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Finance Chiefs Are Still Trying to Replace Excel With New Tools – The Wall Street Journal

Finance chiefs are still trying to get employees to move away from Microsoft Excel, the ubiquitous spreadsheet program loved and loathed by accounting professionals.

While many still see it as a helpful tool, some CFOs say finance teams rely on it too much, often for tasks that Excel isn’t well-suited to handle. That can lead to mistakes and wasted time.

Microsoft Corp. moved Excel and its other Office products to the cloud a decade ago and has offered a number of new features and updates since. But some finance chiefs still want to reduce their reliance on the application in favor of programs that more efficiently automate data collection and analysis. They say there are limitations to Excel’s effectiveness, with users having a tough time keeping track of changes and verifying financial information.

Last year’s abrupt shift to remote work during the pandemic, which forced finance chiefs to manage corporate finances and close the books remotely, highlighted shortfalls in using Excel, said Glenn Hafler, a principal at advisory firm Hackett Group Inc. “The pandemic really exposed the vulnerability that finance teams have as a result of their dependence on Excel,” Mr. Hafler said.

Levi Strauss CFO Harmit Singh.

Photo: Jeenah Moon/Bloomberg News

Inputting data manually, which is what many users still do, can be time-consuming and result in errors that go unnoticed, especially when employees are scattered in remote work locations.

Pure Cycle Corp. , a water- and land-management company based in Watkins, Colo., earlier this month disclosed it had corrected an accounting error that originated in an Excel sheet.

The error was a result of complicated formulas used to allocate costs and a lack of detailed review by the company’s management, said Kevin McNeill, Pure Cycle’s chief financial officer.

“Excel is an extremely valuable tool, but I think most companies, including us, put too much reliance into it,” he said.

Pure Cycle, which reported about $500,000 more in quarterly interest income than it should have, is introducing more controls around its reporting processes and moving as many tasks as possible into its accounting software to avoid overusing Excel, Mr. McNeill said. The company booked $2.6 million in revenue during the quarter ended May 31, up from $1.8 million during the prior-year period.

‘Excel is an extremely valuable tool, but I think most companies, including us, put too much reliance into it.’

— Pure Cycle Chief Financial Officer Kevin McNeill

The widespread use of Microsoft’s Windows operating system and Office suite of products in the 1990s helped establish Excel as a market leader in spreadsheets. Finance employees grew familiar with the program and cultivated their own ways of working in it over the years. It’s a habit many have found hard to break, even as new enterprise software and other spreadsheet offerings, such as Google Sheets, have become available.

It isn’t just smaller companies like Pure Cycle that rely on Excel. Larger companies, for example jeans maker Levi Strauss & Co., which generated $4.5 billion in revenue last year, also use it.

Levi’s runs its supply planning on Excel, which covers raw materials, interactions with suppliers and capacity planning, according to Harmit Singh, the company’s finance chief. But that is set to change, as the company is working to introduce a new artificial intelligence tool to handle those tasks. The transition will happen over the next two years and the first tasks will move off Excel in early 2022, according to the company. “The pandemic reinforced the business case for the change,” the company said.

Microsoft said it is updating Excel—which moved to the cloud in 2011 as part of Office 365 and is now one of the applications in the company’s Microsoft 365 offerings—every month and pointed to new features, such as one that tracks changes for every spreadsheet cell that launched this spring. Another new function allows users to create a formula and share it with others within a workbook, a collection of one or more spreadsheets.

An Excel spreadsheet.

Photo: Microsoft Corp.

“Excel is a well-loved product across all of our customers,” said Brian Jones, head of product for Excel, adding that it can be used on any platform or device.

Microsoft declined to provide a recent figure for the number of businesses that use Excel but pointed to 258 million paid users of its Microsoft 365 commercial suite of office products at the end of the first quarter of 2020. Monthly usage of Microsoft Excel is up nearly 30% year over year, according to a spokesman.

Those changes, however, don’t take away CFOs’ desire to become less dependent on Excel. “That might help to some extent, but getting complicated schedules into our accounting software is still a better solution,” Pure Cycle’s Mr. McNeill said. Levi’s said recent upgrades to Excel haven’t changed the need for more sophisticated tools.

Companies looking to replace Excel—at least partly—have a range of options, depending on the task at hand. SAP SE, OneStream Software LLC, Oracle Corp. , Anaplan Inc. and Workiva Inc. are among the firms offering cloud-based information technology for different parts of the finance function.

Workiva CFO Jill Klindt.

Photo: Workiva Inc.

San Francisco-based Anaplan earlier this year hired Victor Barnes, a former divisional CFO at Coca-Cola Co. , to promote its product to business customers. During his time at Coca-Cola, Mr. Barnes had his team switch from Excel to Anaplan for long-term planning processes, which reduced the amount of time needed to consolidate the information by more than 70%, to two weeks, he said. Anaplan said its revenue has grown in recent quarters as it signed up more customers.

Workiva provides a software-as-a-service platform for financial and nonfinancial reporting and compliance, but even so, CFO Jill Klindt says some on her team use Excel, something she is trying to limit.

The company’s finance function in February moved to a new planning and analysis tool and is automating tasks such as approval of expense reports. “We continue to put in place systems that reduce the reliance on Excel,” she said, adding that Microsoft’s updates to Excel don’t change that.

Workiva also has experienced an uptick in customer demand since the pandemic, Ms. Klindt said.

Consultants say it isn’t only the IT that needs to change, but also the way people organize finance tasks. Otherwise, companies run the risk of spending money on new systems while employees continue working in Excel and only copy and paste the data in the end, said Vanessa Keating, who leads Hackett’s digital finance advisory practice.

“This is what they know and what they are comfortable with,” she said of Excel. Finance chiefs need to reorganize workflows and processes to ensure that the transition away from Excel succeeds.

Still, despite companies’ efforts, executives and advisers said they are unsure whether Excel will ever truly vanish.

“It is deep in people’s minds,” said Workiva’s Ms. Klindt. “I am not the type of person who would ban it.”

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