Excel is a tool that every financial planning and analysis (FP&A) professional knows all too well. Some use it for nearly everything, while others would leave it behind if they could. But there have been advances in Excel in recent years that many financial professionals may not know about.
In a new FP&A guide, underwritten by Vena Solutions, AFP looks at how Excel has evolved, and continues to persevere over more than 30 years. We speak with multiple practitioners—some who are true Excel evangelists and others who only use it when they need to. The guide examines the spectrum of ways to apply Excel, including recent advances, add-ins and third-party solutions/offerings, to help you get the most out of this ubiquitous application.
TO EXCEL OR NOT TO EXCEL
FP&A professionals can apply Excel to a multitude of tasks, including financial modeling, visualization, data analysis, data storage, textual and quantitative data, and regression/statistical analysis. The primary reason is Excel’s flexibility; it allows practitioners to tackle a throng of different responsibilities in a fairly inexpensive, intuitive platform.
However, Excel is not an ideal solution to every problem. Indeed, as FP&A as a whole increases in complexity, practitioners sometimes require more intricate tools, particularly in budgeting, planning and forecasting, with advanced functionality such as data analytics and warehousing.
“The biggest issue with Excel that I imagine people deal with is the processing time when you have significant amounts of data,” said Matt Blickley, senior director of FP&A for Coca-Cola Consolidated. “Everything else that you can do—the calculations, the linking, the formulas, the whole functionality of Excel—I think is fantastic. But there are a lot of limitations with the amounts of data.”
Excel as a standalone application has some common weaknesses frequently cited by finance practitioners, such as a lack of enterprise grade security, collaboration and control features (workflow automation, version control, business rules or user permissions, detailed audit trails, and easy integration with companies’ general ledger and other financial data source systems).
Rishi Grover, chief solutions architect for Vena Solutions, suggested that practitioners may be able to get by on Excel alone, depending on how sophisticated their needs are. “For ad hoc kind of processes, it’s still really good—if it’s not repeatable and doesn’t involve as many users,” he said.
But moving beyond Excel to a dedicated system is a costly endeavor, so FP&A professionals should be sure that they really need to make the move. Grover advises practitioners to consider certain factors before making the jump, such as the number of data sources they are integrating, the amount of time they spend putting data into Excel, and how they ensure the accuracy of the data. Most of all, you need to make sure that any type of specialized software you’re considering is going to be used across the entire department. “You have to involve the end-user in the process, because if it’s not adopted, you’re wasting your time or money,” he said.
Excel as it exists today is more powerful than ever as a standalone application with new features and functions. Add-ins can extend its native functionality and take it to a higher level. Connecting Excel to third-party vendor software can apply the rigor of additional computing power and enterprise controls to make it even more robust. For the FP&A practitioner, the goal is elevate his or her skills within each of these paradigms, and perhaps even leap to a higher paradigm.
Download the AFP Guide to Making Excel Work for FP&A here.