Stop Bashing Excel. Start Using It Right.
A battle is raging over the world’s most popular spreadsheet software. In media outlets, online forums, and even over the dinner table, professionals in the intersection of finance and technology have spent the past few weeks arguing the merits of one of the most ubiquitous pieces of software on the planet.
The debate isn’t about Excel’s utility as spreadsheet software, but its ability to drive heavy-duty workflows in the finance department. At many companies, especially those in a high-growth stage, Excel is being stretched beyond the limits of what it was designed to do. Spreadsheets are running core finance processes like expense management, budgeting, forecasting, and more. And they shouldn’t be.
In modern finance operations, Excel is supposed to be used like scratch paper. It’s great for one-off projects and custom-built analysis, but it’s not adequate for running important processes. Mission-critical systems need to be managed by software that is built for the job. That’s the only way finance processes can scale, minimize error, and enable efficiency. Excel was never intended to handle those functions.
Recently, some have misinterpreted that reality to mean that Excel is somehow “over.” But just as overestimating Excel’s ability to handle important processes is wrong, so is calling it outdated. No one’s suggesting that finance professionals should give up Excel entirely. Instead, it’s important to understand exactly what it is—and what it was never designed to do.
How not to use Excel
The present furor started a few weeks ago, when the Wall Street Journal ran a piece called “Stop Using Excel, Finance Chiefs Tell Staffs.” The story profiled a number of businesses that had recently graduated from Excel to purpose-built solutions, purportedly because the spreadsheet software failed to “keep up with the times.” But the use cases for which these teams found Excel to be insufficient were obviously outside the scope of the software’s design. The article’s subjects reported being unable to use spreadsheets as databases, ERPs, and other pieces of infrastructure.
In the comments section and on finance forums around the web, readers were incredulous that Excel’s inadequacy as heavy-duty software should be seen as news—or as an indictment of Excel. “It’s perfectly good for many things,” one commenter wrote. “The fact that it doesn’t work for multi-use, live-access data sourcing is almost too obvious to deserve an article.”
Another put it more bluntly: “In related news, QuickBooks isn’t a very good spreadsheet. My hammer isn’t a very good screwdriver.”
The trouble with spreadsheets
However plain the limitations of Excel may be to some, the article spoke to a real problem. Too many companies, especially growing ones, are using Excel to manage critical finance processes.
It’s easy to see where the trouble starts. Spreadsheets are cheap and easy to set up. Excel in particular is a remarkably versatile piece of software. On a small team with relatively little data to manage, it’s tempting to use spreadsheets to launch ad hoc workflows. But trusting them is almost never a good idea. Here’s why:
- Excel doesn’t scale. Excel is designed to let individual users manipulate flat data, not to enable a number of users to collaborate out of one source of truth. It’s one reason why manually consolidating data from multiple spreadsheets costs companies almost five hours a week, according to Intuit.
- It’s prone to error. Yes, Excel is easy to use. Yes, it is flexible. It’s also highly manual and difficult to debug. 88% of spreadsheets have errors, according to a study from the University of Hawaii. How could you trust a web of dynamic cell references when one mistake could send a whole document haywire? Take a look at 2012’s London Whale saga for the perils of entrusting complex calculations to spreadsheets.
- Data is hard to manage and secure. Spreadsheets have a tendency to proliferate, which makes it impossible to impose central control and ensure that information is accessible. Some data ends up redundant while other data ends up siloed on individual hard drives. Neither is convenient or safe.
- You’ll waste time. Flipping between multiple sources of information incurs switching costs. Having to manually program and monitor every function you want the software to execute is cumbersome.
- It’s not designed for any particular job. The same versatility that makes Excel a trusty sidekick also makes it ill-suited to support any process with regularity. You wouldn’t build a house with a Swiss Army knife; don’t try to build a stable financial process with a tool that isn’t designed for it.
The truth is, most finance teams keep Excel in a central role due to simple inertia. CFOs tell themselves that retraining on different software will be a pain, or that a new solution will disappoint, or that some other obstacle will incur more friction than sticking with the cumbersome and unreliable system being run in Excel.
With the right software, none of this is true. Outgrowing spreadsheet processes is a moment that comes to every company sooner or later, whether they’re prepared for it or not.
How to replace Excel with software you’ll actually use
To move your processes beyond spreadsheets, first assure your employees that no one needs to stop using Excel. This maturation isn’t about going cold turkey; it’s about getting more efficient. If someone wants to continue hand-crafting exotic reports, so be it. What’s important is that you don’t rely on those spreadsheets to generate, store, or manage the data that runs your processes.
Next, find software that will actually catch on. Displacing a beloved tool is never easy, especially when it’s an application that people can resume using secretly, on their own computers. As you shop around to meet your particular needs, aim for software that satisfies these criteria:
- Usability. New solutions have to be user-friendly, with as shallow a learning curve as possible, to keep people from longing for familiar software.
- Smooth implementation. Setting up software properly is critical to getting your team working as comfortably as they were in Excel. Look for reviews that pertain to a company’s customer service and ask for details on their implementation process.
- Demonstrably effective. If users experience an improvement in productivity right away, they’ll be less likely to look for reasons to revert to Excel. Set expectations realistically and make sure to deliver results.
- Can export to Excel. Remember, the purpose of sourcing workflow-specific software is not to cut out Excel, but to use the right tool for the job. Once you have that tool in place, users will appreciate having the ability to export its data in a CSV or XLS format. Preserving that option is critical. Without it, you’ll only get more pushback.
Don’t confuse versatility for power
A few days after that first article, the Wall Street Journal published a follow-up entitled “Finance Pros Say You’ll Have To Pry Excel Out of Their Cold, Dead Hands.” As it turned out, reports of Excel’s death had been greatly exaggerated. “Lots of intelligent and otherwise rational people would sooner clobber you with a bat then let you separate them from Excel,” the article concluded.
I think both stories missed the point. Of course the iconic software is not going away anytime soon. Nor should it: Excel is a completely defensible tool for data analysis, modeling, and much more. But every tool has its intended use cases, and it’s unfair to expect Excel to be able to run stable, reliable financial processes.
In the age of SaaS financial technology, plenty of affordable software is able to fill that role. Companies today have an unprecedented selection of user-friendly, easily-customized solutions they can integrate with existing systems. Smart finance leaders are taking advantage, and letting Excel stick to the work it was designed to do.