When Microsoft Corp. released its spreadsheet program, Excel for Windows (Excel 2.0), in late 1987, Lotus 1-2-3 was all the rage. “Among numbers-crunching accountants, corporate planners and business school students, the program has developed the kind of loyal following usually reserved for Madonna and the Boston Red Sox,” the New York Times wrote on Oct. 2, 1987.
In that article, Jeff Raikes, then director of marketing applications programs at Microsoft, said about Excel, “We don’t expect [it] to make a huge impact right away. But we are heading into a technology transition, and over the long term we have a major opportunity.”
Controllers, use these best practice Excel reconciliation templates to get your team better prepared to tackle the month-end close.
But it didn’t take Microsoft long to knock Lotus off the top of the spreadsheet mountain. Within a year after Excel 2.0 debuted, its sales began outstripping Lotus 1-2-3, according to Excel guru David Ringstrom, CPA. IBM eventually pulled the plug on Lotus 1-2-3 in 2013; meanwhile, Excel continues to have a rabid fan base, with more than 750 million users worldwide, according to some estimates. There’s even an international Microsoft Excel championship (although the competition is limited to ages 13 to 22).
It’s no secret that accounting and finance professionals are among the most loyal to the iconic spreadsheet program, mostly because it’s fast, powerful, straightforward, and easy to use. According to the 2017 Benchmarking the Accounting & Finance Function report from the Financial Executives Research Foundation and Robert Half, 69% of U.S. companies still use Excel as their primary budgeting and planning tool.
“It’s a fantastic tool for tracking, analyzing, troubleshooting, modeling, and summarizing data,” said Jason Page, corporate controller of Provo, Utah-based Chatbooks, a subscription-based service that automatically turns digital photos into photo books. “I can quickly see and understand the summarized data, trace through formulas, understand what’s happening without much explanation, and ultimately see/touch/feel the underlying data. And it’s beyond easy to sort, filter, pivot, and chart information.”
Accountants’ loyalty even stretches outside the walls of their cubicles and offices.
“I wrote a children’s book and brought it to a publisher for review, and I was the only person who ever brought them a draft of a book in Excel, not a Word document,” said Eva Wells, CPA, corporate controller at Turck Inc., a Minneapolis-based company that specializes in connectivity and sensor products.
Why Excel is still relevant
But as more cloud-based financial software programs (and even database software solutions) hit the market, I asked Wells, Page, and a handful of other controllers what makes a manual-intensive tool like Excel still popular and relevant among accounting and finance teams in this age of automation.
“It’s the same reason why CAD [computer-aided design] software is popular for engineers who need to design and build things. We need to design and build things with numbers, and Excel is a very user-friendly tool to use for that purpose,” said Wells, an Excel user for nearly 25 years. “Even though you can theoretically create a report for most anything from your enterprise resource planning (ERP) system using business intelligence, it might not be able to be done fast enough, and it might not be flexible enough, to allow you to analyze thoroughly. You can build anything in Excel fast.”
Another reason is Excel provides a standard language that most people can understand, said Fred Butterweck, CPA, corporate controller of New York-based Clickspring Design, a multidisciplinary design firm. Because Excel is relatively intuitive, a person doesn’t need several years of training to become proficient with it, he added.
“Because of its linear format, Excel forces you to organize data in a logical and straightforward manner,” said Butterweck, who’s been using Excel professionally since 2000. “An important feature of Excel is that it allows the user to retrace his or her steps by looking at the formulas. Most importantly, it allows users to retrace someone else’s steps if they didn’t create the spreadsheet.”
And Butterweck added that Excel is relatively cheap and doesn’t have implementation or setup costs like some business intelligence platforms. Microsoft Office 365 Business and Business Premium plans cost between $8.25 and $12.50 a month, and customers on either plan get access to applications like Excel, Word, and PowerPoint, among others.
“The Cheesecake Factory of financial tools”
The versatile range of Excel’s capabilities—“from simply logging data and preparing reports, to running complex scenario analyses, to troubleshooting and normalizing data”—is one of the things Page loves about the tool.
“If I can imagine it, I can probably do it in Excel. I’ve even used Excel as a CAD program to map out my home sprinkler system,” said Page, who’s used Excel professionally since 2003. “While it may not be best-in-class in any specific isolated area, it performs a large array of functions. It’s the Cheesecake Factory of financial tools.”
Here are some other things controllers told me they love about Excel:
Pivot tables: “Excel has made the pivot table functionality incredibly simple,” Butterweck said. “When distributing reports and analyses, having the underlying data available by one click really helps the users of the reports understand what’s behind the numbers they’re analyzing.”
Goal Seek function: “This is a ‘what if’ function in the Data menu that allows you to quickly find out what input you need to arrive at a certain result,” Wells said. “The possibilities are endless in accounting for situations where this is useful. For example, if you input two amounts in two different cells for revenue and expense, and then make a formula to calculate income, you could then run Goal Seek to determine what your expense target needs to be in order to achieve the income you want given a fixed revenue number.”
Formula Auditing tool: Formula Auditing can be found by clicking on the Formulas ribbon tab. “You can trace dependents or precedents to see which other cells are connected to the cell you’re looking at,” Wells said. “It’s very useful when you’re making sure a spreadsheet was set up properly from a reviewer point of view. You can review faster.”
Integrates well with other programs: “A good example is how Excel data can greatly increase the efficiency of data input into accounting systems, such as QuickBooks, SAP, or Workday, just to name a few,” Butterweck said. “Rather than spending hours booking journal entries, creating vendor records, and entering invoices, you can just create an Excel sheet and import everything with a few clicks.”
FloQast designed and built a cloud-based close management software platform that closes the gaps between Excel spreadsheets and ERP systems, said co-founder and CEO Michael Whitmire.
“With FloQast, your reconciliation workpapers are still in Excel format stored in cloud document storage that you own (Box, Dropbox, Google Drive, OneDrive, Egnyte, etc.). FloQast sits in the middle, tying together your spreadsheets, checklists, and ERP trial balance,” he wrote in a blog.
With this approach, accountants get the familiarity of working within a tool like Excel but integrated with the actual results that are coming from the business’ operations.
Creative spreadsheet design: “I like being creative in design in the non-creative world of accounting,” said David Rosso, controller, Massachusetts/Midwest Accounting Division of City Electric Supply, an electrical wholesale distributor, who’s been using Excel for 24 years and considers himself a power user. “Designing a spreadsheet for non-financial people to see and to understand is a creative outlet.”
Defending against the Excel backlash
But there’ve been recent defections from Excel Nation, as the Wall Street Journal reported last November. Some CFOs are ditching Excel for their financial planning, analysis, and reporting, opting instead for cloud-based financial software programs that have capitalized on Excel’s weaknesses, touting better data management, analytics, and transparency; collaboration across departments within a single document; and process automation that reduces administrative tasks and errors.
Kolleen Gibson, controller at Boston-based Invaluable, an online marketplace of fine and decorative arts, antiques, and collectibles, said it’s unfair to compare Excel with the specialized technologies mentioned in the Wall Street Journal article.
“Excel is an all-purpose tool, and spreadsheets are built by the users,” said Gibson, who’s been an Excel user since 1990. “Of course, a customized, professionally built and tested tool would be better than something built in Excel. But the article does mention that all these tools have an ‘export to Excel’ feature, so they don’t really make Excel obsolete.”
While cloud-based technologies are “great” and allow users to analyze and crunch data faster, what they don’t have is direct access to granular data, said Marc Baumann, CPA, controller at Sweetwater, a Fort Wayne, Ind.-based music technology and instrument retailer.
“I enjoy having the base data in front of me and being able to alter as I see fit,” said Baumann, who has used Excel professionally for nine years. “I also think ad hoc report generation is more efficient in Excel than these cloud-based databases.”
CFOs said in the Wall Street Journal article that Excel hasn’t kept up with the demands of today’s accounting and finance teams, but that hasn’t been the case at Zipwhip, a Seattle-based business texting provider, according to Controller Ryan Letson.
“From my perspective, Excel has kept up with the demands of my team and I,” said Letson, who’s used Excel professionally for 12 years. “There aren’t many projects or tasks that I take on or assign to my team that cannot be done in Excel.”
Excel skills no longer a priority?
A recent survey by Adaptive Insights, a provider of cloud-based financial software, revealed that CFOs no longer rate Excel proficiency as the most important skill for finance professionals.
According to the survey, only 7% of finance chiefs list Excel skills as important for new hires, and just 5% considered proficiency in Excel as the top skill for their financial planning and analysis teams, down significantly from 78% two years ago.
But Rosso said he tells his team members that there will always be a job for them in accounting or finance because of their knowledge of Excel.
“I tell my employees all the time that no matter what, and wherever you go from here, your Excel education can’t be taken away from you,” he said. “It’s not always easy to find an employee who has experience in Peachtree [Sage 50 Accounting], QuickBooks, SAP, or name any other accounting software as there are hundreds. But there’s only one Excel.”
In a future article, we’ll look at some of the cloud-based financial software platforms that are competing with Excel for accounting and finance teams’ financial planning, analysis, and reporting needs.