Think You Don’t Need ERP For Financials? Think Again.
Somehow, even in 2016, there are still using businesses relying on Excel for accounting, reporting and other critical financial processes. The excuses for not moving into the world of the modern enterprise and using sophisticated ERP for financials can vary; ERP is too expensive, it would be too much of a hassle to implement, spreadsheets are working fine for us—the list goes on, but each business undoubtedly suffers at the hands of the financials spreadsheet, whether they are aware of it or not .
A two-part series posted by the ‘Strategy @Risk’ blog details the inherent dangers that come with entrusting critical company data and decisions to spreadsheets, which may look clean and simple but are in fact not as watertight as they seem. A Panko (2009) study cited by the second article in the Strategy @Risk series notes that a field audit of seven operation details a 2010 economic study that came up with a widely cited conclusion about growth and government spending. A later replication of that report found that in fact there had been a costly Excel coding error that when fixed, totally nullified the results of the statistical study that had been a building block for many arguments.
The author of the posts points to this considerable error as an example of the unavoidable fact that Excel spreadsheets are “error-prone in a way that any programming language or statistical package is not”, exposing the many possible pitfalls of relying solely on spreadsheets and tales to complete data collection and analysis. So why do so many businesses still use spreadsheets for processes that are so integral to day-to-day business operations?
Leveraging ERP for financials instead of spreadsheets or outdated legacy software is non-negotiable, a move into modern enterprise software that businesses must make to be competitive. Read on for more on what you’re sacrificing when you don’t choose to use ERP for financials.
You Are Wasting Valuable Employee Time
Accounting requires the assembly of data from many different departments within an organization, and when financials are left up to spreadsheets businesses need to put an employee up to the task of retrieving this data from every team, verifying it and then collating into a format that be put into your spreadsheets. Not to mention the time someone must put into coding and maintaining the structure of the documents themselves. All of that work can put into the trusted hands of an ERP system.
Quite simply: if you’re not utilizing ERP for financials, your organization is wasting valuable time by putting the burden of data compilation on an employee’s shoulders. Instead of manual entry, ERP software can grab the information as it is input by the various teams and aggregate them within the system. Modern software is built to ease the burden of employees and streamline processes: take advantage of it. With the software’s help, you can automate the rote-work that employees spend so much of their time on—time that would be better redirected towards innovation in their role and working towards growth, not just equilibrium.
You Are Accepting Inherent Risk
Any company relying on spreadsheets should have gotten nervous reading the introduction to this post, and for good reason. When it comes to your own business, do you want to entrust crucial aspects of your product and business processes to the fickle Excel spreadsheet—which has been shown to be so susceptible to error? If an Excel error can lead to the reversal of an entire financial study, imagine what it could do to your reporting. Poor spreadsheet coding or Excel malfunctions can totally throw off crucial financial reports, production schedules and the day to day functioning of your business, and small mistakes can go unnoticed until they have caused damage beyond their initial scale. Quite simply, accepting the status quo of spreadsheets and refuting the necessity of robust ERP for financials is accepting an inherent risk to the integrity of your data and your business.
You Are Stunting Business Growth
Although it might not be inherently obvious, sticking with spreadsheets is significantly impacting your bottom line. Revisit those employees that are tasked with data collection and system input could instead be spending time with inventive tasks that will help your business grow—constituting a much better investment of employee wages. If your data is corrupted, it could effect key financial reporting and accounting processes that affect your bottom line along with executive planning and decisions. It’s better to be sure you are employing a system built for handling accounting and financial processes accurately and efficiently than a much more generalized software like Excel.
Sure, your business can still grow while you are using spreadsheets for critical processes like accounting, and perhaps that is a reason many businesses hold back from implementing enterprise software—they just don’t see a need—but any growth will be stunted in comparison to what you can achieve when you use ERP for financials, and may be completed negated if a pesky spreadsheet error does pop up.
You Are Losing Valuable Insights
You simply can’t code a spreadsheet to perform all the kind of real-time analysis and insights that a modern ERP system can provide your business. To get real-time analysis from a spreadsheet, employees need to work within multiple applications and switch between systems for data collection, entry and reporting. With ERP, all that work happens simultaneously inside the software. Connecting your machinery and production lines up to the enterprise network means that data entry is built into the system itself—no employee time necessary. Excel is no doubt a widely useful tool and extraordinarily helpful in many business situations, but it is simply not built for the kind of functionality and processing that ERP accounting systems were made for. Invest in enterprise software, and it will take your data capability to the next level—allowing your team greater control over operations, waste reduction, cost-cutting and revenue growth.
Moreover, if you locate your ERP software within the cloud, it will become instantly more accessible than spreadsheets. Excel just isn’t intuitive on a mobile platform, and are often cumbersome to edit and check over when using a mobile device and a Sharepoint. SaaS ERP offerings are accessible from any device with an internet connection, and often built specifically with mobile functionality and user experience in mind. That means your sales people will have access to critical data for clients whether they are in the office or visiting a customer site, and every employee, no matter their location can make use of ERP for financials reporting and accounting processes. You just can’t do that with Excel.
Employing spreadsheets and workbooks instead of ERP for financials could be harming your company more than you think—and even if that damage is not immediately visible, small coding and database mistakes will only grow larger and more destructive they longer they exist. Eliminate the possibility of human input error and spreadsheet blunders by trusting an ERP system and its accounting model with your fiscal needs. You can hit multiple targets with just one business decision, from risk reduction to cost cutting, improving reporting and business insights while freeing up your valuable employees for activities that can drive forward movement and positive change rather than just punching numbers.
Are you still stuck in a spreadsheet rut? No idea how to get started on the somewhat daunting path towards ERP? Contact an expert at Datix today! Over 18 years, we have helped countless businesses make the transition, and have honed a method that will align your business processes closely to the ERP system that best fit them.