In business, money is the root of all good (yes, you read that right). As a tool of exchange, it brings people together to do good things that make lives better. With that in mind, let’s assume you agree it’s pretty important that your finance department is linked inextricably to every other part of your business. Thankfully, today it most often is.
Ever since the origination of “big business,” which can be traced back to around 1880, that connection between finance and other business functions has evolved and expanded. Think about what it took to do large-scale accounting before computerized spreadsheets entered popular usage, first with Lotus 1-2-3 in the 1980s and then with Microsoft Excel from the early ’90s to today.
As businesses grew into corporations, paper accounting became an increasingly grueling task. What Excel can do in a second, which is basically any calculation imaginable after you’ve fed it the data it needs to do the sums, had to be done with painstaking accuracy and enormous patience by teams that swelled to huge numbers. It’s no surprise, then, that complex “financial models” and “financial analysis” were given little to no thought.
I can almost hear the echoes of the collective sigh of relief from all those sore-thumbed accountants when computerized spreadsheets eventually surfaced (and in many cases the sigh of despair from losing their jobs). For those who made the transition from paper to electronic accounting, however, it wasn’t just a case of business as usual. Excel was much more than just a digital version of the traditional paper spreadsheet; it was more like a numerical playground for accountants to get lost in formulas, statistics, and models.
With a capable-enough numbers whiz, it was suddenly possible to quickly analyze data and find ways to improve the business’ financial condition. This began to transform the grunt work of accounting into something that had a larger influence over business decisions.
Two decades on, it’s remarkable that many of us in the business and finance worlds now see Excel as something that’s “manual,” “static,” and “slow.” It still has uses in areas where little else can match it – it’s a fantastically powerful tool for data scientists – but it seems out of place in a digital business world that’s striving to become “instant.”
Although the pace of life has accelerated over the past 20 years, “instant” everything is not necessarily something all of us desire in our personal lives. However, in business it’s not about what you want, but about becoming instant – or “live” – to keep up and survive. The future of entire industries is uncertain, and established businesses are collapsing. We’ve already seen how weak or slow decisions, caused by a lack of sufficient insight, lead to that happening. And it won’t end there; the prediction is that 40% of today’s companies on the S&P 500 will no longer exist in 10 years.
The difference between Excel and modern business intelligence tools is that the former delivers instant calculations, but the latter delivers instant insight. It’s this that allows the finance team to go beyond simply reporting past results and touching every part of the business with answers to immediate questions, whether they’re about production, R&D, purchasing, HR, or marketing. The seemingly subtle but practically enormous difference between having instant calculations or instant insights at hand might just turn out to be what saves your business.
Listen back to a free Webcast to hear SAP finance software expert Jason Reid discuss the challenges and benefits of modernizing financial reporting.