Ultimate Excel finance guide
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Microsoft Excel is finance's most ubiquitous tool; in fact, specialty financial management software vendors often identify the program as their biggest competition. But the choice between Excel and specialty software isn't always an either/or scenario thanks to Excel automation tools, which allow organizations to access data from their ERP systems within Excel spreadsheets. But while users say these tools can save time, experts point out that they don't resolve the fundamental problems that come from relying on Excel.
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"The fact that you can connect to the general ledger to feed data to or perhaps even back to a GL system to report the resulting budget or forecast -- it still doesn't change the underlying weakness of using Excel spreadsheets for planning, which is lack of collaboration [and] potential for error," said Steve Player, founder and managing partner of the Player Group, located in Dallas. "It's a Band-Aid that solves one of a multitude of problems."
But Rob Livingstone, principal and owner of Rob Livingstone Advisory, based in Sydney, Australia, pointed out that using an Excel automation tool is better than simply using Excel alone. "It's probably better used than just [to] live natively in Excel, because it's got some sort of rigor around the integrity of the whole system, whereas the integrity of an Excel spreadsheet is potentially untested," he said.
So what are the pros and cons of using add-on Excel automation tools for finance functions? While users and experts expressed an array of opinions, one thread ran throughout: Spreadsheets in finance are here to stay.
Excel-based automation tools reduce manual data entry
Spreadsheet Server, an Excel-based reporting tool produced by Global Software Inc., offers configurations to connect in real-time to several commonly used enterprise resource planning (ERP) systems, including Oracle, SAP and Infor. According to two Spreadsheet Server users, the tool can significantly reduce the amount of time and manual effort that goes into ERP data imports and exports.
Janice Reitman, accounting manager at Guthy-Renker, a global marketing organization based in Santa Monica, Calif., said the company has used Spreadsheet Server in conjunction with an Oracle ERP system since 2006. "We use Spreadsheet Server for most of our analytics because we find it is much easier to get data out of Oracle at the GL detail that we need to be able to explore questions and account balances," she said.
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Before implementing the Excel automation tool, she said users would have to export reports from Oracle in a text format and then manually reformat them in Excel, which took around a half hour. "Now it takes minutes to export data into Excel, and the level of drilldown I can get to [makes it] so I don't have to jump in and out of different responsibilities in Oracle to investigate," she said. She added that the real-time ERP connection makes it possible to refresh Spreadsheet Server reports to account for any changes made in Oracle, instead of having to re-export data.
Ken Paras, director of corporate accounting at the Dart Container Corporation, based in Mason, Mich., told a similar story. "We spend much more time doing analysis now," he said. "In the past we'd spend days trying to get account reconciliation correct, and then there wasn't a lot of time to analyze [the data]. Now we can run a report in 30 seconds and do some deep-down analysis of that account." The company uses the tool to construct balance and income sheet statements, as well as "anywhere we want to see the activity in the GL," Paras said.
However, both Paras and Reitman acknowledged the downsides of using Excel in finance processes. For instance, when asked if he had experienced challenges with Spreadsheet Server, Paras said most issues that arise are usually rooted in Excel.
"People come to me all the time and say, 'I'm trying to do this with Spreadsheet Server, and I can't,' and I say, 'Here's what you need to do in Excel to do what you want to do,'" he said. Also, some users run different versions of Excel, which makes it difficult for him to replicate and solve their problem.
"We don't ignore the fact that once you dump the data in Excel it's changeable, and that's why we always have financial statements that come out of Oracle," Reitman explained. "The version we're working with while closing might be a Spreadsheet Server version, and they'll probably be doing a budget using the Spreadsheet Server files, but we always go back and check to see what the result would've been in Oracle."
Why is Excel so pervasive in finance?
Before Spreadsheet Server was implemented at Solo Cup, the company Paras was working for when Dart acquired it in early 2012, he said the organization considered adopting Oracle Hyperion, an enterprise planning and budgeting system. Ultimately, he said, Hyperion was too robust for the company's needs, and Spreadsheet Server's price-to-value ratio was more reasonable.
The learning curve could have been an issue. "[Spreadsheet Server] is an Excel-based tool, and everybody knows Excel. Some of the other programs like Hyperion are great but less familiar, and oftentimes people will shy away from it."
Familiarity and low barrier to adoption are two reasons that explain the pervasiveness of Excel within the finance function, according to Livingstone. In contrast, specialty software forces users to operate within certain parameters, even when its interface is designed to resemble a spreadsheet.
"The spreadsheet is a blank canvas -- there are no real constraints in using Excel, so that's probably the biggest draw card," Livingstone said. "Once you have an enterprise application, that may limit the size of the sand pit."
But a large sand pit might not be good for a collaborative business environment. "Excel's like people with magic. There's different ways to make a magical result happen, [and] there's different ways in Excel to make results happen," Player said. "You think about doing it one way, and somebody else thinks about doing it another way [and] lo and behold, you'll do something that might work for you but [not] for them," he said. "It's a great tool for people to play with. It's just not robust for a production environment."
Paras mentioned two ways that his company safeguards against Excel errors: inserting "check figures" into spreadsheets, which will raise red flags if values do not return as expected, and keeping files in a secure directory to lessen the risk of an unauthorized person deleting a column or row. And considering that finance users won't be relinquishing their spreadsheets any time soon, both Reitman and Paras said they would highly recommend Spreadsheet Server to their colleagues.
"If people can get the data out of their current system, no matter how hard it is, they might look at this tool and say I can do that by myself, [so] I don't need an add-on," Reitman said. "But if they were to use the system, they would understand the difference between having to export your data and create a Spreadsheet Server [template] versus building it on the fly and keeping it live and always attached to your system. It's an amazing thing."
About the author
Emma Snider is the associate site editor for SearchFinancialApplications.com. Follow her on Twitter: @emmajs24.