6 Reasons To Ditch Spreadsheets & What To Use Instead
Posted on: February 13, 2023
Many businesses still use spreadsheets to store and sort data. On the surface, they are cost-effective and easy to use. While spreadsheets have their place as a basic accounting and collaborative tool, they have their shortcomings, which is why many businesses are moving to financial planning and analysis software. Financial reporting and planning software come loaded with features. They generate business critical reports and provide financial insights that executives can use to make informed decisions.
Still not convinced that you should move away from spreadsheets? We’ll give you six reasons why ditching spreadsheets is in your best interest.
Limitations of Use
Spreadsheets are typically used for simpler statistical calculations and analysis. Spreadsheet templates are designed to deal with a certain amount of information. If you try to scale spreadsheets or share files between incompatible programs, errors may occur. In 2020, at the height of the COVID-19 pandemic, Public Health England may have misplaced around 16,000 Covid test results due to Excel’s physical limit of one million rows.
Susceptible to Errors
Spreadsheets rely on humans to enter data and may have errors in the form of a misreported number or an incorrect formula. Even a small error can lead to faulty interpretations, resulting in huge losses. There are several examples of spreadsheet errors costing companies billions. In 2012, JPMorgan Chase suffered a massive $6.4 billion loss due to a spreadsheet error – a cell was mistakenly divided by the sum of two interest rates, instead of their average, along with other errors involving copy and paste.
In the same year, about 10,000 people were asked to return their tickets to an Olympic synchronized swimming event when a manual error of inputting 2 instead of 1 occurred, which meant that 10,000 extra tickets were sold. In 2018, a well-known wine and liquor retailer in the UK lost about 60% of its market value due to an arithmetic error in a spreadsheet.
Excel lacks advanced encryption features for safeguarding sensitive information. Spreadsheets’ security features, such as read-only and password protection, can be easily bypassed. Hackers can use Excel sheets, macros and other commands to deliver malware.
Any added security focuses on protecting the structure of Excel workbooks, instead of the data stored in them. Hackers often use unsecured Wi-Fi networks to carry out cyberattacks. Your remote workers may use unsecured networks to access spreadsheet data. This opens a window of opportunity for bad actors to orchestrate a cyberattack. As cybersecurity threats evolve, businesses around the world are moving away from spreadsheets.
Formatting & Maintaining Require Excessive Amounts of Time
Setting up a spreadsheet requires a lot of thought and effort. You will want to make sure that all the formulas are working and there are no calculation errors. As you create and import more spreadsheets into your workbook, it is necessary to ensure consistency, which can be a real pain in the neck.
Spreadsheets are very difficult to maintain. Any person who has access to a spreadsheet can change formulas, insert or delete rows and columns, or delete fields. It is not uncommon for spreadsheet users to modify calculations. Any modifications could mean extra work for other users who may be forced to spend hours rectifying errors.
When worksheets are not centrally controlled or updated, collaboration challenges can occur. Employees who work from home share spreadsheet data via email. It can be challenging to keep track of files as they move back and forth. As a result, many employees may unknowingly share the wrong version of the spreadsheet they’re working on with their colleagues.
Before sharing data via email, the sender should consolidate the data from different files. They may be required to obtain approvals from different parties, which can take time.
Lack of Accountability
If a spreadsheet error occurs, there is no way of knowing who made it. It’s almost impossible to know who edited which cell and when. Lack of audit trail leaves businesses exposed to compliance and regulatory risks.
Financial Planning & Analysis Software: A Better Alternative to Spreadsheets
Financial planning & analysis software addresses the shortcomings of Excel. They are specifically designed to automate financial data management. Here are some benefits of financial planning & analysis software:
- Reduced errors: A financial planning & analysis software tool can help prevent manual data entry and calculation errors by automating the entire process. When you have accurate data, you can better plan daily, weekly, monthly and yearly operations. Financial planning & analysis software can organize records, ensuring that all your data is in one place so your managers can easily access them when forecasting demand or creating a budget. It can also help categorize expenses.
- Helps ensure regulatory compliance: Financial planning & analysis software helps account for changes in tax codes and accounting standards. With a financial planning & analysis software solution, you won’t miss any updates. In addition to keeping your business legally compliant, financial planning & analysis software helps you understand how regulatory changes can affect your business, paving the way for better decision-making.
- Advanced security features: Financial planning & analysis software backs up your data regularly, allowing you to mitigate data theft and data loss risks. It has advanced encryption features and can help ensure complete data protection.
- Improved productivity: Financial planning & analysis software can prevent mistakes that humans make when managing data. Reduced mistakes means your teams can focus on their most important tasks and make better decisions more quickly.
- Better strategic planning and analysis: A financial planning & analysis software tool can help your managers analyze market trends and assess scenarios. This paves the way for better decision-making.
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