7 Reasons Excel Could Get You Fired

Most CFOs would agree that purpose-driven financial planning requires solutions that enable transparency, custom reporting, and visibility into business value insights. Yet a study by Incisive Software found that nearly one-third of respondents said their organizations use over 10,000 spreadsheets on a regular basis.

The problem? Excel spreadsheets don’t enable any of those things. In fact, there are seven big reasons why Excel could get you fired — or worse yet, sink your business:

1. Iterative reporting processes that rely on spreadsheets can take months to produce results.

That means when eyeballs are on those results, they’re already outdated or irrelevant. Excel is an adequate system for storing static data; however, it’s not made for the in-depth analysis that most companies need today.

Because it’s really difficult to access real-time data using Excel, CFOs don’t know if they’re looking at current statistics or if someone has recently changed a piece of data. And the time it takes for users to manually enter data into the system only exacerbates this problem.

With Excel, data has to be manually compiled into reports to enable the CFO and his financial planning and analysis (FP&A) team to understand what’s happening within the business. This can be time-consuming and cause problems with real-time analysis and decision-making.

2. Excel spreadsheets aren’t good for historical data storage

Excel is an adequate system for storing static data; however, it’s not made for the in-depth analysis that most companies need today.

Excel spreadsheets aren’t designed for storing historical data because users often update them to keep the size of the spreadsheets manageable, causing organizations to lose their historical data. And that can negatively affect data analysis and comparisons, making it nearly impossible to uncover trends and compare data over longer periods of time.

3. Excel spreadsheets aren’t designed for collaboration

When it comes to the finance function, collaboration is critical, especially during the financial close period; however, Excel doesn’t allow CFOs and their finance people to easily work together or share information with others business units.

That’s because Excel spreadsheets aren’t collaboration tools. Typically, people need to work with the data one after the other — everyone waits for the current user to finish with the spreadsheet before the next user can work on the up-to-date version. Too often, FP&A teams are working on multiple outdated spreadsheets because they don’t know someone else has made updates.

4. Excel is manually driven and prone to error

It’s a fact: spreadsheets are prone to errors, particularly if multiple finance team members are working with the data. University of Hawaii professor Ray Panko discovered that, on average, 88% or Excel spreadsheets contain one or more errors.

The reason for that is that employees have to manually enter, remove, and/or rekey data into the spreadsheet. Consequently, CFOs really never know if the formulas are correct or if any data was entered incorrectly, accidentally replaced, or overwritten.

And just one error in a spreadsheet can potentially undermine the accuracy of financial models and reports, putting an organization at extreme operational risk.

5. Spreadsheets are hard to govern

Here’s another fact about Excel: it Isn’t compatible with good data governance. Spreadsheets are prone to human error, lack internal controls, and are easily manipulated (intentionally or accidentally), making them drivers of risk within organizations.

Here’s an example: Harry, an accounting department team member at a large international company, creates an Excel spreadsheet to track the sales department’s financial data and formats the data so that it makes sense to him. However, when Sherry in the sales department takes a look at the Excel file, she can’t figure out what Harry did and therefore makes changes to the Excel spreadsheet or creates a new one of her own.

The fact that any number of employees can create spreadsheets in different formats is not compatible with good data governance because the CFO doesn’t have control over how those individuals format their spreadsheets or what data they put into them. So when CFOs have to close their books, they’re not sure which spreadsheet is accurate.

6. Spreadsheets lack data management and backup capabilities

CFOs can only trust the data if they know it’s up to date, but they don’t know if that’s the case with Excel files. Because spreadsheets aren’t databases, Excel is not robust enough for organizing data, managing projects, or tracking accountability.

Excel often falls short for data management because of poor data quality, inadequate scalability, and lack of proper version control.

Additionally, Excel doesn’t work very well when it comes to backing up data. Although Excel will remind users to save their changes when they’re attempting to exit the system, it won’t remind them if they haven’t created backups of their spreadsheets.

7. Time spent consolidating, modifying, and correcting spreadsheets steals away from time spent on added-value work.

When employees work in Excel spreadsheets, they have to manually enter, re-enter, validate, and correct data, which takes much more time than just scheduling an automated report and viewing the information. This can be very frustrating for workers.

Additionally, users have to manually copy and paste data from one Excel spreadsheet to another, checking every formula individually — a time-consuming process at best. Employees waste valuable time on these repetitive tasks, which quickly takes a toll on their productivity as they are unable to spend time on more value-added work.

Conclusion

If you don’t want Excel to get you fired or wreak havoc with your organization, you should think about implementing cloud-based FP&A tools to help you better manage the data you need to make the best operational, financial, and strategic decisions for your company.