I’ve been consulting, writing, training and speaking about the use of Excel for analysis, building financial models, budgets and dashboards for many years now and I’ve lost count of the times I’ve been contacted by software providers who’d like “my opinion” on their new software or add-in to Excel which is so much better than plain or, as I like to call it, “vanilla” Excel. Seriously, I get messages about this All. The. Time. So I thought I’d sit down and explain my views on why I stick to Excel.
Having written several books on the subject and hence committed a large part of my career to the use of Excel, I’ve had to seriously consider that perhaps I’m too stuck in my ways to consider any of these new tools. The title of my first Wiley Finance book which has been revised and published three times and sold thousands of copies was “Using Excel for Business Analysis,” so I guess you could say I’m pretty invested in the success of the software.
Despite my investiture in Microsoft Land, I’m the first to admit Excel’s shortcomings; the most significant of those being firstly, the ease with which errors can be made and secondly, the way that it handles large quantities of data. Microsoft seems dedicated to addressing these problems with many of the new features in Modern Excel. The use of tables, dynamic arrays and not to mention good modelling practice can reduce the structural error problems, and the data model feature of Power Query/Power Pivot/Power BI has increased the capacity of the amount of data that can be processed in Excel.
Even with the new features of Modern Excel, we still consider it to be the “Swiss Army knife of software” or the “second-best solution” because although you can do practically anything in Excel, but it’s not always the best tool for the job. For example, you could write your To Do List in Excel but there are a thousand task management apps that will integrate with other systems and do a much better job. You can keep your company accounts in Excel, but a purpose-built general ledger system will deliver a much better result.
So, why do we still use Excel, even though a better solution might exist? For building a financial model, putting together a budget, or analysing a new business opportunity, you’d be hard pressed to find a more suitable tool. Here’s an extract from Chapter 2 of “Financial Modeling in Excel for Dummies” which outlines some of the main reasons most finance professionals choose to use Excel over a potentially better solution:
- Every business already has Excel installed. You won’t need to purchase extra licenses or pay for expensive consultants to install it.
- Little training is needed. Most users have some familiarity with Excel, which means other people will be able to edit, change, and understand your Excel model.
- Excel is so very flexible. You can build almost anything you can imagine in Excel (within the size limitations of the data model, of course).
- Excel “talks” to other systems very well. With Power Query in Excel or Power BI you can report, model, and contrast virtually any data, from any source, all in one report.
- Most importantly, Excel is commonly used across all industries, countries, and organisations. This means that the Excel skills you already have, and the skills you’re currently working on. You can use those skills in other jobs at other companies no matter where your career takes you. Sure, there are thousands of other pieces of software that you can learn, but I truly believe that for a career in finance, one of the best things you can do for your career is to improve your Excel skills.
Of course, I can’t predict the future, but it’s difficult to imagine a world where Excel is not the dominant finance software. So, next time you’re deciding which tool to use, consider whether it should be Excel, Excel or Excel. And thank you for getting touch but I’m not interested in using, recommending or selling your new software tool for you.