Spreadsheets are incredible canvases for financial modeling. For finance teams facing a never-ending barrage of “what-if” questions, they offer a familiar and low cost way to get answers. These qualities are why spreadsheets have survived despite the dozens of FP&A tools on the market today – why fix what isn’t broken? That’s how it’s always been done, after all.
But spreadsheets on their own are indeed broken – or at the very least, they add to the likelihood that something will eventually break. Try as we might to ignore their shortcomings, without fail we’re confronted with the limitations of spreadsheets on a regular basis. And at a certain point, the burden of managing and maintaining spreadsheets outweighs the mild benefits of sticking with the status quo.
Here are a few signs that it’s time to move away from traditional spreadsheets:
You need answers on the fly
Finance leaders are the closest thing most companies have to a crystal ball, and that means you need to provide answers to hard questions about as quickly as a Magic 8 Ball serves up wisdom.
Spreadsheets are a hindrance to gathering speedy insights because the second you hit "save," the spreadsheet is outdated. Spreadsheets are static, and in order for any real analysis to happen, you first have to make sure the data is current and correct. With lots of questions come lots of scenarios, meaning you’re juggling multiple spreadsheets that can fall out of sync faster than you can say, “Outlook is not so good.”
Your team needs better visibility
Department leaders and budget owners need visibility into their finances in order to make good decisions for your business. And often, there’s only one of you and there are several of them.
Of course it would be easy to just share the entire model with everyone, but it’s likely that model contains sensitive information that isn’t appropriate for everyone’s eyeballs. That leaves you playing the role of overworked and underappreciated spreadsheet jockey. You make copies of bits and pieces of the model, refreshing data and manually delivering pertinent information to various stakeholders over, and over and over again.
Board meetings have become a game of ‘spot the difference’
If you’ve never had the pleasure of being mid-presentation when a board member speaks up and says, “Wait, I think there’s an error on this slide,” well, you’re blessed. There’s nothing more disheartening than watching a room full of board members and executives take out their laptops to check your math.
You know that the moment one person spots an error in your presentation, your credibility is crushed. And so to avoid this horrifying scenario, you spend hours tweaking charts, checking data, fixing formulas and formatting tables. Copy, paste, copy, paste… for what seems like eternity.
If you’re spending more than a few hours on your board deck because you don’t trust your data (and not because you just love making slides), it’s likely time to consider some other, more reliable options.
Why companies continue to bother with spreadsheets
So if spreadsheets are so risky and awful, why do finance teams continue to use them? For many finance teams, switching to an alternative solution requires making unbearable compromises on speed and flexibility that most teams couldn’t bear. Many FP&A tools fall into two categories:
Fast and inflexible: A streamlined system that enables integration and rapid visualization, but isn’t as flexible as a spreadsheet and can’t be customized.
Flexible and slow: Switching to a highly flexible, powerful system requires learning new modeling syntax or hiring experts, making it much harder for finance to get its hands dirty and slowing down progress.
And with that, we’ve come full circle. Spreadsheets aren’t going anywhere because at the end of the day, we’re so used to the pain of spreadsheets that we convince ourselves they’re worth keeping for their speed and flexibility (somehow we’ve blocked out that night where the budget we worked on for 24 hours froze, crashed and couldn’t be recovered – funny how that happens).
But there’s another way: make spreadsheets work better. FP&A solutions that enhance your existing spreadsheets’ performance are the way of the future. Find an FP&A tool (and they do exist) that doesn’t force you to choose between speed and flexibility and doesn’t require you to reinvent the wheel.
We like spreadsheets. But just because that’s how it’s always been done, doesn’t mean there isn’t a better way. It’s time to find a happy medium.