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Q&A Forum

BI Tools vs Excel For FP&A


"Can you differentiate between the importance of a formal BI tool versus using Excel files for FP&A depending on the size of the organization? I'm currently using an Excel tool that works OK as we are starting literally from scratch, but at what point would an Excel approach become a hindrance?"

This question was asked at a recent webinar, now available on-demand:

"Designing Great FP&A Processes"

Please add your thoughts about it below. Thanks!


Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

I am an advocate of using Excel as the starting point before moving to a more sophisticated BI tool. It is similar to learning math before you use a calculator. Building the analysis in Excel helps you get a solid understanding of how the pieces come together, the potential pitfalls and beta errors that could arise.. I would move out of Excel once you are comfortable with that understanding and feel that you can look at the results and know when things don't appear correct.

Marc Stone
Title: Owner
Company: Stone Consulting
(Owner, Stone Consulting) |

Completely agree. When migrating to BI tools, I have always used excel as that "proof of concept" to check that you understand the modelling, the maths, the data source integrity and intricacies before building in a BI tool. Excel is not a controlled environment. Once you see it creak and it stops you developing and scaling further or the engine room and data capture behind it becomes an industry, it's time to unravel the spaghetti and develop a BI environment.

However, it's whatever fits. My advice is never over engineer. You'll lose the audience.

Roger Fried
Title: Senior Data Scientist
Company: Teradata Aster Strategy
(Senior Data Scientist, Teradata Aster Strategy ) |

Excel can be perfectly fine for FP&A for many different organizations. The problem is that Excel is really a development environment more than a "tool." You can develop really sloppy processes that are error prone and hard to translate into other tools when the right time comes. Or, you can (based on experience with BI tools, data hygiene, and data management) built solid processes that work well within Excel and will transfer easily to other tools when the time comes to mature.

Finance people with some degree of data management experience should really take the lead in defining the style and structure of key Excel-based processes. The normal Finance/Excel approach is to let a thousand different flowers bloom and let every analyst do their own thing. This creative anarchy can work for many less critical tasks, but for the critical processes a deliberate, planned, and controlled process is needed whether you are working with Excel, Cognos, Hyperion, or R.

Topic Expert
Doug Thompson
Title: Director of Revenue
Company: Castlight Health
(Director of Revenue, Castlight Health) |

The advantage of a BI tool is that it is directly plugged into the underlying financial database (ERP). Anyone running it gets the single source of truth and most up-to-date data. With Excel the data is untethered, it can be overwritten, and may not be the latest version or you end up with multiple versions.

A BI tool automatically pulls in the latest month's data, and makes it easier to do new comparisons of whatever combinations of periods you want. Also makes it easy to run different departmental (or other) groupings/hierarchies at different levels at the click of a button. Agree with above point that when data capture becomes an "industry" that is a good time to switch.

Michael Johnson
Title: CFO
Company: Network Services Company
(CFO, Network Services Company) |

Excel is very limited when dealing with complex business planning models. We've found that when Excel is forced to duty in these environments, the models become inflexible, error prone and unreliable. We also struggled using Excel for meaningful forecasting. As such, we moved to Adaptive Planning, a third-party FP&A tool for financial reporting, planning, forecasting and analysis. Our cycle time for developing the current year budget was measurably reduced, we were able to build scenarios centered around initiatives, we migrated to web-based financial reporting, successfully implemented rolling forecasts and are building web-based executive dashboards. The solution is extremely cost effective and doesn't require extensive ERP integration. I've long been an avid user and proponent of Excel but believe that it's not effective for budgeting and forecasting.

Scott Donald
Title: Grower Represenative
Company: Pearl Crop, Inc.
LinkedIn Profile
(Grower Represenative, Pearl Crop, Inc.) |

I find Excel to be helpful for FP&A personnel, but not the best choice for dashboard reporting. For the folks in FP&A, many times we need to pull several data points (not always centralized) and do some modeling or consolidation, Excel is perfect for this approach. When you want reporting to be self-service, Excel can be problematic.

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