Saturday, July 31, 2021

"Finance Chiefs Are Still Trying to Replace Excel With New Tools"

 From The Wall Street Journal's CFO Journal, July 21:

Many companies would like to reduce their reliance on the spreadsheet application, but employees remain reluctant to give it up

Finance chiefs are still trying to get employees to move away from Microsoft Excel, the ubiquitous spreadsheet program loved and loathed by accounting professionals.

While many still see it as a helpful tool, some CFOs say finance teams rely on it too much, often for tasks that Excel isn’t well-suited to handle. That can lead to mistakes and wasted time.

Microsoft Corp. moved Excel and its other Office products to the cloud a decade ago and has offered a number of new features and updates since. But some finance chiefs still want to reduce their reliance on the application in favor of programs that more efficiently automate data collection and analysis. They say there are limitations to Excel’s effectiveness, with users having a tough time keeping track of changes and verifying financial information.

Last year’s abrupt shift to remote work during the pandemic, which forced finance chiefs to manage corporate finances and close the books remotely, highlighted shortfalls in using Excel, said Glenn Hafler, a principal at advisory firm Hackett Group Inc. “The pandemic really exposed the vulnerability that finance teams have as a result of their dependence on Excel,” Mr. Hafler said.

Inputting data manually, which is what many users still do, can be time-consuming and result in errors that go unnoticed, especially when employees are scattered in remote work locations.

Pure Cycle Corp. , a water- and land-management company based in Watkins, Colo., earlier this month disclosed it had corrected an accounting error that originated in an Excel sheet.

The error was a result of complicated formulas used to allocate costs and a lack of detailed review by the company’s management, said Kevin McNeill, Pure Cycle’s chief financial officer.

“Excel is an extremely valuable tool, but I think most companies, including us, put too much reliance into it,” he said.

Pure Cycle, which reported about $500,000 more in quarterly interest income than it should have, is introducing more controls around its reporting processes and moving as many tasks as possible into its accounting software to avoid overusing Excel, Mr. McNeill said. The company booked $2.6 million in revenue during the quarter ended May 31, up from $1.8 million during the prior-year period.

The widespread use of Microsoft’s Windows operating system and Office suite of products in the 1990s helped establish Excel as a market leader in spreadsheets. Finance employees grew familiar with the program and cultivated their own ways of working in it over the years. It’s a habit many have found hard to break, even as new enterprise software and other spreadsheet offerings, such as Google Sheets, have become available.

It isn’t just smaller companies like Pure Cycle that rely on Excel. Larger companies, for example jeans maker Levi Strauss & Co., which generated $4.5 billion in revenue last year, also use it.

Levi’s runs its supply planning on Excel, which covers raw materials, interactions with suppliers and capacity planning, according to Harmit Singh, the company’s finance chief. But that is set to change, as the company is working to introduce a new artificial intelligence tool to handle those tasks. The transition will happen over the next two years and the first tasks will move off Excel in early 2022, according to the company. “The pandemic reinforced the business case for the change,” the company said.

Microsoft said it is updating Excel—which moved to the cloud in 2011 as part of Office 365 and is now one of the applications in the company’s Microsoft 365 offerings—every month and pointed to new features, such as one that tracks changes for every spreadsheet cell that launched this spring. Another new function allows users to create a formula and share it with others within a workbook, a collection of one or more spreadsheets....