Are you using Excel for business planning and business forecasting?

Let me rephrase that. Are you using Excel, that brilliant personal productivity tool, for business planning and forecasting? And with that biased question, I have given away my opinion right at the start of this blog.  You shouldn’t be using excel for your business planning and forecasting! However, let’s pretend I didn’t ruin everything and go back to the beginning.

I’ll start my journey with VisiCalc which was launched in 1979. It was a Visible Calculator, hence VisiCalc, and took no worlds by storm. Sitting nicely on a green screen Apple computer, nobody predicted that its descendants would be holding some of the world’s biggest companies’ budgets and forecasts together as they negotiated the most volatile trading conditions since the great depression nearly 100 years ago.

Those descendants are Lotus 1-2-3, which was born in 1983 and died sometime in 2013 after a long and painful period of decline, and Excel, born in 1982 (although initially called Multiplan but relaunched as Excel in 1985) and still going strong.

And just to set the record straight, I loved them both. I even loved Quattro Pro. But those were different times. It was before we all had phones and we even smoked real cigarettes while typing numbers into those crazy spreadsheets in the accounts department in the ’90s. Luckily, times have changed.

Spreadsheets were always built to help the individual be more productive. We all had desk calculators then, but it was far better to type the numbers into a spreadsheet so you could check you had input them correctly. It was good to be able to do calculations to large data sets and it saved time when your boss asked you to recalculate using a different assumption and see what the results looked like then. My personal productivity soared. I had been given a choice. Realms of paper and a pencil, a calculator, or a spreadsheet. No wonder spreadsheets were readily adopted.

If spreadsheets were so good then, why are they a bad choice now?

Budgeting and forecasting have changed. The aims are the same, but the processes are very different.  Here are some of the major changes I have seen:

Multidimensional planning and forecasting

Multi-dimensionality has arrived and has been accepted. Every organisation has a need to plan over many different dimensions and must accept that organisations are more complex beasts compared to just 10 or 20 years ago. Multiple sales channels now include on-line, off-line, through partners, or via franchise models and online marketplaces such as Amazon Prime and eBay. Different locations throughout the country, Europe and the wider world. Expanding product or service portfolios, with different standards of luxury, sophistication or branding. Scenario planning for best case, worst case, diabolical case and Covid. The dimensions keep on growing and won’t be shrinking anytime soon.


More people are involved because planning has grown out from the finance department to encompass the entire organisation (This is now being referred to as xP&A, Extended Planning & Analytics). Planning isn’t only about what the figures might look like. Planning is about everything within an organisation. What it markets, what it sells, what it buys or produces, how many employees it needs, and all of its costs. The genie is out of its financial bottle, and won’t be going back in.

Enhanced Security

With so many more people involved in the processes, security becomes an issue. Who can see what, who can change what, who arbitrates any clash of opinion and how do you stop it from being hacked or ruined by mistake?

The need for transparency in planning

Transparency is now a key requirement in any planning process. Coming up with numbers is just the start. Diving straight back into those numbers to sanity check or audit them is becoming as important, along with a newer trend of being able to present those figures in a meaningful way, a narrative if you like.

In all of the above, Excel lets you down again and again. It is not multidimensional, even if it tries really hard to approximate to multidimensionality, in reality, it is simply a collection of 2-dimensional sheets joined together. The more people involved, the more the spreadsheet models will creak and eventually fail, whether through the volume of data, number of concurrent users, too many cooks spoiling the broth with their own pet Excel formulae, or through security issues. As for transparency, have you ever tried to debug someone else’s spreadsheet? Unless you click in every cell and check the formulae, you will never really know if it is consistent or not.

So, what choice do you have now?

There are specialist planning tools available now, so relying on Excel or changing up to a focused business forecasting & planning tool is a choice you are making.  Unless you have limited dimensions within your organisation, the planning is contained within just a small department and you don’t mind it being a secretive process, you really should be looking at switching up.

If we take IBM Planning Analytics (formally Cognos TM1) as a good example, the advantages are many and worthwhile:

  • Planning Analytics is completely multi-dimensional, with no limits, although most people cannot really cope with more than 10 (Einstein could cope with 13 dimensions at a time, but he was cleverer than me and had better hair).
  • More people can be involved in the planning process, models can be more complex, xP&A becomes a reality as more departments can join their plans together to create an integrated whole company plan rather than the disconnected silos of information you see in most organisations. Interestingly, Gartner claims that 70% of planning projects will be xP&A projects by 2024. Obviously, the Excel users will be left behind in that 30% of constrained planning projects.
  • The security is easy to set up but impossible to get around. Access is via a browser using IBM Planning Analytics Workspace (PAW) and you can have the application on-premise or in the cloud.
  • Full transparency, full audit control, and full version control are standard features, so you can be sure that your model, once set up correctly, will continue to work well, but can easily be adjusted, extended, and tweaked as your organisation changes. It will even help you present your plans so you can own the narrative around the changes to your plan.
  • Planning Analytics can be bought as a service (SaaS) from Simpson Associates, so it is no longer a large capital expenditure.

Are you still using huge, problematic, flaky Excel spreadsheets to do your business forecasting and budgeting? Why?


If you have any questions about planning and forecasting, or any of the tools mentioned in this article, please feel free to speak to us using our live chat, where one of our experts will be happy to speak with you in more detail.

Blog Author

Paul Baron – ex-spreadsheet planner, ex-smoker, and current FP&A Engagement Manager

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