Optimising financial processes

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Excel Heaven & Excel Hell; What Fuels Our Addiction?

spreadsheets“Excel: We can’t live without it, yet we are fast coming to the realisation that we can’t live with it either…” Robert Gothan, Financial Director.

When it works, Excel is an incredibly powerful, simple yet sophisticated tool. However, when it goes wrong, it can cause some serious damage, as starkly illustrated by the billions of dollars of losses racked up by JPMorgan’s Chief Investment Office through some impressive spreadsheet errors.

From its humble beginnings as a personal productivity tool, as a rapid calculation and data manipulation and summarisation tool, it quickly became the cornerstone of the Microsoft Office Suite.

It opened up a whole new world of capability for those in finance, with complicated calculations, intricate macros and increasingly sophisticated programming. It quickly became engrained in the critical workings of many major financial processes, from expense claims to financial planning and analysis.

Excel’s greatest strengths are ultimately also its greatest downfalls, and it is far too easy for mistakes to be made and obscured. The spreadsheets are easy to manipulate, share and change – a good feature. However this also means when looking for a single version of the truth you often find no-one is quite sure which spreadsheet or macro is the latest one with the right figures, and you may have little visibility into when and how anything was changed. On the darker side, Excel has made the obfuscation of numbers easier, this making it a powerful cloak for fraud and error

There are even professional online resources that help document some of the most egregious spreadsheet errors (European Spreadsheet Risks Interest Group, for example ) and CFO communities to share the most intimate and advanced Excel ‘tips and tricks’, such is the almost bipolar interest in the Excel phenomenon.

Fast forward 30 years to today’s finance function supporting global operations, with end to end integrated processes, ERP systems and automated controls. One might reasonably expect that Excel would have withered and died in this new landscape.

But no, Excel survives like a mutating species on a remote landscape, invulnerable to anything except nuclear blast. You would think that the last 20 years of advances in systems would have rendered the humble Excel to a Darwinian extinction, no longer fit enough to survive.

However, it is clear that the end to end process automation provided by the ERP systems of the last 15 years has not automated as much of the processes as we might have expected. Although data entry, validation and automated process workflow has transformed much of the finance and accounting processes, some of the key data manipulation tasks have not kept pace.

The good news is that we are now seeing specific tools that augment and complement ERP that are addressing this need, in a way that provides the power whilst maintaining overall control and auditability. Processes like automatic certification, attestations of controls, expense claims, account reconciliation, financial consolidation and transaction matching, to name a few, are now able to benefit from step changes in efficiency and effectiveness as they move from Excel to the latest process automation technologies.

Excel is a long way from extinction, in fact it is still as popular as ever with over 750 million users worldwide. It is a cheap tool and incredibly simple to use, and represents a universal language spoken by us all. We just need to be more discerning about which tasks it is best used for.

Spare a thought for Bill Gates. I am sure that even he never expected or predicted that his humble personal productivity tool would one day be used to support global processes in the world’s biggest companies. Happy Birthday Excel, and here’s to your next 30!