October 26, 2023

Can Excel-based planning still be used in corporate performance management?

What role (if any) should Excel have in the modern finance team? If you and your team are still reliant on Excel for your forecasting, planning, and budgeting you may want to read on…

Recent discussions on the role of Artificial Intelligence (AI) and Machine Learning (ML) in finance may have you scratching your head. You, like an estimated 81% of your industry peers may still heavily rely on Excel as your main tool for planning, forecasting, and budgeting. The truth is, that while many organisations are excited at the prospect of AI & ML and what it can do to improve the FP&A process, most finance teams and Australian businesses still rely on Excel for a large portion of their financial reporting and accounting.

So, what can you expect in the future? It’s hard to imagine a world where Excel is obsolete. With 750 million Excel users worldwide, herein lies one of Excel’s greatest advantages – it’s familiarity. Most finance professionals are proficient and comfortable using the tool. Furthermore, the familiarity of Excel extends well beyond the finance team. Most business units and Boards have come to know and expect Excel-based reports.

Excel’s Integration Across the Business

What we can see here is that Excel has integrated itself across the whole business, and its application across many diverse use cases is also possible. Although it is widely adopted and understood, there are some issues that need to be addressed when it comes to scaling.

Collaboration Challenges

Excel serves a multitude of purposes across various business units, including demand planning, financial reporting, sales projections, and operational planning. Its versatility knows no bounds. However, in today’s collaborative work environment, effective input and cooperation among multiple units are imperative.

A critical drawback of Excel lies in its limited collaborative features and its inability to track changes or provide an audit trail. This poses challenges when working across units or with numerous team members. This deficiency can lead to issues with data integrity, version control, and potential errors. Data may become corrupted or lost, and there could be multiple copies of the same Excel file in the hands of different individuals, making version control an impossibility. Recent research underscores this concern, with 36% of finance professionals highlighting a lack of a trusted, centralised data source as a primary issue in the FP&A process (Source: FP&A Trends, FP&A Scenario Management Demystified, 2023).

Changing Role of Finance Professionals

The role of the finance professional is changing, Excel is not keeping up. In today’s modern world, there are greater expectations for the finance professional to be a business leader. Unfortunately, Excel is not able to service these changing demands. Data storytelling has become an important part of finance’s role. The ability to craft a narrative by leveraging data, which is contextualised and presented to the wider business is what shifts finance from stewards to strategists. With Excel, the story behind the numbers is lost. With greater collaboration and involvement from multiple departments, it is harder to keep track of the context behind the numbers. 

“Excel is great for personal ad-hoc analysis, however when sharing data and collaborating with other people in the business, there should ideally be systems in place. Rather than sharing Excel sheets and managing different versions of the truth.” – Serge Radisic, Minerva Partners

Excel as a Scalability Hurdle

Excel is not a database and cannot be treated as one. For larger companies, or those looking to grow, Excel is not scalable. It is not capable of handling the increasing amount of data that modern organisations are recording or reporting on. As data collection increases, Excel’s ability decreases. It has many limitations when it comes to storing, visualising and analysing data.

Overcoming Resistance to Change

But my staff are resistant to change? If your staff are resistant to change, or you are worried about a skills gap, there are solutions available that offer native Excel integrations. Jedox, an enterprise performance management software, offers users an Excel Add-in. This means that your planners can continue to use familiar interfaces and leverage their existing knowledge of Excel. A leading enterprise performance management (EPM) tool such as this, gives all the great benefits of Excel, while mitigating the risk and limitations of data management, secure user access and collaboration.

Enhancing Data Management with a dedicated Enterprise Performance Management (EPM) tool

How exactly can you mitigate the risks and limitations of data management? Jedox is a web-based tool and was built with collaboration front of mind. Users can transform-limited, manual Excel spreadsheets into robust, flexible, and secure reports. Jedox transforms your spreadsheets into an enterprise-wide platform. You can connect your Excel files to the in-memory database. By connecting all your enterprise data sources you can use intelligent data governance, workflows, and approvals for standardised collaboration. It provides teams with maximum flexibility in planning and data analysis, and simplified collaboration. Furthermore, for companies that are planning on scaling, Jedox gives them the power to easily and quickly view historical comparisons, variance analysis, all the while examining and testing these large queries in a fast and stable environment. Jedox provides FP&A managers with a single source of truth. Planners will have access to a unified data foundation, which contains automatic uploads of current and historical data from diverse source systems. Lastly, its web-based analytics and dashboards also supports planners in their data storytelling and sharing the story behind the numbers to the wider business.

What’s next?

If Excel is still an important part of your financial forecasting process, but you would like more efficiency, accuracy, and security in your plans, get in contact with Minerva today. Send us an email at info@minerva.com.au, or call us at 1300 MINERVA, and we can arrange a demonstration of Jedox. Our initial call would aim to uncover what you would like to achieve in the next 6-months.

Visit: www.minerva.com.au | Follow us: linkedin.com/company/minervapartners


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