Has the Financial Sector Outgrown Excel as the Go-To Analysis Tool?
The growth of Excel over the last few decades has been astounding. From simple calculations to complex, data-heavy spreadsheets, it’s a vital part of many businesses.
The legendary spreadsheets program is lauded for its ease of use and quick access to information that companies need, not to mention its nimble design that makes onboarding a stress-free process.
However, recently there have been some major drawbacks that are affecting how we work with Excel and what we should do about it. In this article, we will explore these issues in-depth as well as offer some solutions for overcoming them. Let’s get started!
The growth of Excel
Data analysis is an incredibly important part of any business. It’s what allows organizations to forecast the future, manage their operations, or identify optimization opportunities that otherwise would have gone unnoticed. Through data analysis, we can also generate insights about our customers and provide a better overall customer experience.
Over the decades, spreadsheets have proven to be a powerful tool in analyzing and visualizing data. First released in 1985 by Microsoft, Excel won a huge market share of the business world, and since then, other spreadsheet applications like Google spreadsheets have emerged to continue the trend.
While a number of alternatives to Excel have emerged, the pioneer spreadsheet program continues to lead in terms of offering the most of what people need for analyses. You can use it to evaluate and report a company’s financial performance, analyze internal data, and predict future trends.
What’s more, Excel does not feature the limitation that comes with stale outdated software that often requires hefty hardware to backup data. A case in point is the good old Lotus 1–2–3 spreadsheet program that has since been discontinued despite being IBM’s first so-called killer application.
How many people are still using Excel in their daily business?
Proving the importance of Excel in today’s business environment is easy as most studies show over 80% of businesses rely on Excel.
These numbers are ever-increasing with more people using the program as there is no compelling reason for using alternative programs. Other benefits include the fact that Excel is easily customizable, making it applicable to both advanced users looking to execute complex functions as well as casual users looking for easy editing of the data they input.
Old dogs cannot learn new tricks
However, as the business landscape continually changes, not to mention the increasing need for automation, the limitations of Excel’s capabilities are starting to emerge.
Increasingly, financial data relies on enterprise-wide integrated data and processes such that an organization’s efficiency is built on one centralized database and source of truth. However, the siloed nature of Excel spreadsheets means that data becomes fragmented and decentralized.
Plus, while Excel can be useful in collecting data from various collection points, it still features a limited ability to handle massive data sets as oftentimes attempts to manage massive data sets with Excel leads to long processing times.
To make matters worse, the data in Excel is usually improperly formatted and riddled with errors. Recent changes in the global business environment have further highlighted the limitations of Excel as accelerated demand for speed and transparency in financial reporting emerges.
Seeking alternatives
Excel still serves a purpose in most businesses today and will remain useful as a tool for managing data. After all, it is still one of the most affordable and intuitive programs for data management and analyses, not to mention its basic functions that are still pretty easy to use even for novice users.
However, as the financial landscape continues to evolve, the need for a more agile and flexible solution will only become more pressing. As data becomes the driving force for business decisions, businesses no longer have the time to wait hours upon hours of processing for a single report. Instead, they need their information now and in real-time.
In light of these new realities, managers are starting to explore more efficient solutions that can handle massive data sets with ease. Some businesses are beginning to move away from using Excel in a number of their processes, ranging from financial reporting and budgeting to analytics.
As such, the future of Excel seems grim. Financial accounting needs continue to evolve; however, you can still expect veteran finance executives to hold on to their treasured spreadsheet program.
