Let’s face the facts – there are some things at which Excel doesn’t excel. In fact, when it comes to running financial reports, it can lead to costly failure. Moreover, it can be quite easy to make mistakes with Excel, and many mistakes will not be noticed when they happen.
Excel has a few points of failure – security, collaboration, and gathering data in a way that avoids errors. Read on to learn how these weaknesses can affect your organization’s performance.
Excel’s Insecurity Problem
One of the problems Excel poses to organizations stems from its insecurity. That might be difficult for many finance professionals to wrap their heads around, but Excel can actually pose a security threat to your organization.
Take a second to think about how Excel is normally used in your organization. Most likely, one person creates a spreadsheet. Then, he or she sends it to someone else. Maybe that person will save the spreadsheet as a different version (such as v2 or add their own name – “Jane’s edits,” for example), though you can’t be sure.
Even if you trust that users are updating the version name on the file, you have no concrete way of knowing who has used it. That raises a number of issues: did the people who work on this spreadsheet include accurate information? Can you trust the data contained within it? Will this lead to costly mistakes?
We’ve all heard the statistic that 90% of spreadsheets contain critical errors, but how many of us realize that those errors have real-life implications? In 2008, the Credit Suisse Group received a £5.6 million fine because there were significant mistakes in the spreadsheets that supported complex financial instruments such as collateralized debt obligations. No company can afford the damage to its bottom line or its reputation due to security problems.
Excel: Not Built for Collaboration
While it’s easy to share financial reports in Excel (see above), the application is not built for collaboration. Only one person can use it at a time. There isn’t a way to make real-time edits, either.
Excel’s poor collaboration capabilities create data silos. How many times have you heard this refrain: “Which version is this? Are these numbers even correct?” Then, the mad dash to start reconciling spreadsheets begins. Spreadsheet reconciliation takes valuable time and resources away from mission-critical processes such as end-of-quarter close.
Even with spreadsheet reconciliation, can you ever be completely confident that your data is accurate and reliable? For many finance professionals, the answer is, sadly, no. A report from KPMG stated that only 47% of executives have confidence in the reliability of their financial information. And why should they be confident, when the chance the data has been manipulated beyond recognition is so high?
Excel Doesn’t Fill the Data Gathering Gap
The third problem with financial reports in Excel is gathering the data that goes into them. Many companies rely on ERP systems to store mission-critical data about their finances and operations. To get data out of ERP systems, you must export it to spreadsheets.
ERP systems are updated constantly, but Excel spreadsheets are static. They don’t connect back to the ERP system after they’ve been created. If there’s a change in the ERP system, it exists independently of the financial reports in Excel. That renders information irrelevant and useless.
What if you’re not using an ERP system at all? You’re forced to hunt down data from multiple sources, which also wastes valuable time
Moreover, there’s a limit to how much data a given spreadsheet can store. If you need more cells than Excel provides, you’re out of luck. Financial reports in Excel create an unholy mess which finance professionals must frantically untangle.
From Failing to Flying Colors: How Companies Transformed Their Corporate Performance
More and more companies are ditching Excel. They realize that Excel is actually killing their productivity and leading to costly mistakes.
Womble, an American pipeline coating company, switched to Hubble’s business reporting solution. Before moving to Hubble, Womble was using spreadsheets to manage its over 400,000 pieces of serialized pipeline in more than 2,300 locations. The visibility into inventory was nearly nonexistent.
Implementing Hubble changed that. Hubble’s business reporting solution enables Womble’s customers to track their inventory throughout the entire order process – they can even change their order and customize settings. Womble’s president can now check any aspect of the company’s operations from any place at any time, something that was previously unthinkable. Thanks to Hubble, Womble has gone from meeting 70% of its planned targets to 99% of its planned targets on every order, every day.
The electronic gaming giant Nintendo provides another success story. Since 2003, Nintendo’s European division had relied upon JD Edwards ERP system. The budgeting process was time-consuming and frustrating; members of the finance department had to email financial reports in Excel back and forth to one another to create a single financial business report. Nintendo’s finance team complained that data wasn’t always accurate, and they had to depend on luck and guessing to formulate business strategies.
For Nintendo, Hubble was a game changer. It integrated seamlessly with JD Edwards, eliminating the need to manually load or export data from the ERP system. The finance team could finally access information in real time, so they never had to worry that their numbers were out of date.
Thanks to Hubble, Nintendo’s finance team now has confidence in its data. In addition, they can run their financial business reports, plans, and close the books in one solution (which is linked in real-time to the firm’s ERP system). Security concerns are a thing of the past – there aren’t multiple versions of spreadsheets floating around, and only authorized users have access to Hubble to ensure data integrity.
Excel is useful, but it was never designed for corporate reporting. As a result, companies can find themselves failing (and in costly ways) without much effort. There’s a better solution out there, though – a business reporting solution that integrates into your ERP system so you can trust your numbers every time. To learn more, download the Bloor report on spreadsheet management.