The Future of Business Modeling: Evolving From Excel to Integrated FP&A

The pressure of newer and faster technologies along with a more integrated and globalized approach to finance, is requiring companies to improve their business modeling. Integrating big data in real time and translating the data into value drivers by identifying relationships helps increase the accuracy of high impact business decisions. Throughout all of the changes and upgrades, there is one constant: Excel.

Many companies are trying to move away from the “outdated” platform of Excel in the financial planning process, but it still plays a major role in many organizations, including most global corporations and MNCs. While Excel is still the go-to platform for everything finance, global corporations and many following them are exploring the benefits of automated decision making and AI.

This doesn’t mean that replacing Excel is the answer. There are many advantages to the traditional Excel software, and no matter how many companies have tried to replicate it, Excel has many irreplaceable components. However, integrated planning platforms have the ability to disrupt the industry and change the future of FP&A.

FP&A and the financial process have gone through a lot of changes over the years, but none are more significant and groundbreaking than digital transformation. The speed and level of access is unprecedented, and digital transformation is all encompassing- from how data is created and stored to how it’s analyzed and used in the future.

Reasons to stay in Excel

So many platforms and technologies have changed or been replaced in the past few decades. Many have become obsolete or transformed so much that they have little resemblance to the original one; yet Excel still has stood the test of time.

Familiarity- The biggest reason is the comfort and familiarity of Excel. Finance teams are used to the layout of spreadsheets, and with the time restraints and deadlines of FP&A teams, taking extensive amounts of time in order to learn a new software just isn’t an option.

Price- In addition to time (which also costs money), many Excel replacement softwares are complicated and far more expensive than Excel. Small and medium sized businesses usually don’t want to spend the extra money on a replacement, and many also require lengthy and expensive commitments off the bat.

Consistency- Excel is a language of numbers and functions that anyone in the world can use. In today’s globalized business world, having a shared language in finance and numbers is an irreplaceable tool which helps tremendously in international business ventures or in any scenario where numbers need to be shared.

Based on these reasons, we can expect Excel to continue to be the most dominant figure in financial planning as an ad-hoc analysis tool. However, there is an overall trend in keeping Excel as a tool for data spreadsheets and using it less for integrated planning. This is where automation improvements and technology updates come into play- as an upgrade, not a replacement.

Challenges

These trends don’t come without downsides. On the one hand, the speed and benefits of real time updates and access to analytics that were never possible until recently, allows businesses to make critical decisions quickly and accurately. On the other hand, the expanse and speed of data creates the challenge of integrating end-to-end financial planning faster and bigger- while the increased competition from newer technologies leaves those who haven’t fully embraced digital transformation behind in the dust.

When done right, technological advancements are the best solution to the downsides of Excel, namely the time extensive manual and routine financial processes. By “outsourcing” these processes to machines that can easily do the manual work, it takes care of the problem of time and skill shortages.

As machine learning and automated processes become more common in financial reporting and planning, human brain power will be freed up for more advanced analysis and decision making. Furthermore, as it becomes more and more mainstream, the prices and solutions will start catering to businesses of all sizes and budgets.

Evolution of Excel use

The numbers back this up. A 2021 Deloitte survey showed that 73% of respondents still use spreadsheets as their go-to tool in budgeting and forecasting.

In comparison, respondents in 2014 stated that 37% used spreadsheets exclusively for preparing financial reports, while in 2021 this number went down to 30%. This shows that spreadsheets are still in widespread use, but the additions and upgrades are becoming more mainstream as companies are seeing the benefits of adding value to Excel without using it as the only financial tool as was accustomed in the past.

These SaaS tools have the added benefit of regular cloud updates to pre-existing features and functionality without needing to complete expensive and time consuming upgrades independently. Companies of all sizes are seeing the benefits of integrated platforms for data collection and aggregating and reporting the feed spreadsheet software into budget, forecast, and financial statements.

The increase in use of SaaS tools started with bigger companies, namely those with over $1 billion in revenue. However, we can expect to see more utilization of integrated planning tools working in-tandem with spreadsheet software for ad-hoc analysis. Organizations are seeing the need for playing scenarios in real time and the flexible FP&A model enables agile and adaptable planning befitting of the fast paced changes of today.

The March 24 FP&A Trends Webinar titled “The Future of Business Modeling: Evolving From Excel to Integrated FP&A” will provide insights into how companies can identify internal and external drivers and the best tips for building driver-based financial models. The panel of thought leaders and practitioners will share their insights on the future of integrated FP&A and the use of technology for integration and collaboration.

There is no doubt that integrated FP&A is the future for businesses of all sizes. The benefits of Excel still far outweigh the downsides, and therefore spreadsheets will be around for the foreseeable future. SaaS add ons will ensure the best of both worlds- staying with Excel and upgrading it in order to get the most out of it.