For Finance Planning and Analysis, Majority Still Use Spreadsheets

The majority of financial planning and analysis teams still rely on spreadsheets, according to a recent survey, although respondents noted the various problems involved, such as the time it takes to deal with spreadsheet errors.

A survey of 224 finance practitioners by gtnews, a unit of the Association for Financial Professionals (AFP), found 73% use spreadsheets for more than half of their FP&A analytical work. Just 37% use specialized FP&A software, although 10% say they plan to adopt such a system within the next 12 months.

"Companies continue to embrace Excel," said Kevin Roth, managing director for research and strategic analysis at AFP.

Mixed feelings

The survey respondents cited mixed feelings about spreadsheets, though. Just 38% judge them effective at dealing with large amounts of data, while 22% rated them as ineffective at that task.

They also noted such challenges as the time involved in identifying and correcting errors (cited by 64%), the need to manually update changes in reports (63%) and the effort involved in manually collecting non-system data (60%).

While spreadsheets are easy to set up, said Robert Kugel, research director at Ventana Research, "there is a very large ongoing cost to using spreadsheets because when they're used by, say, a half a dozen people a half a dozen times, they begin to require an awful lot of maintenance."

Cost of spreadsheets

Asked to quantify the manual effort involved in FP&A, including locating data, copying or pasting data and formatting it, two-thirds of the AFP study respondents said such chores took nine or more hours a month of their time, while 27% said they took more than 20 hours a month.

"There's a lack of understanding of the true cost of spreadsheets," Kugel said. "They're free but people's time isn't."

Using software to automate that manual work would give FP&A teams more time to interpret the data and think about how the company should respond, Roth said. "Sometimes you can't do that if you're spending so much time managing all the spreadsheets."

Use of software

More than three-quarters of the companies that use software for FP&A use traditional systems from major vendors such as IBM's Cognos, Oracle's Hyperion and SAP's BPC.

Budget considerations were seen as the biggest barrier to adopting software solutions, cited by 50 percent of respondents, followed by the difficulty of demonstrating an ROI and a lack of IT support, both cited by 40 percent.

"There's no capital investment needed to use Excel," Roth said. "It's sitting there on your desktop. But there are technical limitations."

If a company considers the amount of time that staffers spend to get things done, "a lot of these tools are cheap," Kugel argued. "What's it worth to you to get the budget done in three weeks instead of eight?"

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