Let’s face it. You’ve found yourself in a destructive spreadsheet relationship. This article is an intervention to rescue you. Your spreadsheet relationship actively sabotages you in ways you’re not seeing or understanding. Worse, it is making promises it can never deliver on. Like many CFOs, I fell in love with spreadsheets when I was a teenager.
I started off my first business training clients on how to use multimedia, and I used spreadsheets to understand my financial situation. As a simple bookkeeping tool, Excel offers limited data analysis tools. So, for basic functionality, Excel is excellent. You’ll understand its limitations, though, when you push it to the breaking point.
Many businesses do it without even realizing it. You may push Excel to accomplish tasks, like revenue forecasting, that it was never designed to do. As you fully begin to understand what you need in revenue forecasting, you’ll see where Excel falls short and why Next Quarter offers the comprehensive tools you need to fully understand your financial situation. Of course, if you’re still determined to keep your hands on your original spreadsheets, here are our top 12 reasons to reconsider your use of Excel. You may quickly be surprised by how easy it is to let go of Excel and embrace the many Next Quarter possibilities.
#1 Your Competition May Have Already Done It
According to a recent Wall Street Journal article, companies like Levi Strauss and others have been working to remove Excel as quickly as possible. Instead of using a deprecated spreadsheet, they’ve embraced the goal of fully moving to a cloud-based revenue forecasting approach. They’ve already experienced many of the benefits, and they’ll continue to reap the rewards.
Excel and other spreadsheets aren’t designed to allow collaboration. So, it’s likely your team handles the data sequentially. You may play the waiting game until the current user is done with the spreadsheet. Then, you hand it off, and the next person in the chain can start their work on the spreadsheet. Of course, nobody really enjoys waiting, so it’s easy to get a few different versions of the spreadsheet going, all of which are outdated.
When you keep that real-time information in your cloud-based repository, everyone in your team can update the underlying data simultaneously. A cloud-based system combines sales, revenue, operations, and other departments. So, your finance team members can quickly and easily see how your revenue is generated.
What’s perhaps even more important is the fact that stakeholders, managers, and executives can quickly pull reporting to better understand the company’s current financial situation. You need this kind of collaborative revenue intelligence across all departments in your company to enhance understanding and efficiency.
You don’t need or want your key employees to become glorified data entry monkeys who are chained to their keyboards. It’s not ok to see them infinitely typing in the dry and redundant details from other systems into spreadsheets or even exporting, importing, and creating pivot tables to better understand the scope.
According to The PwC Finance Benchmarking Report 2019-20, you could reduce as much as 30-40% of the time you spend in your finance department when you automate your proceeds and change the fundamental behaviors of your team. So you’ll save time and money when you take a more strategic approach, and it streamlines closing your books for the quarter by as much as five days. Some estimates put the time savings at 70%.
We all make mistakes, even when we’d like to think our work is complete perfection. According to the Wall Street Journal, Pure Cycle Corp, a Colorado-based water- and land-management company, discovered an error to the tune of $500,000, which originated in an Excel spreadsheet. Every mistake has the possibility of undermining your company’s success or leading to make financial decisions that prove to be ill-advised.
When you transfer data from one source to Excel columns, that simple process can be a recipe for disaster. Not only is mapping data fields tricky, but you may work with different teams with inconsistent field names or criteria. Many factors can make the transfer of field values challenging, which can lead to mistakes or incongruities in the underlying math.
You might be shocked by how easy it is for mistakes to happen when data is transferred. Canadian-based TransAlta is another example of an Excel business nightmare you can learn from. Here, an employee accidentally misaligned bids to contracts when they pasted rows into an Excel sheet. In that complete disaster, the error cost the company $24 million.
When you use Excel spreadsheets, it’s easy to use the data and the tool in variant ways across your organization. You may be surprised just how different every one of your team members uses their Excel spreadsheets. It can be something as simple as the terms or labels you use. That’s why it’s so important to see how a cloud-based system standardizes data fields across your entire organization.
You may use “leads,” while someone else uses “prospects,” and another uses “contact.” You may also have different ways of defining and labeling which leads are “qualified” or “cold.” You may even use different rules for what counts as revenue and when it’s counted as revenue. A cloud-based system allows you to standardize all your terminology and processes. Your teams and department heads all agree on a mutually beneficial and cohesive way of processing your financial data.
The links within and between Excel workbooks break. Then, too, the fields often don’t import correctly. Even if you’ve done everything right in your data collection, input, transfer, and formulations, you’ll still see the horrific “ERROR!” The fact is that it might have been nothing you did wrong. Maybe someone else added data that broke your Excel spreadsheet, or maybe the data you’re linking to is corrupt through no fault of your own.
Either you can’t get the data to sync up, your data is somehow corrupted, or you aren’t able to disconnect the spreadsheets, even when you’re trying to take a completely different direction. The sheer number of hours you’ve spent trying to fix errors or inconsistencies in data may shock you. It’s also another important reason why you need a cloud-based solution that will prevent these types of issues.
Even with dynamically linked workbooks, Excel isn’t designed to offer real-time functionality across your company. It’s a Hodge-Podge at best. That’s why a cloud-based system is so important. You’re better able to integrate your various departments and data, but you can also instantly access the current information when you need it for forecasting without the manual pull. Instead of spending your time wrangling with spreadsheets, you have the data you need for analysis and decision-making.
Excel offers pretty charts and pivot tables, which may have worked ok until now. If you consider the true functionality of Excel as a business tool, it’s a glorified calculator. You’re required to put in all the context, so your audience will understand what your data shows. So, with real-time cloud-based data, you’re able to move beyond the calculator to create comprehensive revenue intelligence with robust forecast reports that show the full picture.
Security is a huge issue. Cybercrime has reportedly increased by an astonishing 600% over the last few years. You now scrutinize all access points to the vital data that makes your company tick. That’s when you’ve likely seen how vulnerable your spreadsheets really are. You probably don’t even know who has access, what changes they are making to your data, and how those changes might really affect your business.
With a cloud-based system, you can control read/write rights based on various factors. You can rely on security, but you can also depend on the veracity of your data. That combination of factors is so much more important than you might realize. It’s a game-changer.
As your Excel spreadsheet increases in size and complexity, it’s even more likely to break. Even if you have backups, it’s difficult to say how your broken spreadsheet will affect the overall functionality of your business. The domino effect could be devastating when you consider the dependencies that you have in place without even realizing it. You need a cloud-based system that is designed to handle the sheer volume of data that you produce in your company.
Spreadsheets can calculate well, which is why they’re really glorified calculators. However, Excel is not designed to handle sophisticated revenue forecasting, which means creating conditional logic. You might be able to hack something together, sure, but you’ll pay for that attempt in time, frustration, and personal energy.
With each bit of conditional logic you add, you’ll see how Excel’s weaknesses become more apparent. You may have created various forecasting models in your Excel spreadsheet, but using it on a daily basis is just one more annoying lesson in the obscure language of Excel coding. As your models become more sophisticated, you’ll quickly see how Excel just isn’t up to the task. If you’ve ever tried to create ad hoc AI algorithms in Excel using VBA code, you already know what it’s like to force complexity onto a tool that just isn’t up to the task.
As a CFO, you’ve used Excel to create accurate, actionable revenue forecasts. All those errors and problems may have seemed like part of your job, the simple fact of life, but it doesn’t have to be that way. At Next Quarter, we’ve created comprehensive tools to help you solve the issues you face with sales, revenue, and demand forecasting. To see what the future of revenue forecasting can really look like, contact us to arrange a demo today.