You can read in so many articles these days, from The Wall Street Journal to Forbes, that Excel is not a reliable tool for complex modeling, and that it is at the root of major mistakes and inefficiencies. The latest event that triggered this rally against Excel is the recent news that Harvard University professors Carmen Reinhart and Kenneth Rogoff made significant errors – solely attributed to Excel – in their 2010 paper “Growth in a Time of Debt.” Another startling example is the renowned “London Whale” story of 2008.
And for every highly visible case, how many billions of dollars have been lost over the years to smaller cases of Excel ineptitude? Seriously, 20 years after we as an industry declared the “end of spreadsheet hell,” why are we still talking about Excel inefficiencies?
The shortcomings of Excel highlighted in these and other examples include the inability to run large, complex models, lack of traceability and auditability, and extreme fragility (ask any CFO about the model that they can’t use because the person who built it left their company). Additional shortcomings include limited integration with other enterprise systems and inability to support collaboration… unless you consider email exchanges collaboration.
What I very rarely read about is the why! Why is Excel still the de-facto modeling tool for pretty much every business user? Just a couple of days ago, one of the most forward thinking practitioners I know told me that his finance analysts demand that any enterprise system they purchase have a “link-to-Excel escape hatch” so they can actually get their work done. What does this tell us about the billions of dollars that have been poured into enterprise software and services over the last three decades?
Here is my take:
1) Enterprise software sucks for the end-users
Don’t get fooled by the sleek demos that you see on the main-stage keynote presentations at conferences held by enterprise software mega-vendors. The majority of business users will tell you that they are dealing with antiquated, inflexible and highly frustrating user interfaces on a daily basis. So where do they find the flexibility, ease of use, and immediacy required to perform simple what-if analytics? The easy answer is Excel. Does that mean that they love it? No, and users are very quick to recognize its limitations, but it is the easiest and often the only solution available to them. They have reluctantly learned how to deal with it because they have no other choice.
2) Enterprise software vendors have complacently declared Excel the winner
Coming up with an alternative is very difficult, so vendors decided that instead of working on this problem, they would declare Excel the winner by default. They would address the weaknesses of Excel (no single version of the truth, lack of security and collaboration, etc.) but still allow Excel be the front end.
That may have worked years ago when the industry was focused on fixing the relatively simple problems of the finance department—assigning annual budgets to department heads, comparing actual versus plans, or working at a fairly high level and across a limited number of dimensions, but the world has changed. The once beloved Excel-centric model falls flat on its face when customers use spreadsheets to address the very dynamic problems of operational modeling and planning across a large number of dimensions. This is especially true at a lower level of granularity with more complex rules or when a tighter level of collaboration, auditability, and traceability is required.
3) Business users are ready to ditch Excel
Here is where the controversy starts: I am convinced that if provided with the right alternative, users will ditch Excel. This alternative is not a better presentation layer or a fancy Business Intelligence front-end, but an environment that gives business users the level of immediacy, power, and connectivity required for them to perform their job a lot more effectively. This solution exists, and it is Anaplan.
Anaplan delivers a game-changing platform that is used every day by business people in some of the largest companies in the world, including Diageo, Pandora, Kimberly-Clark Eastern Europe, and McAfee. These top-performing companies are leaving behind the rigidity and painful implementation of old-school enterprise technologies and embracing the power of Anaplan across many industries and use cases, including long-range and financial planning, territory and quota management, strategic workforce planning, and IT performance management.
My conclusion is simple: we need to thank Excel for covering for enterprise software UI inefficiencies for so long, but it is time to move on! Excel, you’ve done your time!
Interested in connecting with Fred to discuss this post further? Get in touch with him: @flaluyaux or us: @anaplan and let’s talk!
About the Author: With more than 20 years as a leader in the EPM sector, Fred has built his career focusing on providing solutions that help organizations worldwide achieve financial and business excellence. Prior to Anaplan, Fred was the SVP and GM for SAP Applications for EPM, GRC, and Finance Line of Business. Fred started his career in the area of CPM, leading ALG‘s global operations until acquired by Business Objects.