Change. The mere mention of the word makes some people uneasy. There are endless behavioral studies dedicated to determining why people resist change. Whether this change is exercising more, teaching yourself about new technology, or procrastinating less—no matter how you slice it, change is never easy. Based on our human nature to resist change, it’s no wonder why making a dramatic process change at work is a massive undertaking.

Every year, companies large and small spend countless hours developing detailed business plans, forecasts and reports to drive their strategic decision-making and performance management processes. Since most financial professionals have a long history of working with spreadsheets, many organizations rely on these spreadsheets to deliver their plans and reports.

According to a BARC study, more than 80 percent of companies they identify as best-in-class use specialized software for budgeting and planning. And 40 percent of companies in their tech “laggard” category still do this work with Microsoft Excel.

The problem with Excel? Errors are common. Yes, the spreadsheet is a useful and popular personal productivity tool. And although they’ve been used for decades, spreadsheets are poorly suited for enterprise-wide planning and enterprise performance management.

While spreadsheet technology has improved over the years, serious problems persist—especially for those who rely primarily on spreadsheets for large-scale planning and analysis. Three recent examples illustrate the ongoing hazards of reliance on spreadsheets.

• In the spring of 2018, a major liquor and wine retailer in the UK lost 60 percent of its market value in a matter of weeks, due in part to an “arithmetic error” in a spreadsheet. The Times of London commented, “Not for the first time, human error with spreadsheets has led to disaster.”

• In early 2019, a large Canadian firm in the emerging legal cannabis industry cited “spreadsheet error” as a cause of under-reporting earnings. The company’s news release said “The correction was made due to a formula error in the spreadsheet supporting the year-to-date adjusted EBITDA loss calculation.”

• In May of 2018, a large number of young doctors in the UK “had job offers rescinded following an error in the administrative process.” What happened? “A spreadsheet error was made in transferring data from one system to another.”

Change is hard, but to help leaders better understand the costs of sticking with the status quo, here are 4 reasons why it’s time to move on from spreadsheet-based planning.

1. Accuracy, accuracy, accuracy. Perhaps the most glaring downside of planning with spreadsheets is that they are prone to inaccuracies. For a variety of reasons, as many as 88 percent of all business spreadsheets contain errors. The larger the spreadsheet, the greater the chance for error, which can lead to miscalculations that drive poor business decisions. It can even put your business in legal jeopardy.

2. Version 1, version 23, version Final_FINAL? Who knows?! Despite the many features of spreadsheets, they are, by nature, static documents that live locally on your desktop. This can create a major version control challenge. They were never designed to have numerous authors, calculate massive amounts of data, or integrate with hundreds of other documents. If your team is planning in spreadsheets, not only will you end up duplicating work in different parts of the organization, version control issues will potentially lead to confusion about where numbers came from, who is responsible for what and even which numbers are accurate.

3. No one has time for that. Spreadsheets are not known for being fast. When there are large amounts of data, the program can run extremely slowly. This can mean team members spend so much time on data collection and verification that there isn’t much time for analysis. Additionally, a spreadsheet-based planning process means teams can’t alter plans, reforecast or modify budgets in real time. As market conditions change, teams need to modify plans and reports as quickly as possible. Making these types of adjustments in a massive, complex spreadsheet can be both slow and difficult.

4. Maintenance pains. Even when an individual spreadsheet is accurate, as a group, these documents can become painful to maintain. It’s too easy for any contributor to insert rows or columns, change a formula or delete a field. It’s common for users to accidently modify calculations. This can lead to either a painful correction process or introducing new errors. Not to mention that the process of aggregating inputs from multiple users can take weeks. A single person has to collect a huge number of spreadsheets and consolidate them into a single version while also trying to maintain connected documents without creating new errors.

These are only a few of the many downsides of relying on just spreadsheets to complete your financial planning, performance, and management.

Meanwhile, the upsides of specialized planning software are abundant. According to a survey from BARC, 44 percent of specialized planning software users experience significant problems less often, which is only true for 10 percent of Excel users. In addition, 57 percent of those using specialized planning tools experienced improved integration of planning with reporting/analysis, vs 11 percent who use spreadsheets. And 53 percent experienced better-quality results, compared to five percent using spreadsheets.

The good news is, you can still work in the familiar Microsoft Excel interface, but with boosted analytical capabilities and additional governance and control. Take a look at our whitepaper or demo video to see how you can use a sophisticated planning solution to conquer the pitfalls of spreadsheet-based planning.