The future of spreadsheets in the world of finance
It seems like yesterday for the old timers, or just the distant past to more recent newcomers, but spreadsheets have been around for very long. Spreadsheets have replaced paper-based systems throughout the business world. They were first developed for accounting or bookkeeping tasks. Now they are used extensively in any context where tabular lists are built, sorted, and shared. Excel has evolved itself at becoming the most used and known spreadsheet system in the world.
Originally, spreadsheets were a simple organizational resource but they have rapidly evolved into heavy-duty analytical tools. Nowadays known as Enterprise Performance Management (EPM) solutions. The role of spreadsheets are changing. Offline spreadsheets are likely to decrease due to technological advances. Still, the simple spreadsheet remains a valued tool in the financial world.
Here are a few reasons why spreadsheets form part of the future in the world of finance:
- Spreadsheets are intuitive and easy to use – Due to their design, spreadsheets are not intended to deal with the complex issues of the finance office (although spreadsheets can be VERY complex). Instead, they were created to allow users to input a relatively small amount of data, collate and process it and then deliver an accurate accounting of such things as budgeting, financial consolidation, forecasting and reporting.
- They provide straightforward analytics – Spreadsheets allow users to forecast fairly easily and with some degree of accuracy. Admittedly, spreadsheets contain a lot of human errors. However, they do provide a baseline from which questions can be posed to more powerful and more accurate analytical platforms (such as statistical R language).
- They are a great front-end input solution – In a survey conducted by Financial Executives International, more than 50% of the respondents polled admitted to using standard spreadsheets like Excel as a standalone tool. Furthermore, they also use it as a complementary front-end method to input data into other, more complicated systems. Why? So that they could meet their EPM requirements for planning and budgeting, financial reporting and disclosure, and analytics while relying on a tool they are readily familiar with.
- They are affordable – With a remarkably low cost for the functionality they deliver, spreadsheets are the go-to choice for most start-up companies. Online spreadsheets like Google Sheets are free in usage. Offline spreadsheets like Excel only cost 10 euros a month. The learning curve to use them is quite small and almost no formal training is required. Traditional spreadsheets are simply right “first choice” for small scale businesses. Later, as the business grows, the information can be migrated onto more powerful platforms.
- Security is generally not a problem – Access to consolidated spreadsheets is usually limited to a select group of senior executives. By simply securing the actual desktop with a password, using encrypted drives and delivering the spreadsheet via physical means – this means thumb drives and not email. The data remains relatively secure unless phishing and human error are involved.
The future of Spreadsheets
Despite the advantages of spreadsheets, the use of offline spreadsheets for dynamic purposes is likely to decrease. The rise of cloud-based EPM software packages – and a new wave of solutions known as Corporate Performance Management (CPM) solutions – allows a company to take a more strategic approach to their business. In addition, these solutions allow the various divisions within a company to more easily collaborate and integrate their various contributions to the overall scheme.
This evolution is driven by more than just technological advances. Most businesses – even relatively small ones – find themselves dealing with the globalization of many of their products and services. EPMs allow them to readily handle such processes as currency conversions while still providing accurate data consolidation and reporting.
Similarly, the acquisition or merger of one company by another leads to the need for data consolidation from multiple legacy systems. That’s where EPMs come in. Finally, the “need for speed” – that is, real-time reporting – is also driving companies towards the EPM and away from traditional spreadsheets. EPMs allow multiple departments to give timely feedback to the Office of Finance. It even allows more insightful and informed decision-making.
In a nutshell, the role of the spreadsheet might be changing
However, it’s not going anywhere any time soon. It will likely live on as an easy-to-use tool. A tool for simple tasks that don’t require robust analytics or data management. The online spreadsheets like Google Sheets will take in a higher place. Sheetgo will take place in the new shift as a Google Add-ons. This means that our services will be available in all Google Sheets. To conclude, simple spreadsheets will almost certainly remain one of the main sources that feeds data into more advanced systems.
Finance workflows based on spreadsheets
It is possible to process entire finance workflows on spreadsheets, take a look at the following blog post how you can easily create an expense tracker in Google Sheets, using one of our ready-made finance templates.