Spreadsheets cause as many problems as they solve. But spreadsheet use is still widespread, for one big reason – finance professionals are comfortable using them and over the last 40 (or so) years, their use has simply become a habit that is proving hard to break. A quick Google search will show that within the entire population of finance professionals, there are just as many proponents of spreadsheets as there are detractors. No matter which side of the fence you land on, you will probably find someone who agrees with you.
But just because someone agrees with you that spreadsheets are the next best thing to sliced bread, does that mean that spreadsheets should remain your “go-to” tool when it comes to forecasting, planning, and budgeting? Probably not. Google it. I am sure you can find several who will agree with me.
But the problem is that spreadsheets are 40 years old. Think about how many tools and products have come and gone in that time. Sony Walkman. Atari consoles. CD-ROMS. Camcorders. Disposable cameras. And the list goes on and on. However, each one of these products has been replaced by a much more modern alternative.
So why are spreadsheets still hanging on? If we were able to overcome our comfort level with a Sony Walkman and CD-ROMS and embrace MP3 players and smart phones, why are we stubbornly trying to make spreadsheets work for complex financial planning, budgeting, and forecasting?
A finance manager that we interviewed (we will call her Teresa) had this to say about spreadsheets. “In 1997, I was working for a multi-million-dollar IT company. A new CFO arrived, and one of the first things he said to us was ‘you cannot run a company of this size on spreadsheets.’ Twenty years later, and for a lot of companies nothing has changed!”
And that is so true. In 2018, approximately 63 percent of US businesses still relied on spreadsheets; this is down six percentage points from the year before. But those that have migrated to ERP and EPM solutions rate the highest overall satisfaction with the integrity of their data. And the tide is also turning for smaller businesses (in this case those under $25 million). These growing companies are also finding the tool less valuable. In 2018, 69 percent of those small companies used spreadsheets as their primary planning and budgeting tool. That was down nine percentage points from 2017.
Despite being ubiquitous in American companies, spreadsheets do have some significant drawbacks that can negatively impact profits and growth. The era of “low-hanging fruit” is over. Companies are having to find new innovative methods to shave costs, speed up processes (which saves money, wins more deals, and gets data into the hands of decision makers faster), and effectively manage resources. One manual process that leads to one mistake that delays one decision can mean the difference between a profitable quarter or an unprofitable quarter.
Several serious drawbacks with spreadsheets include:
Another finance professional (we will call him “Jim”) had this to say about spreadsheets. “I could talk all day about the problems with spreadsheets,” he said. “But try taking them away from us—you’d have a riot.” Well, no one wants a riot, and no one wants to lose talent. But at some point (if not already) spreadsheets will not be able to support company growth. That is why Oracle Enterprise Planning and Budgeting Cloud (part of Oracle EPM Cloud) supports both company- and department-level planning processes and provides both spreadsheet-based and web-based spreadsheet-like modeling, planning and approval capabilities within—all one collaborative scalable solution.
Oracle EPM Cloud is a way for finance professionals and departmental budget holders to have their cake and eat it too. It will preserve all the familiarity and flexibility of planning, budgeting, and forecasting in spreadsheets but will eliminate the headaches of gathering, consolidating, and checking hundreds of individual spreadsheets.