Microsoft Excel is currently the go-to spreadsheet software for many businesses to keep track of financials, corporate performance and plans (among other things). Despite being a staple software for FP&A teams worldwide,  Excel has several critical faults that have cost businesses billions - low-value transactional data processing, a high likelihood of human error, security risks, and poor data management. Infamous examples of these critical Excel faults have cost companies such as Enron Corp, the London Olympics Organising Committee, JP Morgan Chase, and Barclays billions of dollars.

If you want to breakthrough growth empowered by digital transformation with rapid and accurate analysis, seamless automation, high security, and excellent data management, schedule a MODLR demo here.

In a recent article by Forbes, gathering insights from transactional data is necessary for success. Minimising any volatility, uncertainty, complexity, and ambiguity in your performance management are just as crucial. It is essential for businesses to quickly gather clear, high-value insights from their data to formulate a management strategy for the future collaboratively, and Excel simply can’t keep up with the pace of modern-day business needs.

Many believe a business intelligence (BI) tool can cover what Excel cannot. The truth is, BI tools such as Tableau, Power BI, Qlikview, Domo, IBM Cognos, and Google Data Studio are limited in what they can do. BI tools let users figure out “what happened” with their data and identify issues, but they lack what businesses sorely need - providing solutions of “what will we do about it”. Furthermore, analysis of transactional data insights requires a collaborative planning process to capture the wide range of perspectives across a business; this is something that neither Excel nor BI can achieve. Finally, many BI tools lack the ability of write-back, which severely limits the agility of a business to update and maintain their source systems, such as databases.

Excel does have its strengths, but as business structures grow more complex and the number of data increases, the costs of Excel also grow, and BI tools cannot make up for these shortcomings.

The costs of using Excel

There are many reasons why using Excel can create costs for your business, and here are a few of those costs:

1. The costs of time-consuming transactional data processing

Often, you will see giant amounts of figures, numbers, and data on corporate Excel spreadsheets that require manual entry and reentry.

Excel cannot validate and ensure the accuracy of data on its own. FP&A teams need to spend time on lengthy manual reviews where they just scan and process the data to check its accuracy. Then they need to take more time to read the numbers and check if the transaction figures match. This transactional data process puts the risk of human error on the data and a great deal of pain on your FP&A team.

This process can easily take multiple days to weeks to complete one cycle. With the influx of data and growing information needs of businesses, the time costs and employee resourcing will only increase with Excel.

Let’s take a look at a hypothetical example:

Imagine you have three full-time employees on $35 an hour (approximately 72,800 a year) that work 40 hours per week. Now, let's assume they spend a whole week of their time every month performing low-value data manipulation - taking sales data from three different points of sales systems and combining these into daily and weekly sales reports. The time cost would amount to 120 employment hours and $4,200 spent. Suppose we assume this data-processing cycle needs to be done once per month under this process. In that case, that is a total cost of $50,400 and 1,440 employment hours redirected from valuable analysis to low-value transactional data manipulation to maintain reporting.

These are the cost estimations even before accounting for any human errors from manual review. If one figure is inaccurate, all related calculations and analysis could be unreliable, resulting in even more delays. These errors can also span to billions of dollars of costs for business, as per the likes of Enron Corp, JP Morgan Chase, and Barclays.

There is no sophisticated or reliable way to validate the formulas entered with Excel, and their sheer volume compounds the issue - one formula per cell. Comparatively, contemporary financial management software can separate the flood of data with a friendly user interface.

With contemporary financial management software, this process could be done within a day or even hours - without the worry of human error or wasting your employees' valuable time. Adopting financial management software such as MODLR means that you could not only save financially, but you will have more accurate information and be free to resource FTE into more high-value opportunities.

Schedule a demo to learn more about MODLR’s financial analysis capabilities here, alongside their affordable pricing plans.

2. The cost of human error and data entry

We’ve established analysis done in Excel is costly and time-consuming, but what about manual inputting on data entry and the high risks of human error?

According to studies in 2008, approximately 90% of spreadsheets will contain mistakes. Since 2008, the flow of information and data has rapidly grown with limited advancements in Excel, meaning errors are even more likely.

Due to manual input - human error in spreadsheet inputs is inevitable, and the consequence of a small spreadsheet error will vary drastically on its context and at the rate that it is picked up.

Generally, spreadsheet errors will be minor and are usually quick fixes once identified - even, in this case, the cost of time adds up, they can escalate quite quickly. Many spreadsheet errors will be recognised at late stages of analysis or at critical times before important presentations.

Not only are these errors frustrating, but in these scenarios, the cost of this inaccuracy could potentially jeopardise the trustworthiness of the entire presentation and spiral into hours and hours of reanalysis and losses of opportunities or clients.

Schedule a demo to learn more about MODLR’s rapid data validation and financial automation capabilities.

3. The security cost of Excel

Excel was created to essentially mimic graph paper for the computer - serving as a good tool for spreadsheets, single-use tables, single-use equations, and charts. For this reason, Excel has been highly successful and is used by over 750 million users worldwide.

However, for businesses using Excel for their financial management and reporting needs, it isn’t quite as effective of a tool. Excel gets easily lost through multiple variations and versions of documents that need to be sent and delivered via email or USBs. These Excel transfers lead to several security vulnerabilities, including accidental copying and pasting of privileged information, such as personnel salaries or internal passwords, to wrong network drives or internal channels.

You expose your data to security risks, not to mention poor version control or confusion. Emails can be hacked, and USBs can be easily lost or stolen. Excel’s inability to securely share sensitive information between your team could cost your business reputationally, legally, and financially.

Schedule a demo to learn more about MODLR’s seamless, secure, and real-time collaboration capabilities.

4. The cost of using Excel as a Database

Excel is an unstructured tool. If you use Excel as a database or any form of record-keeping, such as sales transactions or accounting journals, you will have to be responsible for inputting that information, keeping it updated, and coming back to manually check it. Excel will not alert you of any data inconsistencies; it doesn’t enforce data types as a database would and will not interact with business logic to send notifications or interface with other databases. Excel is purely dependent on human input and avoiding human error without the typical safety guardrails provided by all standard database platforms.

Humans make mistakes - especially in today’s fast-changing markets. New information and changes will appear suddenly and create distractions. Couple these distractions with the number of human errors from manual input and various challenges and problems, your data management will be inevitable. Put this together with Excel, and it will be challenging to remain competitive in modern business. Using Excel as a database will not only be inefficient and ineffective, but it can also be incredibly costly to your business.

Inaccurate data, uncertainty, and a lack of robust management will cost your business heavily in time, financial opportunities, resourcing, and in some instances - your sanity. When you use Excel for data management, you limit your ability to adapt and waste time on erroneous tasks. An extra 15-20 minutes of your day spent on manual updates, and data checking may not seem too much in the short term. But this quickly equates to an hour a week per person and 52 hours a year. Imagine the peace of mind and money you will save if this is all automated for you.

Schedule a demo to learn more about MODLR’s robust automated data management solutions.

Moving beyond Excel with MODLR

Overall, Excel for financial management is growing more and more costly for businesses to retain. In a fast-moving world with increasing uncertainty and volatility - Excel is increasingly struggling to keep up. FP&A teams need better solutions fit for the current day and age.

Any cyclic performance management process of establishing a baseline and what-if plans (scenarios), executing the baseline plan, reviewing variances against the plan and re-forecasting.

Adopting modern-day financial management solutions, such as MODLR, make it exceedingly easy to gather insights into your business, all while freeing up valuable time. With a user-friendly interface, MODLR’s visual directory and real-time data management tools allow each user to track their latest financial information, deadlines, and budgets all in real-time under one place. Detailed reporting and analytics can be done within minutes, saving hours and days worth of manual analysis while creating sharper insights that improve decision-making.

MODLR eliminates the risk of human error and verifies the accuracy of your data. The eliminated risk lets your FP&A teams move from capturing data and unweaving Excel spreadsheets to actioning valuable insights and brainstorming high-value strategies.

MODLR’s Software as a Service (SaaS) and cloud nature makes the product a secure, scalable, flexible, and real-time solution that makes collaboration seamless. Move past Excel and its hidden costs.