IT Zone Survey 2005: The ubiquitous spreadsheet
Excel is ubiquitous within the accountancy profession, with more than three-quarters of the respondents (77%) in the 2005 IT Zone survey reporting that they used spreadsheets for some aspect of their work.
For 11% of the 1,000 survey respondents, Excel was their primary accounting application. Three-quarters of the culprits were in companies turning over less than £1m. An overwhelming proportion of these were accountants and business services/IT consultants, who should have better things to do with their valuable time.
Even more worryingly, nearly a fifth of the DIY users were from organisations turning over £50m+. With so many documented cases of Excel errors and their impact, spreadsheet dependence could have expensive financial consequences in these organisations. One possible explanation for this situation is that Excel is being used as a consolidation tool in the place of more expensive specialist programs.
Several survey questions focused on management accounting and reporting functions. The responses to these queries brought to light higher levels of Excel usage than identified in previous IT Zone surveys. Just over half the respondents (51%) replied that they used Excel for management reporting, either on its own, or in conjunction with other applications.
Survey sponsor CODA asked how long it took survey participants to close their books each month. The overall findings showed that nearly two-thirds of respondents closed their books within the space of five working days:
<2 days 40 %
3-5 days 25 %
6-10 days 21 %
11-15 days 8 %
>15 days 6 %
As a general rule, the smaller the organisation, the less time it takes to close the books each month. For all our warnings about the inadvisability of using Excel as your accounting ledger, the vast majority of very small practitioners and consultants who created their own Excel accounting systems closed their books within two days.
Those respondents who linked Excel alone to their main accounting ledger to produce management reports (21% of survey sample) were close to the survey norm for month-ends, apart from a 5% swing from those who took 3-5 days to the lengthier categories.
In a classic case of the cobbler's children syndrome, practitioners using specialist practice management programs were significantly slower:
<2 days 28 %
3-5 days 19 %
6-10 days 22 %
11-15 days 5 %
>15 days 8 %
Longer reporting cycles were even more marked within the third of respondents who used other reporting aids alongside Excel, whether Microsoft Office tools, or the performance management suites supplied by the likes of Hyperion and Cognos. Only a quarter of this group (26%) closed their books within two days compared to the overall figure of 40%. More than a third of this subgroup took longer than six working days to close their books, represented in the main by those accountants, financial controllers and directors in commercial organisations turning over more than £1m a year.
Looking at the overall survey results, more than half of accountants in £1m-£10m turnover commercial organisations took more than five days to close their books, a higher proportion than the survey norm.
Nine out of 10 of these management accountants used Excel to compile their reports. While no blame can be attached to the spreadsheet program for this state of affairs, we can deduce that accountants in many SME finance departments across the UK are spending long periods of their working lives tinkering with figures in Excel.
Some of the biggest consolidation and reporting challenges are faced by the corporate elite, with many £500m+ turnover companies taking more than 10 days to close their books at the end of the month. On closer examination, the value of the specialist corporate performance management suites is apparent from the replies of the largest (£500m+ turnover) Hyperion users, most of whom completed the monthly close within a week. Larger Cognos users showed a similar pattern, but with a higher proportion taking 6-10 days.
The obvious challenge for the financial software industry is to get similar tools into the hands of SME users - at prices they can afford.
When we asked survey participants a free text question about their main technology concerns, management reporting issues were mentioned quite regularly, with only IT security and basic communications/software issues cropping up more regularly. Among the replies received were concerns about Excel errors and reliability, using Excel to report and the question, "Is Excel best at budgeting & forecasting?"
Subscribe to the ExcelZone newswire
To keep up with all spreadsheet developments, click the button below to subscribe to the free fortnightly ExcelZone newswire. The system will take you back to the AccountingWEB home page after it adds your name to the ExcelZone subscription list.