Excel spreadsheets have been used for more than 35 years as a preferred business planning and monitoring tool for small and medium-sized businesses (SMEs).
Excel’s popularity is due, in part, to its relatively low cost and ease of use. However, in the digitised business environment that has accelerated in recent months, spreadsheets may be becoming redundant.
One thing that 2020 has taught business is that any market, anywhere, can be highly volatile and suddenly take a sharp turn. Organisations of all sizes, and particularly SMEs, can be hit hard by market impacts. So, you must be agile enough to shift with the market. To achieve this, your business needs to be scalable and have automated processes that can quickly adapt to change.
The rapid rise of scalable and automated cloud-based software is making it much easier and more cost-effective to replace manual processes, such as Excel spreadsheets. Businesses are looking to replace spreadsheets because they’re becoming too hard to maintain in the new environment, aren’t dynamic enough for real-time business planning and can cause businesses to fall behind their competitors.
Some of the key failings of Excel spreadsheets are:
- They are personalised
Excel is not an intelligent software. It is based on formula fields and simple software algorithms compared to automated business planning software tools. This means that whoever creates an Excel spreadsheet can create it in a way that suits them. They can tweak formula fields, add rows and columns and devise calculations that make perfect sense to the creator of the spreadsheet.
This may work in a situation where only one person needs to manage the spreadsheet, such as for personal finances. However, it can create significant problems for SMEs where more than one person needs to understand and work with the spreadsheet. This is further compounded when the person who created the spreadsheet goes on leave, becomes ill or leaves the organisation. In this case, the spreadsheet can create a high risk of bringing the entire business to a complete standstill, especially if budgeting or expenditure is held up until the spreadsheet owner returns from leave. This situation can also hold up creditor payments, costing the business money in late fees.
If the spreadsheet owner has left the company, another staff member may need to recreate the spreadsheet so they can understand it, which starts the same cycle over again with this staff member. None of the risk is averted and the business will continue to face unacceptable delays.
- No ability for real-time collaboration
The workplace has changed forever. Unless employees’ roles require them to physically be at work, there is an increasing demand, and more competition in the employment market, for employers to offer flexible working arrangements. This lets employees work anytime, from any location through a secure, internet-connected device.
The rise of flexible work has also changed the way people collaborate in the workplace. Meeting together in a room has been replaced with online meetings and collaboration using cloud-based tools. Excel spreadsheets have very limited capacity for collaboration, and no capacity to support it in real time. Excel spreadsheets also cause issues due to lack of version control. This happens when employees work on different versions of the spreadsheet, which then needs to be consolidated and therefore increases the risk of error.
Real-time, cloud-based tools eliminate these risks by letting employees securely log in from any internet-connected device and provide input at a time and place when inspiration strikes. This lets the business harness the best ideas from employees and drive innovation.
- Issues with errors and compliance
Excel spreadsheets are prone to errors, particularly in formula fields. Data entry is subject to typos and other human errors, while lack of version control can cause confusion and more errors. These errors can seriously impact businesses that rely on data to make strategic decisions.
Spreadsheet data errors can also cause regulatory compliance issues that can take extensive time and cost to resolve. For example, just one zero missing from a budget figure can completely change the financial outlook for a business, and what is reported to the tax office. This can then impact the organisation’s compliance with JobKeeper in the current market, for example.
Relying on outdated, manual spreadsheets can hold businesses back just when they need to be driving forward. Automated business planning tools are creating new opportunities for business of all sizes to reinvent themselves as scalable, agile and resilient organisations.
For information about how an automated solution can help your business, read our checklist, or contact the Planning Systems Group today.
