Excel-based vs web-based budgeting and forecasting

For decades, Excel spreadsheets have been the trusted companion of finance teams. Their flexibility, ease of use, and low cost have made them a go-to tool for budgeting and forecasting. However, as businesses evolve and complexity increases, so too have expectations on financial planning. There is greater demand on the finance team and CFO to be more strategic, efficient, and accurate when it comes to financial planning, with the scope to also scale businesses grow. 

This advancement in financial goals has revealed the limitations of Excel-based budgeting and forecasting (B&F). Leading many businesses to the conclusion that they have simply outgrown spreadsheet-based planning, or at the very least, the practice of using it in isolation.  

So, if you’re regularly experiencing limitations using excel-based budgeting software, and forecasting involves too much guesswork, it might be time to re-evaluate your processes.  

Let's delve into the Excel vs web-based differences

How do you choose the best budgeting and forecasting software for your needs? 

It all comes down to what your financial planning needs are now, and in the near and long-term future? For small businesses that requires basic reporting and data exploration and follow a straight-forward budgeting process, an excel-spreadsheet based process might adequately facilitate your needs.  

If you’re a mid to large-size business with a complex structure encompassing multiple branches, divisions, entities as well as growth and expansion plans, your requirements will likely sway towards web-based budgeting and forecasting. It’s at this level where business quickly realise the benefits of financial planning and analysis (FP&A) software - and see a fast return on investment.  

Comprehensive FP&A solutions like Phocas offer tools that are custom-built to support the finance team and CFO, helping them connect financial performance to the wider business. It not only offers budgeting and forecasting capabilities, but also has a BI Analytics foundation as well as Financial Statement software.  

Phocas BI pulls data from your ERP and multiple other sources into one centralized platform, making up-to-date data access fast and easy for everyone. Financial statements connect budgets and forecasts to dynamic profit and loss, balance sheet and cashflow statements. Reporting is automated and live actuals automatically feed back into your budgets and forecasts, enabling you to regularly compare actuals against planned performance and then make quick adjustments as needed.  

The bottom line; web-based B&F (or in Phocas’s case, complete BI and FP&A capabilities), will enable you to transform your finance function. Excel-based B&F will essentially offer basic planning. 

What about Excel plug-in tools?  

Spreadsheet Native 

Pros: Users who are already comfortable with spreadsheets will find these tools easy to use. Since these tools rely on spreadsheets, data can be easily imported and exported. 

Cons: Functionality may be limited compared to more specialized software. Heavy dependence on spreadsheets means issues with spreadsheet functionality may affect the tool. 

Web App - High Spreadsheet Integration

Pros: Enhanced functionality offers more features and capabilities compared to spreadsheet-native tools. Changes made in the spreadsheet are reflected in the tool in real-time. 

Cons: Integration with spreadsheets may add complexity to the tool's interface and usage. Users may still be reliant on spreadsheets, limiting the tool's independence. 

Web App - Medium Spreadsheet Integration

Pros: Ability to leverage both the tool's calculation engine and spreadsheet capabilities. Flexibility to work with both the tool's native features and spreadsheets interchangeably. 

Cons: Seamless integration between the tool and spreadsheets may be challenging. Learning curve to navigate between the tool's features and spreadsheets. 

Web App - Low Spreadsheet Integration

Pros: Focuses on replacing spreadsheets, potentially offering a more efficient workflow. Less reliance on spreadsheets, reducing dependency on external software. 

Cons: Users accustomed to spreadsheets may find it difficult to transition to a new workflow. The tool may lack certain features or flexibility present in traditional spreadsheets. 

Web App - Spreadsheet Replacement

Pros: Offers features tailored specifically for planning and analysis, potentially surpassing spreadsheets in certain aspects. Data is stored within the tool, reducing the risk of version control issues common with spreadsheets. 

Cons: Learning curve to adapt to a new interface and workflow. Limited compatibility with traditional spreadsheets may hinder data exchange with external stakeholders. 

Planning App within BI Tool - most closely aligned with Phocas Software

Pros: Combines FP&A functionality with business intelligence capabilities, providing a holistic approach to decision-making. Offers advanced visualization features, in-depth analysis for everyone, automated reporting, dynamic financial statements, and flexible, connected budgeting and forecasting.  

Cons: Unlike Phocas, some platforms require users to purchase or subscribe to a separate BI tool to access planning functionality. Integrating planning applications with a separate BI infrastructure may require additional setup and configuration. With Phocas, BI Analytics is a foundational platform product that works smoothly alongside other Phocas products; Financial Statements, Budgets and Forecasts, Rebates.   

You can, however, have it all! 

While web-based B&F offers numerous advantages over Excel-based solutions, there's no need to choose between the two. Many modern B&F platforms offer seamless integration with Excel as well as their ERP, allowing organizations to leverage the familiarity of Excel while benefiting from the advanced features of web-based software. This hybrid approach combines the best of both worlds, providing flexibility, efficiency, and accuracy in financial planning. 

What to look for when choosing the best web-based B&F software

1. Usability: Look for a platform that is intuitive and easy to use, with minimal training required.
2. Total cost of ownership: Consider the upfront investment required, as well as ongoing maintenance and support costs. As per point one, if the software is easy for everyone to use, you won’t need to outsource experts and incur increasing costs.  
3. Data security: Ensure that the platform provides robust security features, such as data encryption and access controls.
4. Automation: Evaluate the platform's automation capabilities, including data collection, integration, and process automation.
5. Flexibility: Choose a platform that is highly configurable, can be tailored to fit unique needs, and provides options to build budgets in your preferred method; driver-based, zero-based, cashflow, rolling forecast, historical/incremental, activity-based.  
6. Collaboration: Look for features that facilitate collaboration and communication among stakeholders, such as real-time editing and commenting.
7. Advanced Features: Consider the platform's advanced features, such as scenario planning, predictive analytics, and customizable reporting. 
8. Customer support: This attribute often separates the great from the not so great. Look for providers who have a history of building great relationships with their customers. Real human interaction, caring enough to understand your unique business needs, and a willingness to pivot, listen and provide strategic guidance to help you achieve your goals.