Still using Excel for planning and analysis? Here’s why it’s time to move on…

Pretty much every corporate finance professional has grown up with Microsoft Excel. Easy to use, flexible, and familiar, it’s not hard to understand why so many finance teams turn to Excel for pretty much everything.

So, if something seems to work, then why change it? One problem with having a well-established tech solution in play is that a kind of inertia kicks in: it becomes your default tool to the extent that you use it for activities it was never built for, even though better alternatives exist – and are becoming easier to implement than ever.

Reliance on Excel for financial planning and analysis (FP&A) is a classic example of this. The reality is that Excel was never meant to be an FP&A tool. If you’re still tied to your spreadsheets, here’s why it’s time to move on…

FP&A: Excel leaves you short of what you need

Let’s say you were designing a solution to support your FP&A processes from scratch. Its capabilities would likely include the following:

  • There would be a strong self-service Users within the finance team and elsewhere in the business would be able to perform queries, spot trends, and generate reports on their own without having to constantly call on specialist input.
  • You would have a single source of truth, i.e. you would know exactly where the figures came from and be confident that they were up-to-date, accurate, and not in conflict with competing datasets elsewhere in the business.
  • You would have confidence when it came to data governance. The solution would be able to support a collaborative, team-based approach to planning, analysis, and reporting. At the same time, however, there would be absolute clarity on who owns the report – and who made what changes – complete with robust controls over access and editing privileges.

The problem with a legacy spreadsheet-based FP&A process is that Excel falls short in all of these areas.

Most finance team members are quite happy handling the basics of spreadsheets. However, it’s far from a self-service solution. Only a select few individuals with deep knowledge of how to devise effective formulas can drill into the data and generate answers to queries.

Legacy processes tend to rely on the manual lifting and shifting of data into Excel, a time-consuming process that makes real-time analysis practically impossible and that increases the likelihood of error and inaccuracy.

As anyone who has used Excel will testify, it’s incredibly easy to alter a spreadsheet by mistake. More widely, the absence of tracking functionality and other auditability features presents a real challenge for anyone responsible for internal compliance.

How Excel can cost your business:


Errors are a probability - not a possibility

At the height of Covid, Public Health England had a procedure in place for pulling nationwide infection data into Excel templates, where it was made available to Test & Trace and other government departments. However, it turned out that due to using a legacy file format – XLS – each template could only handle about 65,000 rows of data. When the total was reached, any further cases were left off. At one point in 2020, new infections were under-reported to around 16,000 cases.

This incident was a very public illustration of the issues that can arise frequently with Excel. Research suggests that nearly nine in ten spreadsheets contain errors. Fueled by extremely limited automation and problematic scalability, issues such as missing rows and botched exports have become a fact of life.

If it’s just a peripheral data point that’s affected – or if someone picks up on it early – then there’s no significant loss to your business. What is equally possible, however, is that a single error could have huge consequences for resource allocation and, ultimately, your bottom line.


Finance resources are wasted

81% of finance leaders believe they suffer from the most intensive daily manual work compared to any other senior executive role. If this sounds familiar, it’s worth thinking seriously about the extent to which spreadsheet-based processes are contributing to your workload.

The little frustrations associated with Excel all translate into time and money. For instance, how often do you sit around waiting for workbooks to open once launched? The solution was never meant to underpin a very large planning database. However, if it has organically morphed into one over time, a workbook that started life with a handful of tabs might now be ten times the size. Small wonder that it’s slow and unwieldy.

Or let’s say you are finalising a budget and require input from stakeholders across operational departments. You create a template in Excel and forward it on to managers. Managers make annotations and alterations before returning them to finance. You then need to manually review and consolidate. This whole process might be repeated multiple times in a single budget round.

These time-hungry activities mean you have fewer resources available for value-added activities.


The problem with ‘business as usual’

Finance executives who are still bound to Excel are, for the most part, well aware of spreadsheets’ limitations for planning, budgeting, and forecasting processes.

In a recent study, almost a third of CFOs who still use it cite the sheer length of time involved as the biggest frustration with Excel. Planning staff spend, on average, 14 hours a week preparing ad hoc reports. Around six hours of that time is spent on data preparation and cleansing, including manually inputting information into systems, consolidating different versions of data, and checking for and correcting errors.

‘Lack of business impact’ is a further major Excel frustration. Put simply, it takes so long to produce a budget or forecast using Excel that many assumptions are no longer relevant once the process is complete.

However, despite dissatisfaction with existing processes and outputs, finance leaders can be reluctant to upgrade. There’s often a ‘sunken resources’ reasoning in play here; the sheer time and effort already spent on spreadsheets makes it harder to justify jettisoning them. There is also an assumption that the cost, hassle, and learning curve associated with an upgrade will make it not worth the hassle.

The result? Too many organisations are still grappling with unsuitable tools to support FP&A and are failing to deliver the wider business with the timely, accurate insights it increasingly expects.

The smarter alternative

Armed with Unit4 FP&A, you finally have an effective automated solution that consolidates and centralises data from different sources. Enhanced analysis and dashboarding enable you to view numbers across actuals, plans, and forecasts, drill down to identify root causes and dependencies, and track performance across key strategic drivers.

What’s more, if you have yet to start your journey towards full financial planning and analytics capabilities, customers of Unit4 Financials by Coda can take advantage of the strategic add-on known as FP&A Lite.

Opening the door to self-service analysis, the solution is deliberately pared down to focus on what matters most to finance teams, i.e. being able to drill down and draw workable insights from your financial statements and the data that underpins them. Native integration with your existing Unit4 Financials system means you can be up and running with FP&A Lite in as little as five days.

The result? You finally have the power to give your finance department the capabilities it needs while eliminating the problems associated with siloed spreadsheet-based processes.

Discover more about Unit4 FP&A here. For a no-obligation chat about upgrading your planning and analysis capabilities and to see what’s possible for your business, speak to us today.

Find out more about Unit4 FP&A