Holding on too long -- when do you outgrow Excel?

Here's what I'm finding...it's interesting...Excel is a tool basically designed to replace a ledger and calculator. It provides rows and columns, and does calculations. Ok, plus a few other things. Yet Excel is used as a financial system, database, compensation system. It kind of mirrors what has happened with computers. It's kind of funny that we still call them computers, as if all they do is compute. Sometimes a technology provides such basic value and flexibility that it's use mushrooms. That is true of the computer, and in a lesser but significant way, is true of Excel.

The difference is, the computer is the apex, there is no real technology beyond the computer to do things we do on a computer. If there were, it would just be, well, a better computer. Whereas with Excel, technologies have been designed to take users to the next level when they reach the limits. Excel will never be an enterprise application, it's just not architected for that. Most of us push the limits for quite a while before we make the leap to the next level. Probably we hold on too long, until the pain is great enough to get our attention. But if we wait that long, we might be missing out on some significant benefits of automation beyond what is possible with Excel.

One example is in the area of performance management. Many companies rely on Excel for financial reporting, bugdeting, planning, and forecasting, until the point where they realize they are in "Excel Hell". They end up with dozens or hundreds of spreadsheets. Data reliability is always in question, there is no "one version of the truth," mistakes run rampant as people overwrite formulas or make invalid entries. Changes are a nightmare, as they have to ripple through all the sheets. As a result, changes are seldom made, limiting the responsiveness and agility of the organization.

The same is true with compensation systems. Each manager has a spreadsheet. Numbers have to be manually consolidated to get a total comp number. Different versions of spreadsheets are floating around. No one trusts the numbers. Comp plans become static things because changes are difficult, whereas with an enterprise comp platform, organizations can be nimble. To get the organization to change behavior to match new strategies, the most effective way is to change compensation. A well designed enterprise platform allows for rapid changes to compensation structures to align performance with strategy, and align pay with performance.

Of course, the best case is an enterprise system that lets you still work in Excel, as a front end or offline component, but that keeps the data centralized. Let's face it, they'll have to pry my Excel sheets from my cold, dead body, but at the same time I know that Excel has its limits. To use a Tour de France metaphor, you can ride through the Alps on a bicycle, but at a certain point (if you really have to get somewhere), it's a heck of a lot easier to use a car.

You know you're an Excelaholic when...

My name is Jeff and I am an Excelaholic. And I should know better, I work for an enterprise software company, and preach to people all day long about how they would save money and improve performance by replacing their homegrown / Excel processes (for compensation systems, in my case) with an enterprise system. Which they would. And their lives would be so much easier. But I confess, I am powerless over spreadsheets myself.

To help others identify whether they might be more than just social spreadsheeters, I started to compile a list of telltale signs of Excelaholism. I would welcome additions that any of you might have—just add a comment with your own examples.

• You have more than 100 spreadsheets on your hard drive. ( I have 2,375.)
• You use spreadsheets as a database. (Well, you can sort, filter, and search—duh! What else do you need?)
• You use Excel to lay out your annual Holiday photo montage. (Oddly, it’s easier than Word. I should know.)
• You taught your kids how to use Excel before you taught them to clean their rooms. (Their data is organized; their rooms—not so much.)
• You begin to quiver when you see your spouse do a budget with a pencil and pad of paper. (I showed her how to do it in Excel! She still prefers her way! I hope I get to visit the kids on the weekends!)
• Friends call you up to find out how you do that conditional formatting thing.
• When those friends call you up, you don’t answer the phone because you’re working on a new spreadsheet to document your family tree.
• Your workbook with 147 tabs is so large it crashes your PC, so you go out and buy a machine with more memory. (You corporate finance people: don’t even pretend you don’t know what I’m talking about. Your planning system? Your compensation system? Ring a bell?)
• Your to-do list is in Excel and – even though you are the only one who ever uses it – it is complete with macros, filters, and pushbuttons.
• You are not happy that your stock portfolio is sinking, but you are very excited to be able to be able to graph the trend in 3D.

I am also taking entries for the largest xls size. My biggest one is 27 meg, because it includes graphics, but I’ll bet someone can do better, especially you corporate users out there with the 100+ worksheets. Know what I'm talking about?