Since the first incarnation of VisiCalc in 1979, desktop usage of spreadsheets has run rampant through executive and finance offices of corporations worldwide. Although today’s version of Excel is much more capable than its ancestors, there are still some fundamental challenges that exist when using Excel as your primary application for budgeting or financial consolidation.

Before jumping into the challenges, let’s highlight some obvious benefits for Excel in a budgeting environment. First, it is clearly a pervasive platform. For senior execs and finance team members, it would be rare that Excel is not already installed on their personal computer. A “light” version is even available on mobile devices for access on the road. As a personal analysis tool, the flexibility and power of the application is tremendous. We can expect even more when Office 2007 rolls out. In addition, when a certain type of analysis or report is completed, it is very easily distributed via e-mail attachments or published through a Web interface.

Now let’s turn to the challenges. The biggest issue is that Excel was historically designed as a personal productivity tool. The first architects did not think about converting this tool into an enterprise system. In that regard, as users, we have pushed the application beyond its design limits. Features that are mentioned as strengths (flexibility and ease of distribution) become some of the tool’s biggest challenges. It is very difficult to centralize Excel applications, and version control becomes a major issue. In addition, very sophisticated models can be built, and the macros that establish business rules can become very complex. Maintenance of the application can be very difficult if the original author is no longer around or if he/she has short-term memory lapses. Finally, security on a cell level and “audit-ability” of changes to the model are not possible in earlier versions of Excel, although Microsoft is working on solutions in this area.

Different Vendor Approaches
Most performance management vendors have taken one of two approaches for the integration of spreadsheet functionality in their applications. Either they have created an Excel-like interface with a subset of the functionality, or they have developed direct integration of Excel into their application. Microsoft is clearly supporting the latter, with further enhancements for application support in Microsoft’s SQL Server 2005, Reporting Services, Analysis Services and the soon-to-be-released Performance Point Services. Combined with Excel 2007, Microsoft has plans in place to address many of the concerns that currently exist.

Suggested Next Steps
If your team is flexible and most of the users are indifferent (or negative) about Excel, a spreadsheet-like interface is your best bet. It will likely have functionality that your users need to get the job done, and users will not become confused with a wide range of functionality that they will likely never use.

If you are a Microsoft shop with heavy Excel jockeys, offering them anything but an Excel interface will surely result in mutiny in the near term. Yes, as captain of your ship, you could dictate that all work must be done in your specific application; but if that application does not include Excel, odds are that your users will create shadow applications that they will use to manipulate information and then re-key it into the primary model. This is not a very efficient approach, and there is high risk of manual data errors. As mentioned earlier, there is a growing variety of choices from applications vendors that leverage native Excel directly, enhanced with add-ins for specific areas of functionality in their application.

Remember, it will be very difficult to pry established Excel models out of the hands of business users who cherish them. If they don’t cherish Excel, it should be easy to suggest alternative platforms that will get the job done. For those who do highly value Excel, find a solution that allows users to build upon their existing models – addressing the shortcomings of Excel, but allowing them to continue working in a familiar environment. You will find it much easier to swim with the tide.

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