A recent Wall Street Journal article reiterated a point we have been emphasizing for years: When it comes to accounting, Excel is outdated and inadequate for all except the smallest businesses. It is a spreadsheet tool, not an actual piece of financial management software. As a result, it tends to be inefficient and unproductive, particularly for companies geared for growth.
The WSJ cites companies as diverse as P.F. Chang's China Bistro and Wintrust Financial Corp that ran up against the limits of Excel and suffered setbacks as a result. All of them introduced more sophisticated software later, but let's focus on why that was necessary in the first place.
The Insufficiency of Excel
Excel is a powerful tool, but it's more notable for its breadth than its depth. That is why it's great for individuals and small businesses but wholly inadequate at the enterprise level. Small and midsized companies still relying on Excel for all or even just some of their finance and accounting hit these kinds of obstacles:
- Segregation – Data in Excel exists in multiple locations but not in any single location. Consequently, it's difficult to integrate financial data with other business metrics and hard to produce insights that are accurate and up to date.
- Collaboration – Accounting and finance are cooperative endeavors, but Excel limits access to data and makes collaboration difficult or impossible. In today’s integrated enterprises those kinds of data silos prove to be serious hurdles.
- Scale – Excel was not designed to handle the data volumes that even smaller companies are now tasked with managing. Once the limit is reached, Excel documents reach the boundaries of their utility.
The Advantages of Alternatives
The focus of the WSJ piece is less about why companies abandoned Excel and more about what comprehensive financial management software has to offer. A more sophisticated solution turns accounting and finance into a lean operation and a strategic asset. These are some of the most immediate advantages:
- Efficiency and Productivity – Previously time and labor-intensive workflows are automated and expedited. What used to take hours or days now takes just minutes while requiring far less human input. Instead of dealing with data management, professional staff are free to focus on strategy and opportunity.
- Authority and Access – Once all accounting and finance data exists on a single platform and is integrated with data from other departments there is no question that the best information is available to all. When everyone is on the same page at all times communication and collaboration flourish.
- Insights and Information – Current-generation financial management software is designed to help users go beyond shallow insights and engage with data in powerful and flexible ways. Whatever trends, patterns, and indicators exist inside massive data sets become easier to identify and analyze.
We are glad the WSJ chose to highlight this issue, because continuing to rely on Excel is both an ongoing obstacle and a lost opportunity. Any company that has not considered an upgrade is putting its success at risk. Contact the team at AcctTwo to learn more about the options available to you and your organization.