What’s Better: Spreadsheets or Financial Planning Software?

Finance teams

Here's how agile FP&A teams drive better decisions by choosing the right mix of financial planning software and spreadsheets.

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Névine Ismael
January 26, 2023
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What’s Better: Spreadsheets or Financial Planning Software?


Finance teams have been leaning on spreadsheets since the early 80s, with good reason:

Spreadsheet solutions are an easy way to collate and analyze straightforward datasets, performing best when used for their intended purposes of light reporting, one-off analyses, and moderately complex calculations.

However, Finance and FP&A teams inevitably turn to financial planning software for more complex use cases such as enterprise planning and performance management.

The new generation of agile CFOs and FP&A departments get the best ROI from utilizing the right tools for specific needs, be it high-level reporting or in-depth financial modeling.

Read along as I dissect the differences between spreadsheets vs financial planning software. I’ll also share how to balance both solutions for financial planning, analysis, and reporting.

The make-or-break differences between spreadsheets and financial  planning software

How fair is it to compare spreadsheets to financial planning software in the first place? That’s like asking your local bakery if their doughnuts double as frisbees.

And would you fault the bakery for disintegrated doughnuts when tossed at the park?

You could technically use a spreadsheet solution for most things better handled by planning software, but your results will be, at the very least, subpar if not downright inaccurate.

That’s because spreadsheets, by design, are not aligned with the requirements for FP&A. Take a look at the table of differences between spreadsheets and financial planning software:

Feature required by FP&A teams Spreadsheets Financial Planning Software
Usability Easy to use and require minimal training, but quickly become complicated. Requires a steeper learning curve but provides more organized and efficient processes.
Cost of ownership Free or low cost but offer limited efficiency and effectiveness. Requires an upfront investment, but provides greater accuracy and scalability.
Data security, privacy, and integrity Security features are limited, mainly lacking access and version control. Provides enterprise-grade security features like data encryption, access rights, and audit trail.
Automation Manual processing and longer turnaround times. Powerful automation capabilities that simplify complex tasks and streamline business processes for faster results.
Flexibility Inflexible and cannot be easily customized to meet changing needs. Highly configurable and can be tailored to fit the specific needs of an organization.
Collaboration Limited if more than one person is trying to make edits at the same time. Audit trail, version control, and intuitive design makes cross-functional work a breeze.

You can now see that financial planning software clearly wins at meeting the requirements for FP&A. You might think I’m biased, but this comparison would look much different if we were assessing how helpful spreadsheets are for quick, exploratory data analysis for example.

If that hasn’t convinced you, here are a few more thoughts on why FP&A built on spreadsheets is a bad idea.

Why you shouldn’t rely solely on spreadsheets for budgeting, financial planning, and reporting 

Lack of flexibility and multi-dimensionality 

The primary reason why finance professionals develop their financial models on spreadsheets is that it is easy to get started on. 

Spreadsheet solutions like Excel and Google Sheets have built-in formulas to connect and replicate sheets and values. You can pre-define table styles, customize data sets, and carry out automatic data calculations. 

Problems arise when models increase in complexity as data starts multiplying, both by volume and source. And then, financial models break under pressure from: 

  • Incorrectly applied functions 
  • Human copy-pasting errors and oversight 
  • Inability to process huge amounts of data 
  • Lack of multidimensional data models 
  • Stale and siloed data

Spreadsheets get the work done when you are planning at the conceptual level. However, when you consider cross-functional data elements like cash flow, headcount planning, sales forecasting, and beyond, they aren’t flexible or dynamic to support these functions. 

This is where you need to replace spreadsheet-based documents with better financial modeling

Building a system of checks on top of financial models is difficult, which makes spreadsheets unreliable and dangerous. 

Ideal for use by a single user  

V1, V3, VFinal.xls… that list of file versions is endless.

Despite the many features of spreadsheets, they are, by nature, made to be used by a single user. A major challenge with spreadsheets is version control since they were never designed to have multiple authors, calculate massive data sets, or integrate with hundreds of documents. 

Firstly, version control issues lead to confusion about where the numbers came from, which department or team member is responsible for what, and even which numbers are accurate. 

Second, spreadsheet-based documents are painful to maintain. Complications of access control, change tracking, and audit can either lead to a painful correction process or introduce new errors. With multiple editors accessing the same sheet comes the problem of overwrites and inaccuracies. 

When the FP&A professional has to aggregate input from multiple stakeholders, it can take weeks. The analyst has to collect a significant number of spreadsheets, then consolidate them into a single version, and ensure that the data is accurate. 

Lacking scalability 

88% of all spreadsheets contain at least one error, according to this Forbes article and many, many more studies.

In fact, attempts to correct errors often introduce new ones. Ironic, isn’t it?

Now calculate the time your team spends reviewing models periodically, identifying and correcting errors, fixing the macros, and fine-tuning your models. Imagine having to repeat this process every time leaders look for answers.

The result is limited granularity and impeded on-the-go decision making.

It’s a nightmare to source and consolidate data from multiple business applications, vendors, and departments. The dynamic nature of modern-day businesses calls for the adoption of financial modeling software

FP&A teams are well aware of the fact that in business, change is inevitable. It comes from external drivers like economic downturns, market volatility, or macroeconomics impacting the product or service.

Sometimes, the changes are less favorable and the finance teams are called to support restructuring, reducing costs, or divesting unprofitable business lines. That’s why carrying out such life-changing responsibilities with the right software for the job is critical:

How financial planning software powers a unified approach to drive growth

If your FP&A team were to draw up an ideal wishlist of what they needed to forecast and report with confidence, it would feature everything I’ll take you through below — but would likely include the humble spreadsheet.

But here’s where you’re in for a treat.

Our Financial planning software, Pigment, has all the key features — plus a spreadsheet view we’ve officially titled Sheet View™. It lets you and your team work in a familiar environment while still being nested within the planning platform.

Pigment's Sheet View feature
Pigment's Sheet View - a spreadsheet environment within a powerful financial planning platform

You’re looking at a feature that’s not merely an Excel add-on or anything so makeshift. Just as you need one click to turn a table into a chart, turn your charts and tables into an editable spreadsheet that allows you to feed your side calculations back into the model, all with the click of a button.

Why am I plugging this? To highlight how it is possible to merge the benefits of spreadsheets and more complex financial software — to meet requirements like:

Native scenario planning 

When decisions impact multiple stakeholders, you need a dedicated business planning software to answer serious questions in three ways with native scenario planning:

  • Consolidate data from spreadsheets, CRM, HRIS, and data lakes. 
  • Instead of planning your entire data structure and financial models around scenarios - you can build best and worst-case scenarios natively within the platform without having to disrupt or modify original data models. 
  • Getting answers on an intuitive and user-friendly interface is easier.

You need a tool that can scale with the complexity of your problems and reveal the optimal answer to what-if questions. As a bonus, Sheet View is a great space to cross-check your assumptions on the side.

Aligning cross-functional teams and empowering business users

Cross-departmental cooperation is key for successful financial planning – after all, one department's input typically relies on another's output!

This is why FP&A teams need improved visibility and reduced friction to enhance planning confidence and improve enterprise-wide decision-making. 

Your team also has an important task to consider: providing executive decision-makers with a secure and easy-to-use environment to ensure all the numbers are on point.

Cue Sheet View, a familiar environment with none of the disadvantages of returning to spreadsheets. With this incentivized collaboration, you’ll break data silos by:

  • Creating shared metrics for all teams 
  • Diffusing data in real-time across all models 
  • Gathering data from colleagues painlessly 
  • Gathering feedback from leadership and offering insights in one place

Secure access rights while staying flexible

Using Sheet View solves the major issue of enterprise-level data security for critical financial data while maintaining your flexibility to brainstorm.

You still get brownie points for integrating robust financial modeling software in your CFO’s tech stack and protecting the integrity and security of business data. 

You should look to gain these key security features for better safety standards and confident financial modeling: 

  • Access rights management
  • Secured identity management 
  • Data snapshots 
  • Audit trail
  • Data encryption

The choice is easier than you think

There's no shame in being a finance team that likes spreadsheets. But are you getting the most bang for your buck?

If you're considering ditching Excel altogether in favor of a newfangled financial planning platform, it may feel like a big move — and it is. When it comes to more complex use cases like enterprise planning and performance management, it’s the right move. But when you need to do quick and simple ad hoc calculations and sanity checks, you may find you’re missing a simple spreadsheet. 

The best way to drive better decisions is by utilizing the right tool for specific needs - with Pigment and our new feature Sheet View, you now have one single platform to address all your planning needs, from the most complex to the simplest ones!

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