Advice and Information for Finance Professionals

Top 6 Challenges of Financial Analysis with Excel

Guest Author

By Bobby Ellis, Global Director - EPM, Datavail

There’s no question: Microsoft Excel has helped a lot of organizations get off the ground. But at a certain level of growth, spreadsheet software is going to keep your organization grounded. A better solution for financial planning and analytics (FP&A) — including budgeting, planning and forecasting — is to migrate to a more shareable, scalable, and trackable finance solution like enterprise performance management (EPM) in the cloud.

Yet, finance professionals are reluctant to give up their beloved spreadsheets. In fact, a recent article in The Wall Street Journal prompted such debate that the reporter followed it up the next day with a story headlined, “Finance Pros Say You’ll Have to Pry Excel Out of Their Cold, Dead Hands.”

But there’s good news for both the CFOs who want to ditch Excel and the financial analysts who rely on it. You can have both, without sacrificing any of the flexibility of spreadsheets or the security, scalability and shareability of the cloud. Read on to learn more.

A Cure for Excel Nightmares

Everyone has a favorite Excel nightmare. From claims that "Excel is broken" when the numbers don't add up correctly, to employees drawing growth charts and then massaging the numbers to generate the curve they want, it's possible for Excel to get the facts horribly wrong depending on the skill level of the user.

Excel nightmares multiply as users and locations multiply. Once you reach a certain level of complexity, it becomes impossible to reconcile the problems in time to meet your monthly, quarterly or yearly deadlines. Among the problems that commonly result:

  1. Inability to forecast accurately more than three months out. This means you can do cash flow well enough to get by, but good luck trying to project financial results for new markets or products.
  2. The bomb that shows up at the worst possible time. Finance spreadsheets are heavily dependent upon bits of underlying data. If they are not properly flagged, they could end up being discovered at the worst moment.
  3. What-if scenarios are more like “what-the” scenarios. What happens if interest rates increase half a percent in the next year? If you are using Excel, questions like these from end users who want to see different scenarios can only be answered after days of pizza and no sleep.
  4. You say "potato," they say "tuber." Whenever you have unique users creating and editing their own finance spreadsheets, which must then be merged to arrive at consolidated results, you will eventually encounter a terminology issue that mucks the whole thing up.
  5. The bank says there's no money but the books say we have plenty. Is it fraud? A simple mistake? A frequently repeated problem? With a spreadsheet system, it can be hard to know. What's not hard to know is that people perpetrating fraud find legacy systems a lot easier to game.
  6. Who has access to this spreadsheet? If you don't have a quick answer to that question, you have a problem — or maybe even several problems: the missing spreadsheet, the lost spreadsheet, the stolen spreadsheet, the tampered-with spreadsheet, and so on.

The Two Biggest Problems with Using Excel for FP&A

But the two biggest problems we’ve identified in our practice are the wasted time and wasted talent that result from continuing to nurse a legacy spreadsheet system.

Excel systems cost time because each user invents a unique solution to a common problem. His or her original solution is often unseen because it gets erased in the merger of data into a single format. You waste time merging the data, then waste a lot more checking it and correcting errors.

Excel systems waste talent by making people with a high level of training and achievement — enough to certify financial results — frantically dig through spreadsheets to make a quarterly closing. The waste of talent comes when a sales rep lands a big account and your cost estimating can't close the deal for weeks, leading the customer to frustration and a quicker competitor.

These wastes become apparent when you get an offer for your business and no one has a clue whether to accept it or not.

How to Get the Best of Both Worlds

What’s needed is a solution with all of the flexibility and familiarity of Excel, with the control that CFOs are demanding. To borrow a phrase, “There’s an app for that.” It’s called Oracle Planning and Budgeting Cloud.                  

The beauty of Oracle Planning and Budgeting Cloud is that its interface looks and behaves just like a spreadsheet. FP&A teams can run forecasts, analyses and plans using the tools with which they’re already familiar. The difference is that the source data is pulled directly from your company’s finance systems (such as enterprise resource planning, or ERP) and lives in the cloud — so the numbers are always accurate, consistent, and secure across every user.

In case you need more ammunition to convince the powers-that-be that you should upgrade from Excel, Datavail has just released a paper entitled, Why Finance Leaders Are Dropping Excel for Oracle Planning and Budgeting Cloud. It provides a comprehensive list of the problems of using Excel for planning, budgeting and accounting, including:

  • Data integrity problems
  • Standardization issues
  • Lack of communication capacity
  • Security/access concerns

The paper then outlines the benefits of using cloud-based EPM, the characteristics of the Oracle solution, and the steps involved in migrating financial analytics to the cloud. The many benefits of making the switch include auditability, forecasting ability, operational efficiency, and expansion planning.

Oracle Planning and Budgeting Cloud drives the financial planning, analysis, and reporting of companies across the globe. Datavail has dozens of consultants who work with the application for financial analytics across a variety of business verticals.

If you are ready to upgrade to a serious EPM system, Datavail's experts are available to help assess, plan, and execute your move to the cloud. If you've never been to the cloud and you are curious how migrations work, how long they take, and what results you can expect, contact Datavail today.

Download the paper, Why Finance Leaders Are Dropping Excel for Oracle Planning and Budgeting Cloud

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