Research Latest: Are spreadsheets holding back Finance Transformation?

These are some of the key findings in recent research conducted by MHR Analytics in partnership with Accountancy Age. The report, The road to 2022: An evolving finance function, highlights the steps finance departments are taking in terms of culture, people and technology in order to become more strategy-driven. 

The finance function tends to see itself as a leader in technology adoption. However, the research also points to continued reliance on spreadsheets for reporting and analysis, suggesting a possible gap between perception and reality. In short; some CFOs may not be as well-equipped to face the challenges of the near future as they think.

Automation is a top priority 

69% of companies will deploy high levels of automation by 2022 (up from 64% at present)

71% of companies will have fully automated budgeting, planning and forecasting processes in place by 2022, (up from 64%). 

The comments of respondents mirror what we have seen elsewhere: Covid-19 has accelerated trends that were in place already. This is especially the case when it comes to finance automation. 

As Kayleigh Williams, Head of Business Services at accountancy firm, Duncan & Toplis explained, “Since the start of the pandemic and the UK’s first lockdown in March 2020, business’ eyes have been opened to any weaknesses that are a result of not introducing tech sooner”. 

Finance departments have long recognised the value in overhauling slow, resource-hungry processes. But of course, some companies are always quicker than others when it comes to adoption. The pandemic has meant that late adopters are approaching automation with added vigour: the pressure is stronger than ever to reduce inefficiencies, do more with less, and free up time for strategy. 

So where should automation sit within your wider finance transformation strategy? We would suggest the following approach: 

• Focus on automating existing processes before you turn your attention to introducing new capabilities. That way, you can free up finance department bandwidth to devote to more complex projects (e.g. advanced analytics and big data initiatives). 

• Review all finance tasks to see where productivity and efficiency improvements may be possible. 

• Pay special attention to rules-based, consistent processes as these are often prime candidates for automation. Examples include transaction processing, financial close, budgeting, planning and forecasting. 

• Examine the potential positive impact of automation on your compliance obligations (e.g. lease accounting and statutory gender pay gap reporting). Dedicated solutions integrated with existing systems can help streamline a mounting compliance burden.

Spreadsheets as a stumbling block 

By April 2022, 68% of finance execs believe their company “will lead in technology adoption”. But 72% say they will still be using spreadsheets for reporting and analysis. 

CFOs expect the finance function to develop a much greater focus on analysing data; on generating answers to problems right across the business. But how exactly will this analysis be carried out? As one respondent put it, “analysis is still likely to translate to spreadsheets, the tried and tested home for most accountants”.

There remains a strong element of finance teams sticking with methods they are familiar with, rather than the solutions most likely to result in their desired outcomes. 

For a data analyst or finance manager who has been working with Excel all their lives, spreadsheets seem easy. However, especially if you intend to open up reporting to a wider user-base, you will likely find that not all business insiders view it that way. 

Spreadsheets are cumbersome; adding new data and calculating new values is usually reliant on manual input and is prone to error. They become even more problematic if you are still using spreadsheets as your main tool to communicate data internally. Viewing a spreadsheet-based report, it can be difficult to interpret what’s important and what’s not. Results can more easily be misinterpreted, and the day-to-day usability of reports can be significantly diminished. 

When choosing an appropriate vehicle for data analysis and reporting, bear in mind the following: 

• Many reporting and analytics solutions feature a spreadsheet interface. For instance, with Microsoft Power BI, the Excel interface allows for routine data analysis. Users can then switch to Power BI desktop for more complex tasks. 

• Because it offers a familiar environment, a spreadsheet interface can often be useful for encouraging data analytics adoption among certain users. However, the actual Power BI desktop is specifically designed to make complex tasks easier (e.g. building advanced models, querying data and creating visualisations). If users stick solely with the Excel interface, it can become harder to put these capabilities to work. 

• Technology adoption should always be accompanied by role and user-specific training. Where necessary, this should involve looking beyond spreadsheets to ensure those users are getting the most from the solution.

Implementing the right changes 

Where possible, finance transformation should be focused on leveraging what you have in place already. As the researchers found: 

“Teams are now on the hunt for automated HR, payroll and cash management solutions that are not only scalable, but easy to implement within existing infrastructure and integrate with ERP or TMS systems.”

For many organisations at present, the immediate priority will be to implement niche automated solutions to plug specific productivity gaps. For others, it may be a case of updating your data analytics and decision-making capabilities. This may involve introducing new technologies; but equally, it could be a case of rolling out existing tools across a wider user base. 

MHR specialises in enabling finance departments to identify their pain points and to implement precisely the technological changes needed to address them. To get your transformation initiative on track, speak to us today.