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Is There Still a Role for Spreadsheets in Finance?

Spreadsheets-dont-work-485-277Let’s face it – spreadsheets will have a role and offer value to finance to some extent for the foreseeable future. As a “spreadsheet jockey” myself, I use them primarily for ad hoc analysis and reporting. One of the questions that needs to be asked though is, does your FP&A team spend 80% of their time getting data into reports and tying them out for analysis and only 20% of the time actually analyzing the data? Or, do they spend 20% preparing reports and 80% on analysis. If it’s the former, which is actually quite common, then you should seriously consider an alternative to spreadsheets. While many in finance tend to want to stick with what they know, not using a more appropriate technology is a disservice your FP&A team and organization as a whole. Outstanding spreadsheet skills do not necessarily translate into added value for the organization. Understanding the business and using the proper tools for analysis helps to develop your team AND add value to your organization.

Winston-Churchill-614-298Furthermore, if spreadsheets are preventing you from producing a rolling 12 month forecast, you should consider a different technology. In my experience, by the time most spreadsheet-based budgets have been completed, they are already obsolete. As Winston Churchill famously said, He who fails to plan is planning to fail. I would take that truism further and say that He who produces obsolete plans is wasting his time and putting his company at risk. The forecasting process should be built on a budget and then updated regularly so that management can understand issues before they become crises and have the time to act. Cloud CPM technologies, and Adaptive Insights in particular, are purpose-built for this and are able to do so efficiently. Thus it frees up the FP&A team to focus more on developing expert knowledge of the business and ensuring the budget aligns with strategy. It also elevates the role of FP&A in the eyes of the executive team and the broader organization as they are able to proactively identify challenges that are on the horizon and then collaboratively seek out solutions.

So, yes, spreadsheets still have a role in finance but they should be relegated to more appropriate niche tasks while more capable cloud CPM solutions become the tool of choice for FP&A teams.

Ready to look beyond spreadsheets for your FP&A team?  Please contact me to discuss the benefits of Adaptive Insights, the #1 cloud CPM solution.

 

Building a World Class FP&A Team

Jotham-Lane-director-Carlson-Management-Consulting

Jotham Lane, Director

Now that budget season is over, it’s time to reflect on the effort taken to complete the task and to challenge the status quo. For many financial planning and analysis (FP&A) professionals, it can be a grueling and rote activity as described in my previous blog post, Avoid the Budget Season Blues.  If your company still has a spreadsheet-based budgeting process, your FP&A team likely spent a lot of time on the following:

  • reconciling data to prior period reports such as P&L by cost center
  • keying in or copying/pasting data for analysis
  • writing formulas in Excel
  • using pivot tables
  • reviewing and testing to eliminate errors and validate results
  • consolidating multiple spreadsheets from various cost centers (watch out for those formula errors!)

There is significant opportunity cost associated with spreadsheet planning not only in the time it takes to budget but also in not fully leveraging the business acumen and capabilities of the FP&A staff.

All of these skills are required in the majority of FP&A positions but it begs the question, “Do they add value to the organization?”  Generally speaking, they do not.  In my previous roles in corporate FP&A, I found the process to be a time drain that diverted me from more fully impacting the business for the better.  There is significant opportunity cost associated with spreadsheet planning not only in the time it takes to budget but also in not fully leveraging the business acumen and capabilities of the FP&A staff. In my experience, finance professionals would prefer to focus on analyzing the numbers and providing answers to more strategic issues.

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Avoid the Budget Season Blues

Adaptive-Insights-Platinum-Partner_03It’s that time of the year known in finance circles as budgeting season. Unfortunately, for many finance teams still using spreadsheets, it can be a time of dread, stress and frayed nerves. Dwight D. Eisenhower famously said “Plans are nothing: planning is everything”. That is certainly the case with spreadsheet-based planning as, according to research on the subject, 60% of budgets are already obsolete by the time they are completed. We can chalk that up to the ever-changing nature of business and the rigid nature of spreadsheets. But what if plans were actually meaningful? What if the planning process was an opportunity to get everyone to sing from the same sheet of music and get aligned with company strategy? Rather than singing the budgeting blues, finance teams can hum happily through the planning season. That is certainly the reality for many companies who use Cloud-based corporate performance management solutions. The issues of spreadsheets are already well documented and in fact there is even an organization dedicated to spreadsheet risk called the European Spreadsheet Risks Interest Group. You may wish to read about some of the spreadsheet horror stories they have collected over the years.

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