Excel is cheap, widely available, and contains innumerable calculations that make it useful for budgeting and planning. Yet, while Excel is certainly easier than performing calculations manually, it provides a number of limitations that make it inefficient, inaccurate, and altogether challenging to use for critical corporate processes.
Excel is unfortunately limited to a two-dimensional framework that stifles visibility. When businesses attempt to generate financial models and create a variety of “what-if” scenarios, not only is the process time-consuming, but the multi-dimensional model is difficult to envision, resulting in more oversights and errors. As most people have encountered, when you stare at a set of numbers for long enough, they eventually become jumbled, and tackling financial modeling on a spreadsheet makes it difficult to envision the end result.
Prone to Error
Due to the exhausting manual data entry, Excel is very prone to error.
In addition to improving efficiency, another core aim of technology is to reduce human error. Excel is unfortunately particularly vulnerable to human error, as it relies on manual data entry to create budgets and plans. If any part of the data is entered incorrectly, it may throw off the entire plan, which could have a devastating impact on the company. Just ask J.P. Morgan. After a single miscalculation in Excel, the bank lost several billion dollars, all of which could have been avoided with a more accurate system.
Tedious and Inefficient
Excel is tedious and disorganized, resulting in more work for financial planners.
As technology advances, humans find faster and easier ways of accomplishing the same task. There was a time when budgets were prepared manually, and Excel had yet to be invented. Excel revolutionized budgeting and planning, as well as countless other tasks, providing a new technology to streamline the work of finance departments. Yet, the world is more reliant on efficiency than ever before, and nowadays, Excel is proving to be needlessly exhausting for corporate planning. Now, the marketplace is dominated with fast-growing companies that are in a constant state of change, and using Excel spreadsheets and email to manage budget cycles takes more time than many fast-paced businesses can spare.
What’s the Solution?
While Excel may be sufficient for smaller companies, large or rapidly growing companies need a more efficient and accurate way of planning corporate budgets. Cloud-based enterprise performance management (EPM) software provides an integrated budgeting solution that can eliminate a lot of the shortcomings of Excel. By automating a number of financial tasks, it can significantly reduce the potential for human error.
It’s also equipped with advanced modeling capabilities that can provide a multi-dimensional view of financial models, providing businesses with the enhanced visibility they need. With all aspects of the budget cycle integrated into the software, businesses can drastically speed up their modeling approach, while generating more accurate forecasts.
There was a time when Excel was the latest and greatest budgeting and planning technology. However, as the marketplace continues to evolve, modern businesses need to adapt to emerging technologies in order to provide their company with the greatest possible advantage. Cloud-based EPM software is equipped with all of the budgeting and forecasting tools that modern businesses need to conquer their budget cycle swiftly, while enhancing the accuracy of their numbers.
Read this white paper to learn more about the ways Excel is hindering your budget cycle.