When is it time to move on from Excel?

I love you, Patrick :), but respectfully suggest that there are other considerations at hand. I have been a finance exec at companies ranging from raw startups to deca-billion dollar Fortune 100 behemoths, and we all used Excel. However, that did not mean Excel was the optimal solution in most cases.

I love Excel and use it all the time. However, I find it is best for ad hoc analysis. Any time you need sharable, scalable access to something like complex, company-wide planning models, I find Excel has severe shortcomings.

First off, errors. Don't worry, they're in there. If the workbook is at all complex, there are, statistically speaking, errors. Probably many. If there aren't, congrats; you're an outlier.

Second, access and sharing. This to me is much bigger than the first. If you are building models and want them to go beyond a single analyst, you need sharing, version control, access control, model archiving and more. Excel does not give you those. You need something that's purpose built for planning, and Excel is not.

Third, purpose built for planning. Host is one of many reputable planning systems that are made solely for corporate budgeting, forecasting and "planning": https://www.proformative.com/budgeting-planning-forecasting-system-reviews. The key is that these systems are built with corporate environments in mind. They come with pre-built models. They automatically/programmatically do things like 4-4-5 spreads, % growth over time, headcount planning, advanced reporting and analytics and much more. Excel has none of that and building it is painstaking and you build it again and again.

Fourth, integration. The purpose-built planning systems are built to be integrated into other systems. Thus, you can pull in actuals monthly from an ERP system, you can integrate treasury systems to pull borrowing rates, you can pull from HR systems for headcount plans, etc.. You have to do the connecting work, but the systems are made to be connected and this makes integration far easier and more scalable.

Finally, put it all together. Having a purpose-built planning system is incredibly powerful. Not because it replaces Excel, but because it's made for and makes possible scalable, collaborative planning across your company. There's so much more you can do that you will find yourself quickly going beyond "Excel model maintenance" mode and into much deeper and more effective analysis of the things that drive your planning and, ultimately, your company's outcomes.

So, while Excel is powerful, there is no doubt you are missing a lot. You should at least see what's out there if you have any doubts, and make the decision based on your needs and what you see available in the marketplace.

Dear Anonymous - generally agree with Bryan's points above. Curious about what your company does since you mention that you have 75 employees and no revenue. It seems that at 75 employees there would be some revenue, though I understand your company might have other sources of funding.

The major issue I have with organizations tied to Excel spreadsheets are three-fold:

1. The plethora of spreadsheets, when or what is critical mass?
2. Excel is not always the right vehicle to use to retrieve reliable data
3. Most are not well documented, causing issues ranging from errors in interpretation to re-connecting them to other programs should they become disconnected.

Thank you everyone for your very insightful comments. This is a great platform and I really appreciate the time you spent to answer my question. It will hopefully help others as well .

Another option to consider is to implement processes and systems around the spreadsheets you rely on.

A rigorous process for managing critical spreadsheets that includes identification, best-practice standards, peer review, version control, access control and possibly 3rd party audit would address most of your concerns.

Dedicated systems are available (ClusterSeven, Incisive, Cimcon, Lyquidity, and others) that provide a framework for managing these types of processes. And there are inexpensive cloud-based and desktop-install type options from some vendors.

Eliminating spreadsheets is often one of the goals of a systems implementation, but as Regis points out and most of us would agree, they are never completely eliminated. Therefore, it makes sense to have processes in place to effectively manage them.

It's great that you're considering moving away from stand-alone spreadsheets toward a collaborative EPM solution. While Excel is certainly the undisputed king for financial modeling, planning and reporting, as Bryan does a great job of outlining, it falls woefully short in managing shared planning processes such as budgeting and forecasting.

The debate to adopt or eliminate Excel, however, feels simplistic: corporations want the familiarity and power of the spreadsheet without its many inherent weaknesses. The reality is that it’s not a choice for or against Excel. It’s possible to have your cake and eat it too – leveraging all the things that have made Excel the most widely used tool by finance teams globally (modeling capability, ease of use etc.) while also having the trusted data storage and security, scalability, workflow and multi-dimensional reporting many organizations require.

I would also add that you should include BPM Partners in your research. They're an independent research and advisory firm that publishes an annual report of business performance management trends and reviews of the major vendors. One interesting finding from the BPM survey was that 77% of companies that have made an investment in EPM technology still supplement it with spreadsheets. The idea that Excel gets replaced when companies invest in on-premise or cloud-based EPM solutions just isn’t true. The familiarity, the syntax, the power of Excel has a following now exceeding 750 million users around the world (according to Microsoft). Vendors who don’t embrace Excel natively in their technology stack are doing a disservice to the very communities they pledge to serve. That said the very same study found that organizations that use stand-alone spreadsheets for budgeting are nearly five times more likely to take five months or more to complete a budget cycle versus organizations that have invested in a purpose-built application for planning. The manual nature of stand-alone spreadsheets definitely consumes time and resources.

So while it may be true that your size will prevent you from adopting a larger enterprise solution, that doesn't mean you should be eternally confined to Excel Hell. By using a purpose built planning application you can stop manually maintaining and consolidating spreadsheets and focus on the goals and strategies that will deliver the performance you're looking for.

I would recommend moving to Host immediately if you have grown to that level. Excel is a great tool but completely unrealistic when coordinating a complete planning process with multiple scenarios and models. We have found that Host has been very reasonably priced for what we get. We have roughly 30 users both internally and externally to Finance. Using the application security we can control all of the access to any piece of the process depending on the user.

While our Excel usage will never completely go away (never say never), it is hard to see how we would use it today to try and budget or forecast. We have numerous models that are driven with both internal and external factors. We utilize statistical and unit accounts within the application, to drive various results and test potential outcomes. Using a CPM tool like Host gives us a great deal of confidence that there is not a buried formula issue. It also easily controls workflow and version control. That has been invaluable.

All in all, I don't think we would look back. Just our two cents.