Is Excel Planning a Mistake?

Excel's critics say that Excel is unsuited for budgeting, forecasting, and other activities that involve collaboration or consolidation. But they ignore one key word.


Excel's critics say that Excel is unsuited for budgeting, forecasting, and other activities that involve collaboration or consolidation. But they ignore one key word.One of Excel’s most widely quoted critics is Robert D. Kugel, Senior Vice President and Research Director for Ventana Research.

For years, he’s opposed spreadsheets consistently. To illustrate, Kugel wrote in BPM Magazine back in 2004 that spreadsheets drive process complexity.

“Although spreadsheets are great for ad hoc analysis that involves only one or a few people, they’re fundamentally unsuited for enterprise-wide collaborative efforts such as budgeting and planning at the level of detail corporations require.

“The spreadsheet’s defects are behind the difficulties organizations have with the process. We therefore advise organizations to eliminate spreadsheets if they want to budget and plan more effectively.”

“Eliminate Spreadsheets”? Others Agree

Most Business Intelligence vendors—that is, Excel’s competitors—have ridden Kugel’s anti-Excel bandwagon for years.

To illustrate, more than a dozen years ago Adaptive Insights revealed that they were shocked—truly shocked—to learn from an ongoing survey that most businesses still used Excel for budgeting.

And a recent search of their web site shows more than 2,000 articles about spreadsheets—few of them favorable.

Kugel’s words have influenced the business press, as well. A senior editor of CFO Magazine once wrote me that, “our usual stance is that Excel is best for analysis and self-contained business unit reporting, but isn’t appropriate for corporate reporting, budgeting, analytics, etc…”

In the early 2000s, I studied many of Kugel’s articles about the use of Excel in enterprise applications. My original thought was to write a detailed response to him and other such critics of Excel.

But now, I must admit that I agree that Kugel makes valid points about the way Excel normally is used in business. For nearly 40 years I’ve helped employers, clients, and readers to cure similar problems with spreadsheets.

The Real Problem: Standalone Spreadsheets

In his article “When Good Spreadsheets Go Bad,” Kugel made his thinking clear. He wrote, “Ventana Research strongly advises companies to eliminate standalone spreadsheets [my emphasis] in all collaborative or repetitive enterprise-wide finance functions such as budgeting and planning.”

He also advises companies,” Kugel continued, “to limit their use in cases where security, control, and auditability are critical. The importance of these issues has increased with the passage of the Sarbanes-Oxley Act and subsequent focus on establishing and maintaining robust financial controls.”

That is, companies should limit their use of standalone spreadsheets for collaboration, consolidation, and auditability.

I couldn’t agree more.

What’s the Alternative?

What’s the alternative to using standalone spreadsheets?

Kugel recommends software that “bolts” spreadsheets to a centralized computing system. “It leverages all of the training and experience individuals have accumulated over the years,” he wrote, “while eliminating the difficulty of rolling up information from a set of spreadsheets, ensuring the synchronization of information, and enforcing all forms of security around the information and process.”

What type of software “bolts a spreadsheet….to a centralized computing system”? Many products do. Unfortunately, most such products write numbers and text to Excel, continuing to store values in cells—a bad practice that Kugel correctly opposes.

In my experience, the best way to eliminate the spreadsheet problems that Kugel has described for years is to use an Excel-friendly OLAP database..

The key characteristic of this approach is that it eliminates the use of raw data in workbooks. Instead, users rely on worksheet formulas to live-link their spreadsheets to multidimensional data stored on a server.

This approach gives spreadsheets read/write access to a central database with full security.

For reporting, it can link worksheet formulas to Big Data. For example, one of the largest companies in the world runs their entire company using Excel linked to a massive database load-balanced across nearly 2,000 CPUs.

For planning, this approach allows spreadsheets to update the server in real time—either through manual data entry or by setting up formulas that write to the server whenever Excel recalculates.

The server then fully consolidates each entry in real time. It also translates all currencies as needed—in real time. With this technology, senior managers can track their worldwide budgeting and forecasting process in real time.

As Kugel has demanded for years, this arrangement offers full synchronization and security. Password security can be specified down to a single value in an OLAP cube. And spreadsheets are synchronized easily, because they’re refreshed with up-to-the-second data whenever they’re recalculated.

Are Excel users making a mistake when they budget in Excel? Yes, but only if they use standalone spreadsheets.

Is there an easy cure? You bet.

Excel-friendly OLAP is the way to go.