What’s better? FP&A software or Excel

When it comes to managing money, the right tool is key. Excel has been around for ages, but we're here to show you why FP&A software is the real winner for finance teams.

In this article, we’ll share how FP&A beats Excel every time, allowing your finance team to work smarter, not harder. We’ll cover:

What is Excel?

Perhaps the most ubiquitous finance solution, Excel has been used by companies since the late 1980s. And while it initially provided structure to otherwise difficult processes, more advanced solutions have been introduced since.

Excel has functionality to support a wide range of finance processes, including budgeting, planning, reporting, forecasting, analysis, and more. It can help finance teams build data models, visualize their data, and carry out complex calculations.

It supports various processes and can be used across different systems and languages, which helps companies with diverse ERP (Enterprise Resource Planning) systems to communicate effectively. This adaptability has made Excel a common language of sorts in the business world, particularly in finance.

What are the challenges of Excel?

Despite its widespread popularity, there are several drawbacks to using Excel as your primary finance solution. It can be difficult to maintain internal control over different versions of your budgets, plans, reports, and forecasts, since anyone can save a new version of a spreadsheet to their computer. With multiple versions of a single document circulating, it can create confusion around results and lead to your team questioning the integrity of your data.

Excel is also not ideal for more complex finance processes like financial consolidation and account reconciliation, which usually require contributions from across the company, multiple currencies, and manual data entry. This is another primary challenge of Excel – there is no way to reduce the number of manual inputs or validate the data that is inputted, putting you at risk of human error.

Also, in an age where security risks are of growing concern, Excel is not well-suited to maintaining compliance, particularly when there are new data regulations introduced regularly. The lack of built-in, robust security features can make it difficult to ensure that data handling practices comply with standards such as GDPR or HIPAA.

O que é o software FP & A?

FP&A software is a comprehensive suite of tools and systems designed to optimize a company's financial operations. This type of software facilitates the strategic planning, monitoring, and analysis of an organization's financial performance.

Typically, FP&A software has several key features, organized into categories such as:

• Strategic planning and budgeting
• Comprehensive reporting (including financial, compliance, and operational reporting)
• Financial consolidation processes
• Analysis for profitability and optimization scenarios
• Managing and executing strategic initiatives

It's crucial for organizations considering FP&A software to recognize that not every provider may offer a complete set of these functionalities. Finance teams should carefully evaluate FP&A software vendors to ensure alignment with both their immediate needs and future growth plans, ensuring the chosen solution can adapt and scale effectively.

It’s also important understand that while certain FP&A software vendors market their solutions as superior alternatives to spreadsheets, these offerings are closely integrated with Excel, functioning primarily as Excel add-ins. This means that rather than replacing Excel, these solutions build upon Excel's existing capabilities, integrating additional features while still operating within Excel's framework.

FP&A software can also be referred to as Corporate Performance Management (CPM), Financial Performance Management (FPM), or Enterprise Performance Management (EPM) software. While the core functionalities remain consistent, the nomenclature has evolved to reflect the role of these solutions in empowering finance teams to drive performance.

What’s the difference between FP&A software and Excel?

FP&A software has been developed specifically for finance teams, whereas Excel was created to be a personal productivity tool. Building on the structure of Excel, FP&A software aims to address many of the challenges with spreadsheets, including:

• Automation: FP&A software is well equipped to automate recurring finance processes like data entry, validation, and reporting. This automation extends beyond Excel's capabilities, streamlining workflows and significantly reducing the potential for human error.
• Scalability: FP&A software can handle increasing data volumes and complexity without compromising performance—a critical advantage over Excel, which may struggle with large datasets or intricate analyses.
• Collaboration: Building on the shortcomings of Excel, FP&A software can improve company-wide collaboration by allowing departments to contribute to budgets, plans, and forecasts, promoting a unified approach to financial management.
• Data validation: With built-in data validation, FP&A software can quickly identify mis-entered data, safeguarding you against costly mistakes. This level of precision is crucial for maintaining the integrity of your financial data.
• Non-transactional insights: Another way that FP&A software stands out from Excel is that it can provide non-transactional insights. Some FP&A software solutions have AI-enabled features that can provide a comprehensive explanation of your data trends and variances. This supports retrospective analysis and forward-looking forecasts, which enhances reporting accuracy and efficiency in ways that Excel cannot match.
• Security and compliance: With features like role-based access, audit trails, and data encryption, FP&A software offers superior protection for sensitive financial information, meeting regulatory and governance standards more effectively than Excel.

By addressing the challenges of using Excel for complex financial tasks, FP&A software stands out as a more secure and scalable solution for modern finance teams looking to drive business performance.

How can you combine Excel and FP&A software?

The good news is that there’s a way to combine the best of Excel and FP&A software to transform your finance processes. With a Financial Performance Platform like Prophix One, you can allow contributors from across the business to use the interface they are most familiar with, like Excel, to contribute to budgets, plans, and reports. This approach streamlines workflows and approval processes, reducing manual intervention and accelerating decision-making.

Then, using all the benefits and advantages of FP&A software, your finance team can easily import submitted spreadsheets into the solution for further validation and analysis. Most FP&A software solutions have advanced reporting and data visualization capabilities, which allows you to generate deeper insights, predictive analytics, and more sophisticated financial reports than Excel alone could produce.

By integrating Excel with your dedicated FP&A software, you can also eliminate many of the security risks of spreadsheets. While Excel files can be prone to security risks when shared widely, integrating them into a secure FP&A platform can offer advanced security measures like encryption, access controls, and audit trails, thereby enhancing data protection and compliance.

Overall, if you’re hesitant to give up Excel, there are ways to combine the power and scalability of FP&A software, while still giving your team the option to share some data in spreadsheets.

Conclusion: Why FP&A software is the best choice for finance teams

After exploring the ins and outs of both Excel and FP&A software, it's clear that for finance teams looking to elevate their game, FP&A software is the clear winner. With its ability to streamline processes, enhance collaboration, and provide deeper insights, it's not just a tool but a game-changer.

Curious how FP&A software measures up to Excel add-ins? Check out our blog on Excel add-ins vs FP&A software.