More than three decades after its debut, Microsoft Excel for finance and accounting professionals is still the preferred tool for budgeting and planning. But it's starting to slip in the polls.
Excel was one of the earliest electronic spreadsheets, first developed for the Apple Macintosh in 1985. But it wasn't until the release of Excel 2.0 for MS-DOS, on Halloween 1987, that the now-ubiquitous program really took off.
The 2018 Benchmarking the Accounting & Finance Function report, a joint effort of Robert Half and the Financial Executives Research Foundation (FERF), shows how usage of this software is declining. Of the U.S. executives surveyed, only 63 percent said their companies continue to use Excel as their primary budgeting and planning tool — down six points from last year’s survey.
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Among Canadian respondents, Excel also dropped in dominance, with 68 percent of the firms relying on the software, which is down 10 points from the 2017 survey.
Smaller businesses are also finding the software less valuable than last year: 69 percent of American companies with annual revenues under $25 million use it as their primary tool, compared with 78 percent in 2017.
Why Excel for finance makes sense
The answer behind Excel’s continued popularity is threefold: affordability, simplicity and flexibility.
- Low cost — Firms can opt for an annual subscription to Office 365, which includes Excel, Word, Outlook, PowerPoint and other applications, and a single license covers five computers. The suite of software is still available for a one-time purchase, as in the good old days.
- Ease of use — The basic functions of Excel are mostly intuitive and simple to learn, and templates save time and effort. Take, for example, setting up a spreadsheet to track and update payroll. It’s as easy as opening one of Excel’s many native templates for payroll registers, calculators, timesheets and more.
- Templates — Another option is to use one of the dozens of Excel payroll templates offered by firms such as ADP, a major provider of HR services, or Vertex42, a company that specializes in spreadsheet templates. Once the spreadsheet is set up, all you have to do is enter the hours employees worked during the pay period (this process can be automated) and any changes in pay rate or deductions.
- Effortless integration — As a part of a larger suite of applications, Excel works seamlessly with other Microsoft business tools for word processing, databases, presentations, graphic design and email. This means accounting and finance professionals don’t have to spend time converting or exporting files before using it with other software.
Limitations of Excel for finance
Despite its popularity among CPAs and numerous upgrades over the years, Excel lacks some useful features that ease the load for accountants and payroll specialists. Business collaboration is one such area. While the cloud-based Excel web app does allow multiple people to work on one spreadsheet simultaneously, it’s a bit clunky to use. The web version also doesn't have all the advanced features of the desktop version.
Even though competitor Sheets doesn't have all those advanced features either, the Google tool does have a nifty chat window and a robust comment feature. For truly seamless real-time collaboration on basic spreadsheets, especially with remote colleagues, Google Sheets is the clear winner.
Scalability is another issue for Excel, which is why the larger a company is, the more likely it is to use a budgeting and planning tool like Oracle Hyperion or SAP Business Planning and Consolidation (BPC). Although Excel’s capacity to handle large data sets has improved notably in the last few years, massive Excel files still severely drag down most computers.
Excel is good for basic graphing but isn’t quite robust enough to customize and combine diverse data sets and graphs. For payroll professionals and accountants who frequently create complex charts and graphs, using Excel alone could mean wasted time. There are better options out there for such power users.
Long live the spreadsheets king?
Excel has aged fairly well, unlike other similar software that arrived on the scene during the 1970s and ’80s. (Does anyone remember VisiCalc and Lotus 1-2-3?) For more than 30 years, the granddaddy of spreadsheet programs has helped countless businesses with number-crunching, charts, payroll, inventory, expense reports, cash flow and more.
And take note: Microsoft will soon release Office 2019, which is rumored to have groundbreaking new features, especially for corporate customers. Will it be smarter and more connected? Stay tuned!
Excel has its limitations, but the multinational tech giant behind its development has the resources and resolve to keep it relevant and indispensable. That means this application is likely to remain the primary tool for finance and accounting departments for many years to come.