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When is it time to move away from Excel for the budgeting process?

Expert Hyoun Park reveals the signs that it's time to adopt dedicated software for the budgeting process, instead of relying on Microsoft Excel.

Microsoft Excel is a fantastic self-service discovery tool for ad-hoc data. However, its key weakness is that there are currently few safeguards for data governance, data processing or data quality. This makes Excel a poor tool for organizations that need to share data or conduct complex analysis where errors can easily be entered through a single point of failure. 

There are typically three key reasons to move away from Excel:

  1. The need for multiple stakeholders to directly manage the budgeting process. To maintain a log of changes and ensure that there is governance in the budgeting process, companies should move away from Excel.
  2. The need for complex budgeting processes. For instance, if budgeting involves algorithmic or statistical risk factors, companies should move to a more robust budgeting tool that has integrated business intelligence or predictive analytic capabilities.
  3. Budgeting requires significant nonfinancial explanation or analysis. If budgeting requires a high level of documentation from either a governance or compliance perspective, it may be time to move to a budgeting system that has more strategic management or GRC (governance, risk management and compliance) support to manage text and other backing information that will clarify the budget above and beyond Excel's capabilities.

About the author:
Hyoun Park is principal analyst at Nucleus Research Inc., overseeing primary investigative research on analytics, big data, business analytics, social software and enterprise mobility. Follow him on Twitter
@hyounpark and read his research at


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Does your organization use Excel for budgeting?
Yes, I, as a director, use Excel for budgeting and forecasting. Works pretty well for my small business. My wife works for an international giant corporation. They use Excel for analysis, budgeting, and forecasting, in a stack of tools.
Absolutely true, but only because 99% of Excel processes are architected on the traditional 'old' paradigm of the paper spreadsheet. It's like still attaching horses to a motor car!

It is just easy to incorporate the principles you have mentioned (data-level security, one version of the truth, manageabilty etc), without needing to abandon existing Excel budgeting models that may have taken years to perfect and are the 'de facto' platform for budgeting in most organisations.

I have demonstrated the general idea here.

I'm not convinced that purchasing a specialized software is the way to solve people and process problems. It's just never been so historically. Such a software has much more chances ending up on a shelf that doing any good.