In 1985, Ronald Reagan was a second-term U.S. president; Mikhail Gorbachev assumed the role of general secretary of the Soviet Union’s communist party, still tucked behind the Iron Curtain; the median price for an existing American home was about $75,000; and a basketball phenom named Michael Jordan was named the NBA’s rookie of the year.
And, Microsoft Excel (for the Mac) made its debut. (Excel for Windows would come two years later.)
The spreadsheet application, which first wowed business users with its solid graphics, fast processing, and versatility, has held its position as the indispensable software for finance executives for 36 years.
This workhorse of finance has lasted so long and become so ingrained in everyday work that many question — despite at least three or four revolutions in IT infrastructure since its birth — whether Excel could ever be replaced.
“Everyone in finance uses Excel from their first day of work to wherever their career takes them. It’s familiar, and it’s intuitive; it’s also scalable,” says Tim Beauchamp, director of finance at communications agency Cognito.
“Excel offers all you need for most analyses and also offers something to the novice,” Beauchamp adds. At Cognito, which boasts more than half a dozen offices globally, Excel is critical for budgeting and forecasting, analysis of the company’s accounts, and evaluating and reporting underlying performance.
“It’s also nimble enough to be able to respond to the less routine occasions when insights need to be presented numerically or graphically” to people outside finance, says Beauchamp.
Unlike software that has become stale or outdated with the ubiquity of internet access and the increased role of analytics, Excel has evolved with the times.
“Microsoft has continued to listen to customers and support their program,” says Michael Poveda, a partner at accounting firm UHY LLP. “A lot of applications are left by the wayside and stop getting supported by their parent companies in favor of newer intellectual properties.”
Microsoft also continues to update and improve Excel, adding valuable features like 2020’s XLOOKUP function, which allows users to run searches within a table of data more efficiently.
For those demanding users who want a function not yet available, there is also the option to “customize” Excel, says Samantha Louise, CFO and co-founder of digital marketing firm Versus. “You’re not restricted by a software package’s programmed limitations,” she says.
But old dogs can’t always learn new tricks. While Excel has shown remarkable staying power, some experts believe it may now be challenged beyond its reach. Companies big and small increasingly need to automatically pull their financial data from multiple cloud-based systems and utilize more advanced data analytics. Excel may be a roadblock to that.
“The raison d’être of the [financial reporting] system is enterprise-wide integrated data and process [creating] one centralized database and source of truth,” says Phillip Klein, CEO and co-founder of FinLync, a treasury app company.
“However, in reality, through M&A deals and the purchase of point solutions, data becomes fragmented and decentralized across systems. Users require data from different databases, and the IT effort and costs to consolidate those databases are prohibitive,” says Klein. The result is far-flung, diverse financial data that “becomes exponentially less valuable when components of data required reside in other systems.”
While Excel is often used as a collection point for data from other systems, it is still a “manual and largely siloed vehicle,” says Omar Choucair, CFO of software company Trintech. Excel’s limited ability to handle massive data sets “can lead to long processing times and more steps than other database tools,” says UHY’s Poveda.
Add to that the errors that manual entry and cut-and-paste can introduce in an Excel spreadsheet as well as Excel’s limited collaboration features, and it’s clear that the killer app of business accounting is showing its age.
That’s especially true as “the global pandemic has highlighted and accelerated the increased demand for speed and transparency inside finance organizations,” Choucair says.
Indeed, Excel may be a big reason why in the eyes of some finance lags in the information technology advancements evident in other industries, says serial entrepreneur Lil Roberts, founder and of accounting services startup Xendoo. “Accounting is still very analog. … Despite “minor tweaks and adjustments,” Excel and business finance on the whole “have not changed for the most part.”
Given Excel’s pervasive position within businesses (and as a forever favorite of finance executives), what software could supplant it?
Experts point out that finance analytics platforms from companies like Tableau Software (acquired in 2019 by Salesforce) or Google’s Sheets spreadsheet application show great promise in allowing executives to collect large, diverse data sets better and analyze them quickly.
“Advanced business intelligence tools that focus on data mining, predictive analytics, and visualizations are becoming the norm,” Poveda says. “Any applications that offer database capabilities along with visualization tools can make Excel look like an inferior option.”
Case in point: schools and businesses have been training students and employees on these newer applications, Poveda says.
Like many older applications, Excel stems from its developer roots of using arcane text strings to run functions or manipulate data, says Micheal Strambi, CFO at compliance software firm MetricStream. “That creates a culture of having to learn unconventional commands to make Excel shine.”
However, Excel’s basic functions are still pretty easy for a novice to pick up, and it has extensive practical applications and advanced features that businesses find essential. What’s more, points out Louise, compared with the contenders to the spreadsheet throne, Excel is still “inexpensive, affordable, and accessible.”
“What makes the program such a fantastic tool is that [Microsoft] has thought through all of the critical things important to finance executives,” says Pramod Iyengar, CFO at payments company Veem. That, more than anything, may be why Excel has lasted.
But a new generation of CFOs and other finance executives may be tempted by flashier, more powerful, and better-integrated tools.
“Twenty years from now, we’ll still have Excel… but it will be a much smaller user base,” predicts Louise. To thrive (rather than just survive), she says Excel needs a “dramatic makeover” to appeal to a broader swath of novice and intermediate users.
But don’t expect veteran finance executives to give up their devotion to the treasured spreadsheet program. As most would probably say, “Excel is not perfect, but it’s ours.”
Karen Epper Hoffman is a freelance business writer.