more-arw search

Q&A Forum

When is it time to move on from Excel?

We use this excel model at my company that we update every month with new information (actuals, new hire forecasts or other assumptions). We are still small, under 75 employees and no revenue yet. Using Quickbooks on-line, but thinking about Netsuite. We spend 2 to 3 days a month to update the model, and maybe a week before our quarterly board meeting. Although we still have resources to work on this, I am increasingly concerned about the possibility of error, and would also look at a cleaner process around scenario building and comparisons. We are also starting to involve a couple of non finance individuals in the process. Is it worth looking at Host Analytics alsready or should we wait? How much is the license per year for its most simple application? I have seen on this site 3 to 4 months implementation, which looks huge given the non-complexity of our current business model. Anyone has experience and/or recommendation in using such a tool that early in a company's life? And if so does Host Analytics synch with QB and/or Netsuite? Thank you.

Answers

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

I am in a $900mm company and we leverage Excel quite well. Based on your size and the complexity you mention, I think looking at Host Analytics is pre-mature.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Good point, Patrick. Here's a free recorded webinar video titled "3 Reasons to Replace Spreadsheet Budgeting:"

https://www.proformative.com/whitepapers/webinar-recording-3-reasons-replace-spreadsheet-budgeting?pf_source=sj-host-analytics-when

Enjoy!

Best... Sarah

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

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.

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

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.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

When to switch from excel is a question that many debate. Bryan is correct that excel has limitations, like all software. Just know the limitations and you should be fine. For example - Excel is great at modeling. It is not good at being a database of information. But Patrick's experience is also valid. A few items to consider -

-Regardless of what system you use, the time involved to update plan to actuals will not be saved. User error will not be eliminated by either system. Regardless of the system checks.

-Most individuals gravitate to excel as it provides flexibility. If your company is at an early stage of development, you may need that flexibility. But if you are determined to go down the system route, just note - I have seen companies convert as they claim they have 100 unconnected spread sheets and they need error free consistency. Six months later they have a new system. Three months after that they end up with a new system and 100 unconnected spread sheets. People will gravitate back because of the flexibility.

Goodluck.

Roger Whitham
Title: Managing Director
Company: Bassett Bridge Associates
(Managing Director, Bassett Bridge Associates) |

Regis makes very valid points on why organizations gravitate back to Excel. In my experience to get the most out of automated planning/budgeting/forecasting tools an organization needs to fully understand the business drivers so meaningful KPI metrics are defined and reported. Through this then the automated tools will yield meaningful analytical results accepted by a broad management base.

If questions arise, and they will, Excel becomes the perfect tool to explore the data further. And if warranted, the automated tool's reporting can be modified to incorporate findings unearthed through the use of Excel in to the standard reporting.

Its important to understand the benefits and limitations of the tools you deploy. Building an ecosystem that seeks to maximize the benefits while limiting the down side costs is a reasonable goal. And to do this will require commitment and conviction.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

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.

Anonymous
(accounting) |

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 .

Tom Scott
Title: Principal Consultant
Company: Jerts Consulting & Services
(Principal Consultant, Jerts Consulting & Services) |

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.

Tony Ard
Title: Director, Solutions Engineering
Company: Axiom EPM
(Director, Solutions Engineering, Axiom EPM) |

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.

Sean Finneran
Title: Financial Analyst
Company: Sea Island Co
(Financial Analyst, Sea Island Co) |

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.

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

We use Excel. I think one of the main reasons is that everyone knows how to use it. Even when we have another data source, someone will usually say: "Can you dump that into Excel so I can play around with the numbers?" I have not had experience with the other software you reference. We do have our general ledger balances in a Office PivotTable, but that is really just an Excel PivotTable and most people build a PivotTable then export it to Excel.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Mark,

What you are describing is an ad-hoc usage; not corporate systemic usage as part of the official set of books.

I think that is where (corporate acceptance of systemic usage), IMHO, the problem lies.

Dabney Wellford
Title: CFO
Company: Wellford Consulting
(CFO, Wellford Consulting) |

All the above are great answers. If you are in the true start-up stage, you are going to start facing pressure to conserve funding. Netsuite would probably work, but be careful that all of their ratios calculate properly - and be prepared to pay a lot for it. Host is probably a better solution.

3071 views

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.