more-arw search

Q&A Forum

Should Excel Be Expelled?

 

"Can we totally eliminate excel as a financial analyst tool?"

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

"How ‘Modern Modelers’ Will Take Over the World of Financial Analysis"

Please add your thoughts about it below. Thanks!

Answers

Hyoun Park
Title: Principal Research Analyst - Performance..
Company: Blue Hill Research
(Principal Research Analyst - Performance Management, Blue Hill Research) |

I don't think it's fully practical to eliminate Excel as a financial analyst tool. The most important thing about Excel is to shift the relevant logic to more scalable applications if it ends up being reusable. Think of Excel as RAM while more robust enterprise apps and business intelligence tools are like ROM. RAM gets wiped out and replaced all the time because that's what it's good for. ROM always treats the same problems the same way.

But there are much better ways to synchronize Excel with other applications now than there were just a few months ago. 2015 has been the year of strong Excel integrations with performance management.

Mike Haile
Title: Founder
Company: Haile Consulting Solutions
(Founder, Haile Consulting Solutions) |

I agree with Richard and Hyoun. The level of usage of excel in an organization is a good indicator as to possible issues with the ERP/business systems. I don't think its possible to completely stop using the tool because of its ease of use, but it should just be used to supplement the other systems in the organization.

Michael Stimson
Title: Director
Company: GIDE International Limited
(Director , GIDE International Limited) |

There are alternatives to spreadsheets.

It is still possible to use spreadsheets, but they are a single user tool, they do not allow collaborative working and they do not perform with large quantities of data.

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

Using Excel as the "Kleenex" in the spreadsheet world: Before we had personal computers, could we have eliminated paper, pencil and a calculator?

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

Mark,

We still use paper, pencil and calculators, we just no longer use an abacus and manual calculator's (I remember going to my Dad's office as a kid and saw them...)

But that being said, there are/should be better tools to get done what needs to be done.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

I will probably be stoned for my comments, however all of our programs export to excel and people with advanced excel knowledge can manipulate mass amounts of data quickly in excel. Are there better solutions available, of course. For my needs, Excel still does the trick. It's cost effective and gets answers to data quickly. We have replaced Excel with out BI reporting for a lot of reports, but still rely on Excel for a lot as well.... and yes I still have a 10-key touch on my desk. My accounting specialist laughs when he hears me using it.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

In a vacuum, I don't think the question is meaningful in and of itself, because Excel (and its ilk) are many things. Each functionality can be replaced with something better, but it remains a fantastic paradigm for a financial analysis, presentation, and information management sandbox.

One way to look at it is the positive and negative uses. Mistakes I have seen....
-System of record for "x".
-Operational anything, especially database.
-Shared sandbox (revision tracking is horrible).

Fantastic uses:
-Back of envelope calcs (anything that I would have done on my HP12c)
-Ad-Hoc analysis (from pivot tables to lookups)
-Functional / sharable models (the ability to communicate business logic; remember its origins as Visicalc...a way of showing your work).
-Inter-system data porting (the cloud isn't a unified system by a longshot)
-Perhaps most importantly: Commonly understood programming language. It is hard to understate the gravity of a lingua franca. I have many times been able to communicate the importance of key terms in a contract by translating it into Excel, and then showing the impact of different outcomes driven by apparently minor language changes. Similarly, one of my biggest projects at (large tech company) was translating a bunch of 400 page-each agreements into 1 page Excel logic. Ideas that were uncommunicatable were suddenly understood by 100 people in different roles, different departments, etc.

To the (assumed) point of the webinar: yes, for point applications. To Mike's and others points, if the system of record comes with a tool, chances are you'll have way more success with that tool.

Topic Expert
Alan Hart
Title: Consultant
Company: Pacific Shine Group
(Consultant, Pacific Shine Group) |

The reality is that Excel is the most common software tool in the workplace, and not just in finance, accounting or any other areas that require maintaining calculations or data analysis.

Excel (and all popular spreadsheets in the past 35 years) is fundamentally an incredible tool with capabilities and functionality unmatched by any other software application. Unfortunately, we have become dependent on it for far more applications than we should. Applications such as planning, budgeting & forecasting, consolidation of financial statements and other critical financial processes should not be dependent on and performed with Excel (or any other spreadsheet). The risks of errors, omissions, broken links and the significant effort required to update complex models is far too great, especially given the fact that the practice of change management is nearly non-existent when it comes to use of spreadsheets in corporate finance.

However, financial analysis can be performed in Excel as long as the data driving the analysis is produced elsewhere (e.g., a dedicated planning and budgeting software solution, your ERP software, etc.). In this case, Excel should be used for its impressive formatting and display capabilities and ability to link it to data sources. Ideally in complex analysis, no actual formulas, links and other computational programming should be maintained in the Excel workbooks. Locking down worksheets, requiring access passwords and other security measures will reduce the risk of data manipulation.

When risk to accuracy and completeness of data in Excel workbooks or worksheets is greatly reduced, finance organizations can enjoy repetitive and consistent display of data in a familiar format and appearance, making the data simpler to understand and driving decisions quicker and with more confidence. For these reasons, Excel should remain an important tool in finance, as long as we understand its risks and limitations.

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

Alan -

You hit that proverbial nail right dead center on its head; "Unfortunately, we have become dependent on it for far more applications than we should."

That is the crux of the issue. While others have stated that the cost is minimal, performance and range of flexibility great, using the wrong product, no matter how good it is, is ultimately a recipe for disaster.

You also summed up Excel nicely, "...Excel should remain an important tool in finance, as long as we understand its risks and limitations."

We as the drivers of finance should be pushing the marketplace to develop products that deliver the flexibility of Excel with the reliability and inter-connectivity of the generic products that are driving the data stores we all use.

Dmitry Faybysh
Title: CEO
Company: Bankcard Analytics
(CEO, Bankcard Analytics) |

Excel is a great tool if its used the right way. Since most accountants and analyst spend most of their day using Excel, than why try to fight it. Instead set-up a platform where analysts use excel as an interface to the actual data or data models. Than the data is always normalized and you can refresh it as needed. Microsoft has come a long with being able to leverage excel with a BI platform. You can now even able to create a dashboard with all kinds of dynamic charts, tables, graphs and even bing maps.

Elliott Lester
Title: VP IT
Company: Reddyice
(VP IT, Reddyice) |

Excel is a valuable tool. I believe there are seven issues with Excel:

1. A lot of time is wasted importing/exporting/building power pivot tables-the “excel way”
2. Where the data comes from is often lost in complex Excel spreadsheets as it has been manipulated so many times.
3. Data is often disconnected from the database once it is imported and changes/mistakes/issues are rarely observed.
4. Large datasets are not well reflected in Excel.
5. Excel does not do well with real-time data—it is a historical data tool at best.
6. The “excel way” requires expertise in excel rather than in data analytics resulting in a tunneled frame of reference.
7. Excel spreadsheets are oftentimes tied to individual employees--if these employees are transitioned in any manner--these spreadsheets somehow are lost or forgotten or can not be duplicated or utilized.

The issues can easily be overcome with modern cloud based tools that allow for all data-including real-time- to be automatically integrated into the toolset so that instead of spending time pushing data, we can spend time analyzing it. Excel jockey’s—and we all know them-can manipulate data like a Jedi Knight manipulates the Force. But modern modelers require statistical and knowledge of
best practice data modelling techniques and trends, such as designing, building and running heterogeneous databases –all to allow executives to manage rather than react.

With a best practice cloud based tool—data can be presented in Excel but the analysis is created thru a modelers eyes rather than a data pusher. And with the right cloud tool, the expertise in the modeling is in the tool
structure and methods so that your Excel Jockey’s become tool experts immediately with little ramp uptime allowing them to begin to focus on the data rather than the pushing. And executives don't have to wait for excel jockey's to manipulate--they can view real-time data on a dashboards/excel.

Finally, Modern Modelers should have operations experience, skills and frame of reference and if you are pushing data in and out of excel there is little time for one to obtain that or extract it from those that do. A modern cloud based tool set allows this to occur thru its processes and configuration. Just sayin…

Anonymous
(Accounting Manager) |

At our organization we didn’t look at Excel as an evil tool, just something that needed to be under control. That’s why we went with a robust Enterprise Performance Management software platform (Axiom EPM) that allows us to leverage the flexibility of Excel but with locked down security, integrated workflow, advanced visualization and dashboards etc. You don’t have to expel Excel, you can have the best of both worlds.

Randall Bolten
Title: CEO
Company: Lucidity
LinkedIn Profile
(CEO, Lucidity) |

The predictions of Excel’s imminent death have been made for the last, oh, 25 years, and yet today Excel is very much alive. Once you get past the basic accounting and transaction processing – where almost every enterprise of any size uses accounting software – the overwhelming majority of financial applications are built in Excel. So, unless we presume that the overwhelming majority of finance managers are stupid and/or lazy, that tells me that Excel is the software tool of preference because it is “better” than the alternatives. Remember that the meaning of “better” is driven by some combination of…

-- functionality
-- cost
-- complexity and time to implement
-- ease of use
-- ease of learning how to use it
-- reliability
-- flexibility
-- user familiarity (i.e., no need to be trained on a new piece of software)
-- security and control
-- interoperability with accounting, sales forecasting, and other systems

Excel’s position as the dominant reporting, modeling, and planning, budgeting and forecasting software will drop away when decision makers no longer see it as the “best” alternative along all of the above dimensions.

I see the comments above by Christie, Keith, Alan, and Anonymous as more focused and specific echoes of these sentiments.

Ron Davis
Title: HRIS Analyst
Company: NRDC
(HRIS Analyst, NRDC) |

I agree with Mr Bolten

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

Short answer.... NO. Excel is just too flexible and easy to program. That doesn't make computer programmers happy however. Additionally, it would require millions of accountants to be re-trained in another application everywhere in the world. The questions is actually quite funny.

Chris Holtzer
Title: Senior Manager - Strategic Analysis
Company: Sargento
(Senior Manager - Strategic Analysis, Sargento) |

This question comes up from time to time. What is the proposed replacement? BI's are just spreadsheets (Excel) someone else programmed, checked for errors, and wants to sell you. Keep in mind they likely did so with no working knowledge of your business, industry, customers, product...etc. Yes, they polished the interface, but that can be done in Excel. It's just normally a waste of time. (Why are we in such a hurry to now pay for it?) If the polished interface is the goal, there are lots of solutions out there but none of them replace Excel, they replace a few of the things you were doing with Excel.

They aren't selling you anything you don't already have access to, they are selling you their time and energy to program. It may be a great value or a bill of goods, but it isn't a replacement for your ability to think, and apply that thinking and modeling in a presentable, defensible manor, in a universal language, everyone understands.

Excel is like the John Deere of business software. You don't use it because nothing else can get the job done. You use it because, well, they've been doing it for a long time, it works, and you know they'll be doing long after we're all dead. If it's not broke, why fix it?

Excel is the single most used business software, period. For many reason, I suspect, cost and flexibility being number one and two (you pick the order).

Ern Miller
Title: Co-CEO
Company: Miller Small Business Solutions
(Co-CEO, Miller Small Business Solutions) |

Converting Excel to more efficient processes is the bread and butter of my company.

The easiest way is to move everything to MS Access and if the processing demand is greater than Access can handle, we move everything MS SQL.

6523 views
Topics
Products and Companies

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.