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Microsoft Excel enjoys global superiority as the go to electronic spreadsheet for financial management and data collation. This status is well deserved as the business application has given in excess of 30 years of admirable and loyal service in helping companies track, forecast, analyse, and manipulate a wide range of business data.

Despite its excellent run of success, the limitations of the software programme in supporting connected planning is well known, especially among financial modellers who more than any category of professional users push Excel to its limits. It is within this area of business, the financial modelling space, that Excel is experiencing its biggest challenge to date. Intensive users can find themselves engaged in the process of writing their own macros to solve problems rather than performing analysis.

While some businesses will never grow and expand to the degree that they outgrow Excel, others will indeed need an alternative solution.

Here are ten signs your connected business planning has outgrown Excel.

One: You’re filled with a feeling of dread two months before budget time rolls around and you start engaging yourself with a lot of “pressing tasks” that “must” get done first.

Two: A huge amounted of time is spent working on numbers while organisational control declines almost on a daily basis, and you feel as if your bookkeeping is in control rather than the other way around.

Three: You do not have the financial information needed to do up the company’s quarterly or annual Profit and Loss statement to file the taxes, or professional financial statements needed, such as balance sheet and cash flow statements, to secure capital to facilitate the company’s growth.

Four: Half of your sales forecast mysteriously disappears because someone accidentally overwrites a crucial formula with a number, sending finance into a tailspin.

Five: Someone adjusted a vital linked spreadsheet or saved it in a different excel, leaving you staring at a spreadsheet with all cells displaying #.

Six: A simple request for a new insight leaves you viewing a budget from every angle. It should not be difficult to obtain or produce your financial reports in a short time (30 mins). A request from your CEO or manager for a new insight or even the task of reworking a budget should not cause the kind of hassle one has to endure using Excel. Recutting data and making new charts before being able to get to the actual information is too much as compared to being able to generate new error free custom reports with just a few clicks when using a budgeting software. Even the greatest of an Excel expert can make one little mistake while trying to do a quick turnaround on a report.

Seven: You find that the company is a victim of fraud, embezzlement or employee theft. While Excel is an amazing software for carrying out many data and financial processes, its porosity makes it a fraudster’s best friend. The ease with which information can be inputted and exported speaks to a lack of security. It is far too easy to duplicate spreadsheets and add and delete columns. Not that it’s entirely an Excel issue. Accountability and managerial oversight are also root causes, but at the same time modern accounting systems such as Anaplan make a better option as their activity tracking feature provides increased visibility. If the people who have access to your current budgeting system can make changes that go unnoticed, then you have a problem.

Eight: The growth of your business is causing your current budgeting system to crack. An increasing number of businesses have found themselves in a bothersome spot where the company is growing but processes are not going as smoothly as they are accustomed to. These companies find themselves struggling under their own weight and complexity. Many have identified the probable cause to be the inability of their business process and business software infrastructure to support the business’ current requirements and future growth plans.

Nine: The company finds itself with a large budgeting team. Having to assign a number of personnel to manage the organisation’s budgeting may be the first sign that it’s time to consider upgrading to a dedicated budgeting software. A team of three high level executives handling budgeting indicates that possibly Excel can manage the pressure. In such a case, the document does not have too many moving parts so it can be sealed off to prevent individuals from making structural changes to their copies. It also means there’s no need for too many different input.

When the size of the team leaves you with half-dozen or more moving parts, problems abound. Individuals will need different inputs, causing multiple rounds of changes to the document with the whole piece missing everyone’s attention before its finalised. Your best solution is connected planning budgeting software that will allow for the import of historical data from Excel and save the business from dedicating a lot of time and human resources to sort through and correct errors.

Ten: You are frequently blindsided by shortfalls in expected revenue. If your executive team is often blindsided by shortfalls in expected revenue then that’s a clear sign your need to move away from Excel and get a dedicated budgeting software. Large unexpected margin fluctuations across projects and fluctuating billable utilisation are also key signs. Senior management not being able to identify the issue until it is too late to fix it seals the deal.

This tends to happen when a change in one department is not effectively communicated to the stakeholders of other departments that may potentially be affected. For example, your department may decide to, at the request of a very pleased customer, go ahead and extend the time for deliverables for another two weeks, but you failed to communicate same to Sales, Project Management, Procurement, Support and Admin Invoicing. Whatever commitments these departments had to other customers and whatever they needed to sign off on for this customer has now been delayed. Such occurrences negatively affect the departments involved, the customers, and the company at large.

The bottom line

Excel is a two-dimensional software with significant shortcomings in scalability and flexibility, constraints which defeats effective integrated planning and can be costly for a growing business.

Solutions such as those which provide for connected planning eliminate spreadsheet chaos. The finance team can easily build and maintain one budgeting model that is used across the various dimensions of the organisation and profit and loss calculations will only need to be entered once. The organisation would then have a single profit and loss account which can be viewed individually for any of its departments or on a consolidated basis and for any version. The updating of a single Excel formula is all it takes to amend the calculations in the entire model, and all changes are reflected throughout the model in real time.

As the company expands and new dimensions need to be added, all that’s required is for the name to be typed in the list. This eliminates having to manually replicate and link the inputs or to adjust the consolidation and the outputs.

About the author

Rajeev Mitroo is the ANZ Managing Director of Anaplan, a cloud planning platform. 

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Rajeev Mitroo

Rajeev Mitroo

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