Excel’s Long Reach Sheds Light on Enterprises’ Back Office Pain Points

Back in 1987, Microsoft released Excel, its spreadsheet program designed to handle all manner of calculations and computations, from simple mathematics to complex probabilistic statements.

And in the decades since, the files, the rows, the columns have proliferated by the billions, by the trillions, more likely — and have become a mainstay of back offices, from the biggest banks to the sole proprietorships that line Main Street.

But widespread use should not be equated with efficiency, certainly not when it comes to supply chain management, and fostering a sense of transparency (and streamlined payment flows) between buyers and suppliers.

Manual as Manual Gets

Excel’s data process is, of course, as manual as manual gets, input by hand, saved, and eventually used to populate invoices, accounting ledgers, expense reports … and then the paper checks are cut. It all takes days, weeks, months, and complexity is the overarching hallmark. As many as 40% of B2B payments are still made with paper checks, and 81% of companies still pay other enterprise through those paper-based channels.

One illustrative case in point comes from a recent article to be found here, where ArsTechnica noted that Formula 1 has been using Excel to manage a “car build workbook” to manage 20,000 individual car parts.   But the workbooks don’t have some critical data on hand, per the report, such as costs and production times tied to each individual part.

Microsoft, for its part, still sees demand for the spreadsheet. In the latest quarter, the company reported that Office Commercial products and cloud services revenues, which includes Excel, were up 15%, driven in part by Office 365 Commercial revenue growth of 17%.

None of this is to suggest that Excel does not have a place within organizations — it certainly does. But there is, of course, room for improvement, and for automation. As reported here, PYMNTS Intelligence research has found that that 8 in 10 content management system firms that currently operate without an automated non-payroll spend management system report that they are “highly interested” in using one. Of the 200-plus firms surveyed by PYMNTS, 9 in 10 indicated it would take just a month to onboard new software into their existing accounts payable (AP) systems.

And as detailed by separate PYMNTS Intelligence research, all manner of firms see more back-end activity in the works, as the companies we’ve surveyed  anticipate a 50% increase in payments made and a 46% increase in invoices delivered. Of firms with revenues up to $15 million, 80% anticipate an increase in payments through their accounts payable (AP) systems, and 75% predict an increase in the invoices managed through their accounts receivable (AR) systems over the next three years. A full third of companies have yet to automate their AP and AR process — and hence, reduce some reliance on the spreadsheets and the paper checks. But 85% of companies recognize the benefits of automation — chiefly through improved cash flow.