5 Reasons Why Spreadsheets Aren't Enough for an Effective What-If Analysis
Spreadsheets are widely used for various analytical purposes, including what-if analysis. While spreadsheets are a valuable tool for organizing and manipulating data, they’re not always the best choice for complex what-if analysis.
Discover five reasons why spreadsheets may not be sufficient for what-if analysis and what you can do to prevent errors:
1. Limited Scenarios:
Spreadsheets have a limited ability to analyze different scenarios. They require users to manually create each scenario, which can be time-consuming and may result in important details being overlooked. Additionally, changing one input value may not automatically update all the associated formulas and calculations, which can result in incomplete or inaccurate results.
2. Lack of Flexibility:
Spreadsheets are often built with a fixed structure, making it difficult to modify them as the needs of the analysis change. They may require users to create new worksheets or to copy and paste data between different worksheets, which can be tedious and error-prone. This lack of flexibility can make it difficult to quickly test different scenarios and analyze the impact of different inputs on the final output.
3. Data Integrity:
Spreadsheets rely heavily on data input by users. If the data is not entered accurately or consistently, the analysis will be flawed. Additionally, if data is entered in the wrong format or with incorrect formulas, it can result in incorrect calculations and a failed what-if analysis.
As the size and complexity of the spreadsheet increases, so does the risk of error. This can be due to the sheer volume of data or the interdependence of different calculations and formulas. Spreadsheets with a high degree of complexity may require specialized knowledge to fully understand, which can make it difficult to identify and fix errors.
5. Lack of Collaborative Features:
Spreadsheets are often used in a collaborative environment, but they lack the necessary features to enable effective collaboration. For example, multiple users may need to work on the same spreadsheet simultaneously, but this can lead to version control issues and conflicts. Additionally, spreadsheets do not have built-in tools for commenting, sharing, or tracking changes, which can make it difficult for users to work together effectively.
While spreadsheets can be a useful tool for what-if analysis, they have certain limitations that can lead to a failed analysis. The best way to mitigate these limitations is to invest in a planning platform and adopt a more collaborative approach to analysis.
Finicast’s collaborative software provides companies and analysts with various economic, financial, and operational scenarios, thus giving an insight into future business standards and planning, making it easy to deliver and modify sales forecasts, territory plans, and commission calculations. Executives, business owners, and other leaders can use this information to make decisions for the upcoming months and years to maximize their growth and profitability with accuracy and confidence.
Contact us today to learn more about how Finicast can help you.