Has excel reached its limits?
The inefficiencies of self-built spreadsheets
Spreadsheets. The most beloved tool of all those working with numbers in their daily job. Starting in the late nineties, its simplicity and flexibility created an army of devoted business users, making it by far the number one choice to date for number-crunching tasks. And although all kinds of rapid technological advancements are happening around us, spreadsheets are surprisingly enough still present in every single business environment.
Enterprise Resource Planning (“‘ERP”) systems, often introduced by means of a multi million euro implementation project, already replaced many excel-based tasks over the last two decades. And, as a result of the recent transition of databases and ERP systems to cloud environments, there is more corporate data available than ever before. Right at your fingertips.
Yet businesses still struggle to perform simple modelling or planning tasks within these bulky systems. Ask almost any financial department to generate a forecast for the next three years and you will most likely receive a spreadsheet filled with ERP-sourced data.
“As a result of the recent transition of databases and ERP systems to cloud environments, there is more corporate data available than ever before. Right at your fingertips.”
The reason? People still love the flexibility and simplicity. And you can’t even blame them. ERP systems have proven to be a great tools but reached a level of complexity that suppresses any form of flexibility. Every request for a change from a business unit automatically becomes a multi-month IT project with a corresponding business case, budget and approval process. If the facts change one year later, the process has to start all over again. Sounds familiar?
With very few business people actually enjoying these lengthy processes, spreadsheets seem to be the most feasible Do-It-Yourself solution. And I couldn’t agree more. Columns, rows, formulas and an infinite amount of empty cells provide a solid and flexible alternative. Albeit not a reliable one.
80% of all spreadsheets has errors. No matter how skilled you or your team are with spreadsheets, errors are inevitable as a result of the flexibility provided to the user. Imagine for a moment that 80% of every spreadsheet your team delivers contains errors and is therefore not completely waterproof. Considering that most spreadsheets are interlinked or roll-forwards of previous years, you could wonder how reliable the end-result is stemming from a series of spreadsheets.
“Around 80% of spreadsheets has errors. No matter how skilled you are with spreadsheets, errors are inevitable”
Many would argue that company-crucial spreadsheets should be audited by a person other than the creator in order to avoid these errors. However, excel requires logical thinking and every team member develops its own set of logical rules. I have personally tried countless times to perform a deep dive into complex spreadsheet of colleagues with a similar conclusions every single time: part of that logic is in the brain of the creator and unless you have build it yourself, you will rarely understand all ins and outs model.
Another level of complexity? Macros! When talking about macros, I usually refer to “Pandora’s box”. Macros broaden the capabilities of spreadsheets to a great extent although it comes with a “danger” sign of substantial size. Not all employees are familiar with macros in most teams. Many users tend to build further on macro-enabled legacy spreadsheets of which they have no idea what is happening in the background. It results in complex and non-auditable spreadsheets.
The result of crucial planning, modelling and reporting jobs should be auditable, reliable and flexible. Spreadsheets do no longer satisfy these requirements and have reached the limits of their capabilities. Is there an alternative out there? Yes. There is.
At Numlix, we strongly believe that it can be done differently. Connected Planning technology offers a future proof alternative with similar spreadsheet flexibility but greater auditability. It empowers business units to perform modelling and planning tasks without the involvement of IT while remaining the familiar feeling of cell-based logic in excel.
If your company plans to grow, your planning and modelling methodology should grow with it! If you are interested in connected planning, we are happy to demo the potential and flexibility of such technology.