Excel vs. Enterprise Software for Budgeting & Planning [Part 2 of 3]

October 1, 2015 rgrover

In the first article in this series, we looked at the main topics, purpose and target audience of Enterprise Budgeting & Planning with Excel for Dummies, a new, free ebook written especially for CFOs, VPs of Finance, Finance Directors, Accountants and Controllers who want to improve their budgeting and planning processes without giving up their existing Excel investments and infrastructure.

In this article, we’ll look at the central challenge facing the vast majority of the book’s readers; how to strike a balance between the familiarity and widespread adoption of Excel, and the workflow, audit trail and other features of traditional enterprise solutions.

Excel still reigns, even with enterprise-level limitations

Starting with VisiCalc in the late 1970’s, spreadsheets have firmly established themselves as universally valuable business tools, in no area more so than Finance. Even with the proliferation of modern financial, ERP and corporate performance management (CPM) solutions available:

  • Upwards of 90% of corporate finance departments still rely on spreadsheets for everything from budget submissions to account reconciliations.
  • Even among firms with sophisticated ERP or CPM systems, 83% still revert to Excel for data collection, modeling, reporting and more; the inevitable “Export to Excel” habit engrained in so many financial professionals.

Still, with its popularity, flexibility and familiarity, Excel on its own lacks a number of important features essential to enterprise-level financial planning and analysis. These include a lack of:

  • Version control and data integrity;
  • Business rules and permissions;
  • Scalability to the big data level;
  • Source system integration;
  • Enhanced analytical capabilities;
  • Detailed audit trail capabilities, and more.

It’s no wonder that most enterprises eventually find themselves outgrowing Excel…or so it would seem.

Traditional enterprise solutions are no replacement

When you’ve reached the point where you feel you’ve outgrown Excel, it’s easy to conclude you need to make the leap to a more complex, expensive and rigid ERP or CPM solution. With vendors ranging from SAP and Oracle to niche software vendors, there’s certainly no shortage of options available.

As tempting (and/or intimidating) as these offerings may be, it’s important that you understand the limitations of even the most sophisticated enterprise solutions, with implications that very well may outweigh those of Excel. Consider just a few of the costs and consequences:

  • Upfront Costs: The most obvious cost element in traditional finance software, this line item can easily reach six, seven or even eight figures.
  • Training: Unlike Excel, which every accountant has known like the back of their hand since high school, every enterprise finance system on the market will require a large degree of user training – in some instances the involvement of IT to make even simple changes with proprietary scripting languages.
  • Implementation and Support: While the cloud is bringing these costs down for many niche players, the mega-vendors are still on a slow journey to a SaaS model. The alternative – on-premises delivery – translates directly into months or even years of implementation, consultants, IT involvement and more. Need an upgrade? Be prepared to put up an army of consultants in a hotel again.
  • Excel Endurance: As we’ve said earlier, more than 80% of companies with a traditional enterprise finance solution still use Excel for things they don’t know how to do otherwise. Exporting data to Excel – one of the most common features of ERP systems – takes data out of a controlled environment, defeating the entire purpose of workflow, version control and audit trail functionality.

An ongoing dilemma…with a solution

If weighing the pros and cons of spreadsheets vs. more complex enterprise software sounds all too familiar, you’re not alone. At Vena, virtually every client we have – and some we don’t – have struggled with the same challenge.

Find out how to get the best of both worlds with your free copy of Enterprise Budgeting & Planning with Excel for Dummies.

Get your free copy of the book here.

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