Finance chiefs are still trying to replace Excel with new tools

Microsoft Corp.

moved Excel and its other Office products to the cloud a decade ago and has offered a number of new features and updates since then. But some CFOs still want to reduce their reliance on the app in favor of programs that more efficiently automate data collection and analysis. They claim that there are limitations to the effectiveness of Excel, as users find it difficult to track changes and verify financial information.

Last year’s abrupt shift to remote work during the pandemic, which forced finance chiefs to manage corporate finances and close books remotely, highlighted shortcomings in the use of Excel, said Glenn Hafler, a director at the firm. Hackett Group consulting INC.

“The pandemic really exposed the vulnerability finance teams have as a result of their reliance on Excel,” Hafler said.

Entering data manually, which is what many users still do, can be time consuming and lead to errors that go unnoticed, especially when employees are dispersed in remote workplaces.

Pure cycle Corp.

, a water and land management company based in Watkins, Colorado, earlier this month revealed that it had corrected an accounting error that originated in an Excel sheet.

The error was the result of complicated formulas used to allocate costs and the lack of a detailed review by company management, said Kevin McNeill, Pure Cycle’s chief financial officer.

“Excel is an extremely valuable tool, but I think most companies, including us, trust it too much,” he said.

Pure Cycle, which reported around $ 500,000 more in quarterly interest income than it should have, is introducing more controls into its reporting processes and shifting as many tasks as possible into its accounting software to avoid excessive use of Excel, McNeill said. The company posted $ 2.6 million in revenue during the quarter ended May 31, compared to $ 1.8 million during the prior year period.

The widespread use of Microsoft’s Windows operating system and the Office suite of products in the 1990s helped establish Excel as the leader in the spreadsheet market. Finance employees became familiar with the program and cultivated their own ways of working on it over the years. It’s a habit that many have found difficult to break, even when new business software and other spreadsheet offerings, such as Google Sheets, are available.

It’s not just the smallest companies like Pure Cycle that trust Excel. Larger companies – for example, jeans maker Levi Strauss & Co., which generated $ 4.5 billion in revenue last year – use it, too.

Levi’s runs its supply planning in Excel, which covers raw materials, supplier interactions and capacity planning, according to Harmit Singh, the company’s chief financial officer. But that will change, as the company is working to introduce a new artificial intelligence tool to handle those tasks. The transition will occur over the next two years and the first tasks will move out of Excel in early 2022, according to the company. “The pandemic reinforced the business case for change,” the company said.

Microsoft said it is updating Excel, which moved to the cloud in 2011 as part of Office 365 and is now one of the applications in the company’s Microsoft 365 offerings, every month and pointed to new features, such as one that tracks changes for each worksheet. cell phone that was launched this spring. Another new feature allows users to create a formula and share it with others within a workbook, a collection of one or more worksheets.

“Excel is a product that is well loved by all of our customers,” said Brian Jones, Excel product manager, adding that it can be used on any platform or device.

Microsoft declined to provide a recent figure on the number of companies using Excel, but pointed to 258 million paid users of its Microsoft 365 business suite of office products at the end of the first quarter of 2020. Monthly use of Microsoft Excel increased nearly 30% year-over-year, according to a spokesperson.

However, those changes do not eliminate CFOs’ desire to be less dependent on Excel. “That could help up to a point, but including complicated schedules in our accounting software is still a better solution,” said Pure Cycle’s McNeill. Levi’s said recent updates to Excel have not changed the need for more sophisticated tools.

Businesses looking to replace Excel, at least in part, have a variety of options, depending on the task at hand. SAP SE,

OneStream Software LLC, Oracle Corp.

, Anaplan INC.

and Workiva INC.

They are among the companies that offer cloud-based information technology for different parts of the finance function.

San Francisco-based Anaplan earlier this year hired Victor Barnes, former Coca-Cola Divisional CFO Co.

, to promote your product to commercial customers. During his time at Coca-Cola, Barnes had his team switch from Excel to Anaplan for long-term planning processes, reducing the amount of time required to consolidate information by more than 70%, to two weeks, he said. Anaplan said its revenue has grown in recent quarters as it has signed up more clients.

Workiva provides a software-as-a-service platform for financial and non-financial reporting and compliance, but even so, CFO Jill Klindt says that some members of her team use Excel, something she is trying to limit.

In February, the company’s finance function moved to a new planning and analysis tool and is automating tasks like approving expense reports. “We continue to implement systems that reduce reliance on Excel,” he said, adding that Microsoft’s updates to Excel do not change that.

Workiva has also seen an increase in customer demand since the pandemic, Klindt said.

Consultants say that it is not just IT that needs to change, but also the way people organize financial tasks. Otherwise, companies risk spending money on new systems while employees continue to work in Excel and ultimately just copy and paste the data, said Vanessa Keating, who runs Hackett’s digital finance advisory practice.

“This is what they know and what they are comfortable with,” he said of Excel. Finance managers must reorganize workflows and processes to ensure a successful transition from Excel.

Still, despite companies’ best efforts, executives and advisers said they’re not sure whether Excel will ever really go away.

“It’s very much on people’s minds,” said Ms Klindt of Workiva. “I’m not the type of person who would forbid it.”

Write to Nina Trentmann in [email protected]