops rapidly, more and more firms are seeking automated solutions that create processes that are not only accurate but also highly efficient. Whilst this is a good thing, the problem is that many businesses still crunch data first and ask questions later, and are therefore failing to reap the benefits of an end-to-end automated system. Taking the time to consider what defines the business, and what drives it, will help Finance Directors streamline their processes and produce better results than simply relying on Excel alone.

There is no doubt that spreadsheets are a fantastic tool. However, CFOs should recognize that engaging less with spreadsheets and more with the business will help produce more reliable results in a timely manner. It would also free up time from transaction-level focus to add value and partner with the business. Taking the time to automate processes will help finance departments get the most from all of their tools, including Excel. Not all processes and tools will work for every organization, but it is vital that businesses take the time to explore their options and constantly review the way they analyze their data in order to avoid pitfalls.

Robert Gothan is CEO and Founder of Accountagility

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Published under license from ITProPortal.com, a  Future plc Publication. All rights reserved.

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