The Good, Bad, and Ugly: Why Transition From Excel-Based Budgeting

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Transition from Excel

In the Beginning

Many organizations use Excel-based budgeting for its flexibility and ease of implementation. Excel is highly capable, allowing for nearly any type of model to be built. Its familiar interface and functionality allow people to easily make changes as needed. An organization can use Excel to progressively build a budget model with no significant upfront investment or managerial pressure to get it all right the first time. Excel is an excellent place to start. However, once the model is built, and the time comes to actually start using it, the benefits of using Excel quickly dissipate.  Before long, an organization will find itself in “Excel Hell” where the amount of time wasted can be measured in days or even weeks.

Change Something on the Sheet, I Dare You

The first problem with Excel deals with the very manual nature of the application.  If multiple contributors are required to complete a budget then time will be spent disseminating, receiving, and consolidating Excel workbooks.

For example, if sales are budgeted by territory, higher level managers may need to consolidate ten or even twenty templates before any reports may be built.  Once reports are built – and changes are made to the budget– this task of consolidating Excel sheets will need to be redone.

Management may also spend considerable time looking for the most recent version of an Excel file, or correcting and validating the budget when an outdated version of the file is used. In fact, most organizations will need to do a full validation of the numbers each time a single mistake is discovered.

With a solution like BOARD, these processes can be automated.

Instead of waiting for templates, budget contributors may simply login over the internet and begin budgeting. The budget data is centralized and allows for the latest version to be available to any contributor.

When contributors are finished budgeting, there is no work required to build reports.  Changes made to the budget will flow through to reports and become available to other users immediately.  Thus, instead of spending most of their time preparing reports, managers may spend their time analyzing them.

Overall, if an Excel model is employed for budgeting over the long term, it can be expected that any savings incurred during the initial implementation of the model will be lost to the pains of actually using it.

Go Ahead and Try to Maintain It

Another problem with Excel is that it can be very difficult to maintain or change in the late stages.

As new sheets, modules, and cell references are added or layered into the model, the task of updating a workbook with new lines can then take significant amounts of time and effort as the user need to perform a thorough examination of each sheet to ensure that newly added cells are included in formulas. The more complicated a workbook becomes, the longer it will take to validate the final budget.

In a solution like BOARD, making changes is much simpler. Formulas will apply to groups instead of individual cells; therefore, the administrator would only need to add new lines in one place to update the model. As long as the scope of the model doesn’t change, users are able to add new customers, locations, products, or other entities without the assistance of a programmer.

It’s Going to Crash!

A third problem with Excel deals with the management and storage of large amounts of data.  A single Excel workbook can hold a limited amount of data before performance is affected.  Large workbooks containing years of historical data or numerous formulas may be slow and prone to crash before work can be saved. It is for this reason that one of our clients’ outgoing Excel models was nicknamed the “Goliath”. The solution to this problem is to break out the workbook into pieces that contain the data relevant for analysis. This of course, creates more management issues as data then exists in many places but no one place contains it all.

Using a database may alleviate these challenges. A database may store much more data than an Excel workbook, and can perform calculations more efficiently. Work is also saved immediately so there is no risk from a crash, power outage or other adverse events.

As we said at the outset, Excel is a great please to start. However it gets cumbersome. While it may have worked at first, it may now be costing you more than it initially saved. Rather than continue to spend valuable time and resources on your own version of the “Goliath”, break away from your Excel Hell and into a budgeting and planning solution that saves time and effort, strengthens collaboration, and helps you gain insight.

About CRGroup

Since 1989, Corporate Renaissance Group has been delivering expert guidance and leading solutions to help improve business management and performance. We are a group of business, financial and technology experts helping leaders transform organizations through expertise in business management, financial management & business systems deployment.

As a proud member of the Microsoft & BOARD™ partner networks, we provide complete training, deployment, and support of enterprise solutions to help clients realize their financial and business objectives. Learn more at www.crgroup.com

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