For decades, spreadsheets and spreadsheet software like Excel have been the backbone of business planning. From tracking expenses and making projections to performing complex calculations, spreadsheet software helps guide organizational decision-making, report generation, and more.
However, recent research reveals that the era of dominance of the Excel sheet as a primary tool for business planning may end. The ever-increasing need for companies to collect and analyze data underscores the fact that spreadsheet software has some significant limitations — and presents multiple risks — and it’s time to look at alternatives to the traditional cell-matrix or data table approach to working with business information.
The Major Disadvantages of Using Spreadsheets for Business Planning
In addition to their limited capacity for handling large amounts of data, spreadsheet programs create other business issues.
Human Error
Working with spreadsheets creates the risk of a plethora of errors, from simple manual data entry mistakes to issues with formulas, copying and pasting information between worksheets, and accidental deletions or changes. The result can be devastating, as flawed data leads to flawed analysis, conclusions, and decision-making.
Considering how difficult it can be to scour the data grid and identify errors, the potential for human error is a major drawback to using spreadsheets.
Limited Functionality
Static spreadsheets limit an enterprise’s ability to be nimble and make quick decisions. Typically, there’s minimal (or no) integration with existing analytics tools. While formulas and macros provide some automation capabilities, there’s no way to conduct sophisticated calculations or use data effectively. Ultimately, the lack of automation restricts the company’s efficient decision-making capabilities.
Obstacles to Collaboration
Most spreadsheet software doesn’t support real-time collaboration. Excel, for instance, allows only one user to edit a file at a time.
Spreadsheets also tend to be categorized. Stakeholders can typically only work on document versions without seeing the bigger picture. This creates a lack of version control and challenges in planning and decision-making.
Alternatives for Modern Enterprises
Implementing new tools and technology in place of spreadsheets supports more strategic decision-making, improves security and data integrity, and allows for a more collaborative work environment.
Switching to web applications is the most effective way to move away from traditional data management approaches and overcome these barriers to effective business planning. Web applications improve data integrity via strict verification requirements and software-driven processes. Perhaps the greatest advantage is the reduced risk of human error, thanks to these programs’ ongoing monitoring of data entry and the application of rules and data governance tactics.
Web applications also have the advantage of supporting business intelligence, analytics, and real-time data processing capabilities. They provide the real-time data you need when you need it to make better decisions in less time.
Finally, spreadsheets cannot match web-based applications in terms of collaboration opportunities. There’s no need to worry about version control since applications allow multiple people to simultaneously work on the same data set.