Nine ways excel hinders financial planning and analysis, and what to do

For many organizations, financial planning and analysis (FP&A) processes are initiated in Excel due to its ease of use, flexibility and user familiarity. While Excel is a powerful tool that allows users to organize, analyze, and visualize data, it has its limitations.

Enterprise planning management (EPM) software, such as Workday adaptive planning, picks up where Excel drops off. Unlike Excel, EPM tools consolidate data from various sources into a unified, real-time view, facilitating informed, strategic decision-making and promoting cross-departmental collaboration, ensuring that operational plans align with overarching financial goals.

Recognizing when it’s time to move from Excel to an EPM tool can be hard. Here are nine red flags that indicate it’s time to make the switch.

1. Processes centralization

As FP&A process components expand, managing Excel becomes more complex. In an Excel-supported environment, data is often dispersed across multiple spreadsheets and workbooks to be updated, managed, and consolidated by each user. It’s decentralized, which can lead to inefficiencies, inconsistencies, and a lack of transparency, hindering budgeting and reporting processes.

2. Version management

Version management in Excel can be a daunting task. As changes are made to spreadsheets, keeping track of different versions can become complex and confusing. Without a built-in version management system, there’s a risk of overwriting important data or losing track of the most updated version, leading to potential inaccuracies and inconsistencies.

3. Multiple spreadsheets

Managing multiple spreadsheets in Excel is a common challenge. As the number of spreadsheets grows, so does the complexity of managing and consolidating data. This can lead to errors, duplication, and a lack of visibility across different data sets. Manually consolidating data from multiple spreadsheets can be time-consuming and introduce errors.

4. Scenario planning and comparison

While Excel allows for scenario planning, it can be difficult to manage and compare multiple scenarios. Creating what-if scenarios in Excel often involves manually changing input values and recalculating results, which can be tedious and error-prone. Additionally, comparing scenarios can be challenging due to the lack of a streamlined comparison feature.