Dive Brief:

• CFOs recognize the limitations of using spreadsheets as their primary tool for preparing budgets and forecasts, but they’ve invested too much time and knowledge to replace their version of Excel and are held back by the potential cost of a third-party solution, a survey of 200 finance leaders at mid-sized companies shows.
• In its favor, Excel is seen as a highly flexible tool thanks to the versatility of spreadsheets.
• “Excel has only further cemented its position as the universal language of finance,” survey sponsor DataRails says in its report. The company provides software that helps companies make better use of Excel in the financial planning and analysis (FP&A) function.  

Dive Insight:

Despite the limitations of the tool, which stem largely from Excel’s manual processes — sharing spreadsheets, correcting mistakes, sourcing data — almost two-thirds of CFOs continue to use spreadsheets as part of their budgeting and forecasting processes, the survey shows.

About a quarter use only Excel, almost half use a combination of Excel and FP&A software and the remaining quarter have dropped Excel altogether and use specialized software.

Time sink

The biggest complaint among spreadsheet users is the time required by manual processes to complete even basic tasks, such as budget preparation.

“With so much time spent on manual processes, the analysis part of Financial Planning and Analysis gets lost,” the report says. 

It takes between four weeks and three months for the typical organization to complete its annual budget, after which more time is spent correcting mistakes and updating data. 

“The sheer length of time involved is cited as the biggest frustration for CFOs (29%) followed by ultimate lack of business impact (28%),” the report says. “This follows a common complaint that many budget assumptions are no longer relevant once the lengthy process is complete. Other frustrations include errors that have to be fixed — a constant challenge for one in five CFOs.”

Companies of fewer than 300 employees typically prepare the budget with a planning staff of 13, a number that grows to 23 for companies with 500 employees or more. 

“Sharing financial documents and spreadsheets across so many stakeholders adds complexity and creates delays,” the report says. 

Separate from the budget, planning staff spend on average 14 hours a week preparing ad hoc reports.

“Data preparation is a big part of this laborious process,” the report says. “An average of 42% of that time, or around six hours, is spent on data preparation and cleansing. These activities include consolidating different versions of data, checking for errors, or manually inputting information into systems of record.”

Even so, finance leaders tend to be reluctant to dispense with spreadsheets. “CFOs cite three reasons for sticking with Excel,” the report says. “First, the time and knowledge invested in Excel models makes it hard to ditch. Second, Excel’s flexibility is unrivaled. And finally — the implementation costs of a potential third-party solution.”

If they and their team spent less time on manual processes, CFOs say, they could spend more time adding value strategically.

“The situation severely reduces their ability to participate in strategic decision-making,” the report says. 

A third of CFOs say they’re dissatisfied with their overall output, and nearly a third say “constant spreadsheet jockeying” leaves them bored.