CFOs Still Trying To Replace Excel With New Tools

Microsoft Corp.

moved Excel and its other Office products to the cloud ten years ago and has since offered a number of new features and updates. But some CFOs still want to reduce their app dependency in favor of programs that more efficiently automate data collection and analysis. They say there are limits to how effective Excel is, with users struggling to keep up with changes and verify financial information.

Last year’s abrupt shift to remote work during the pandemic, which forced CFOs to manage company finances and close books remotely, highlighted gaps in the use of Excel , said Glenn Hafler, director of consulting firm Hackett Group. Inc.

“The pandemic has really exposed the vulnerability of finance teams due to their reliance on Excel,” Hafler said.

Entering data manually, which 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, Colo., revealed earlier this month that it corrected an accounting error that came from an Excel sheet.

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

“Excel is an extremely valuable tool, but I think most businesses, including us, put too much faith in it,” he said.

Pure Cycle, which reported about $ 500,000 in quarterly interest income more than it should have, introduced more controls around its reporting processes and shifted as many tasks as possible into its accounting software to avoid to overuse Excel, McNeill said. The company reported sales of $ 2.6 million in the quarter ended May 31, compared to $ 1.8 million in the prior year period.

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

It’s not just small businesses like Pure Cycle that rely on Excel. Larger companies, for example jeans maker Levi Strauss & Co., which generated $ 4.5 billion in revenue last year, are also using it.

Levi’s manages 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 is about to change, as the company is working on implementing a new artificial intelligence tool to handle these tasks. The transition will take place over the next two years and the first tasks will leave Excel in early 2022, according to the company. “The pandemic has strengthened the business case for change,” the company said.

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

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

Microsoft declined to provide a recent figure for the number of businesses that use Excel, but reported 258 million paid users of its Microsoft 365 business suite of office products as of the end of the first quarter of 2020. Monthly Microsoft Excel usage is up nearly 30% year on year, according to a spokesperson.

These changes, however, do not take away the desire of CFOs to become less dependent on Excel. “It might help to a certain extent, but integrating complicated calendars into our accounting software is always a better solution,” said Mr. McNeill of Pure Cycle. Levi’s said recent Excel upgrades haven’t changed the need for more sophisticated tools.

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

OneStream LLC Software, Oracle Corp.

, Anaplan Inc.

and Workiva Inc.

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

San Francisco-based Anaplan hired Victor Barnes, former chief financial officer of the Coca-Cola division earlier this year. Co.

, to promote its product to professional customers. While at Coca-Cola, Barnes shifted his team from Excel to Anaplan for long-range planning processes, which reduced the time needed to consolidate information by over 70%, to two weeks. , did he declare. Anaplan said its revenue has increased in recent quarters as it has signed 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 some of her team use Excel, something she tries to limit.

The company’s finance function switched in February to a new planning and analysis tool and automates tasks such as approving expense reports. “We continue to put in place systems that reduce reliance on Excel,” she said, adding that updates from Microsoft to Excel do not change that.

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

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

“It’s what they know and what they’re comfortable with,” she said of Excel. CFOs need to reorganize workflows and processes to ensure the transition away from Excel is successful.

Yet despite the best efforts of the companies, executives and advisors said they were unsure if Excel would ever really disappear.

“It’s deeply ingrained in people’s minds,” said Ms. Klindt of Workiva. “I’m not the type of person to ban it.”

Write to Nina Trentmann at [email protected]