We love Excel and Google Sheets. But there’s a limit to what you can do with them.
Despite the limitations of Excel or Google Sheets forecasting, most FP&A teams still prefer spreadsheets to analyze and report data and create forecasts.
At first glance, spreadsheets have clear advantages. Some of the most important ones include:
But are Excel and Google Sheets forecasting still possible in the face of more complex requirements? Can they still be relied upon for organizing and presenting data or are they more likely to create bottlenecks?
Table of contents:
Today’s post takes a deeper dive into the limitations of these two solutions. We’ll also break down how a modern FP&A platform can complement them without sacrificing their ease of use.
Integrating data from multiple sources into your Excel or Google spreadsheets is a painstaking and tedious process. Users usually have to do this manually, spending significant time and risking errors. The more sources you have, the longer it will take you to export data and re-enter it to your spreadsheet. And you have to do it over again every time you want to run any analysis to make sure you’re using up-to-date data.
Additionally, the very flexibility that makes Excel and Gsheets so popular also means that it’s easy for people to make unintended changes to carefully designed models. Even a small mistake in the model can raise questions about the trustworthiness of a forecast.
According to both PwC and KPMG, more than 90 percent of corporate spreadsheets contain errors. This comes as no surprise, as it’s so easy to get a formula wrong, overwrite important data in Excel or Gsheets, or delete a row or column you think isn’t necessary, but that breaks a calculation.
If you rely on spreadsheets, your FP&A team will be wasting time pulling in information from various sources and checking for errors. This significantly limits their capacity to contribute to more valuable strategic discussions.
Most FP&A tools integrate with other key data sources. For example, OnPlan works with your favorite platforms, including Netsuite, QBO Quickbooks, Salesforce, BigQuery, SnowFlake, and others.
This saves your FP&A team a significant amount of time, as they’re no longer required to copy data from multiple sources manually.
Your organization will benefit from automated updates of historicals and no longer having to stitch together fragmented data. This means you’ll have more time to focus on value-adding activities instead of being stuck doing repetitive tasks.
Excel has been around forever. And since Google Sheets relies on similar structure and formulas, most finance professionals are comfortable with these solutions. However, that may not be the case with other departments at your organization.
For a truly collaborative decision-making process, people performing different roles need quick access to data relevant to their area of expertise.
This needs to happen at the click of the button, without putting the integrity of your data at risk. If someone who’s not familiar with Excel or Gsheets goes into a spreadsheet looking for information, there’s a good chance they may change something inadvertently, affecting your entire forecast.
Additionally, a CEO may not need the same level of granularity compared to a CFO, but neither Excel nor Gsheets can provide them with a data view or dashboard tailored to their needs at the click of a button. This makes filtering out relevant information time-consuming and slows down cross-company collaboration.
Modern FP&A solutions have fantastic reporting capabilities. They can greatly increase the speed at which you access data. Unlike Excel or Gsheets, they feel less intimidating and more accessible for people who are not comfortable with spreadsheets.
Most importantly, they can also ensure every person in the company receives information relevant to their role only.
These tools let you set up role-specific dashboards and acts as one source of truth for your entire company. In it, you can set up as many dashboards as you want in parallel without having to manually copy your data like in Excel or Gsheets. Each of these dashboards will have multiple real-time data points available at any moment.
For example, the dashboard of a Head of Sales will show information such as monthly recurring revenue (MRR), churn rate, average customer value (ACV), customer acquisition cost (CAC etc. The CFO’s may also contain information about cash balances and overhead costs, whereas a CEO will likely need an overview of every department’s metrics for a better decision-making process. A modern FP&A solution also makes it easy to create graphs, which let you see trends over time and compare both historical periods and forecast periods.
Both Excel and Gsheets are highly versatile tools that serve more purposes than just FP&A. However, they don’t offer the most seamless process for enabling information sharing while protecting sensitive data.
For example, an organization could have a sheet in their forecast with salary details by individual. To be able to share it, someone would need to manually pull out that salary information into a separate spreadsheet. This creates a situation where you’re using two spreadsheets communicating with each other, which isn’t very efficient. It also increases the risk of corrupted data from broken links.
Excel and Gsheets also offer limited auditability features and version control, and can’t be used for process management. And even though these tools are making progress in terms of audit trail capabilities, they still make checking the validity of your data more difficult than it needs to be.
FP&A software makes it easy to restrict access to information based on roles. It also shows you who has logged in to the system and when they have logged in. If there are multiple people with access to a model, knowing who made which change is crucial for validating your data.
It’s also useful to know how often your team is using the software. For example, if you see your Head of Sales hasn’t logged in to the system for a while, maybe it’s time to speak to them and figure out why that’s the case.
In areas such as protecting sensitive information, advanced audit trails, and version control, a dedicated FP&A tool offers significant advantages over Excel or Google Sheets.
If your company is in growth mode and you’re using Google Sheets or Excel, you should be wary of the challenges of scaling up. For example, if you’re introducing a new product line or service into your offering, you’re going to have to extend your existing model. As your business expands, and you keep extending your models, they will become increasingly difficult to maintain.
If one person is updating the spreadsheets, they may be the only one capable of updating the model and finding the information you need.
As your business grows, and spreadsheets increase in complexity, depending on one person for making updates is going to create a huge bottleneck.
A dedicated FP&A solution is designed with the user in mind. It allows you to make additions to your models very easily and makes it easier for everyone to find the information they need.
It also facilitates a more structured way of scaling up and ensures you’re not dependent on a single person for making changes to your forecasts.
Additionally, great FP&A tools allow you to quickly run or update scenarios, which is essential if you’re growing quickly and throwing more data points into the mix.
The problem with Excel or Gsheets and scenario planning is that you have to set up a copy of your original model, which people often forget to do. Then they save over the base case, and when they discover this, they have to try to recreate it. Version control hell… And that’s if they discover they’ve overwritten their base case right away. But it could take weeks before you notice that there’s something wrong with your base case model.
Even if you remember to save your scenarios with a different name, when you’re working with multiple scenarios, that can also mean keeping track of 5-6 spreadsheets. Making structural updates to your model can mean updating each and every one of them. This makes efficient data management one of the biggest issues with building scenarios in Gsheets and Excel.
With the right FP&A solution, structural changes are reflected in your base case and all of your scenarios instantaneously. There’s never a danger of overwriting one versus the other. Creating and updating new scenarios can be done very easily, without the need to copy anything or keep track of changes in multiple sheets.
Another big advantage of using a dedicated FP&A tool is the ability to see the results of all your scenarios in one dashboard with the click of a button. For example, you can see the impact on your cash balance for the next three years if you decide to make an investment versus not making it. You can easily create a side-by-side comparison/graph for both those scenarios (and more scenarios if you need them). This isn’t possible in Excel or Google sheets without significant additional effort.
Using a modern FP&A tool doesn’t mean you’re replacing your Excel or Google Sheets spreadsheets. There are FP&A tools available that keep the same formulas and structure you’re used to — and even allow you to interact with models directly in Google Sheets — while adding functionality specific to the needs of FP&A teams.
This includes process and version control, dashboards tailored to specific roles, customizable access permissions, building scenarios with the click of a button, and other capabilities that will speed up and simplify your forecasts.
Implementing FP&A software will help you:
To learn more about OnPlan’s approach and see it for yourself, feel free to book a 30-minute demo with us . We’re looking forward to connecting with you!
Ed note: Want to dive deeper into essential FP&A topics? Check out OnPlan’s most popular posts of all time here:
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