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Has the changing role of the CFO destroyed our love for Excel?

Founder and CEO, Applied Analytix, Inc.

Every finance professional learns to love Excel early in their career. From simple calculations to powerful analytics and scenario-modeling capabilities, Excel has been the go-to finance tool for more than 30 years. But for many in the finance business, that love is dwindling. The role of the CFO is expanding across industries, from cost-controller and budget-minder to the primary strategic driver responsible for connecting operational and marketplace realities to financial resources. Today, the finance function is using powerful collaborative planning and forecasting solutions, with advanced analytics and rolling forecasts, to adapt in real time to rapidly changing conditions.

Finance and Excel: A relationship on the rocks?

It is not surprising that Excel has a hard time keeping up with the more demanding requirements and changing role of today’s CFO. Moreover, from the perspective of finance professionals, confidence in Excel is not enhanced by the frequency of reports of Excel errors contributing to organizational forecasting mistakes or a career-ending snafu. Among these errors, for which Excel has become notorious, are:

  • http://www.ibmbigdatahub.com/sites/default/files/loveforexcel_blog_5.jpgPoor collaboration: Excel was not built to be a collaborative tool. Although the software has some collaboration features, it’s still clunky by today’s standards. In particular, versioning can be a nightmare, requiring hours of busy work as Finance tries to identify which of several versions contains the latest data, and in which fields. In worst-case scenarios, if multiple changes have been made by different users, some of those changes may not end up in the final version at all, resulting in faulty data.
  • Security risks: Excel provides some basic security features such as password protections and user controls. Unfortunately, they are notoriously easy to hack. For example, a simple Google search turns up instructions for breaking these controls. A malicious user, or even a curious employee without the right security clearance, can readily access finance details that were intended only for a specific audience.
  • Amplified mistakes: Every time a spreadsheet is shared, it’s exposed to a data corruption risk. Sometimes data corruption is due to deliberate malice, such as a disgruntled employee tampering with calculations. More often, it happens due to honest mistakes. For example, an analyst may run queries off the enterprise resource planning (ERP) system, dump the data into Excel and then go crazy building pivot tables and formulas for analysis. Every time he or she changes the data, there is the potential for a mistake. These errors can accrue and propagate throughout the organization and, over time, they become amplified, causing serious distortions in your view of the organization.

Reunited, and it feels so good

Given these issues, it is not surprising that some CFOs have ended their organization’s relationship with Excel altogether and, instead, opt for a non-Excel online analytical processing (OLAP) or similar system. However, for many organizations that rely on Excel for daily functions, this is simply not practical—and is actually not necessary. Excel remains a powerful tool for finance organizations and, with the right combination of processes and technologies, organizations can take advantage of Excel strengths while mitigating its weaknesses.

Currently, powerful solutions, such as IBM Planning Analytics and IBM Cognos TM1, offer finance organizations the ability to streamline processes and create a single source of truth while gaining powerful analytics capabilities. Access to accurate, real-time data and insights, rolling forecasts and financial scenario modeling give CFOs the ability to identify and respond to market opportunities and ensure their organizations spend and invest wisely.

Learn how you can leverage Excel into a powerful partner of the CFO with the new white paper, Avoiding the Spreadsheet Trap.