In the beginning there was the abacus and numeric notation... In this article we chart the evolution of accounting technology and its impact on the world, while considering what lies ahead for the lowly spreadsheet. We look at what that means for accountants and the rest of us...that is, their clients.
In its broadest sense, technology refers to scientific knowledge applied to a problem for practical purposes. Sometimes people use the term as referring to the equipment developed and applied to a specific problem. Regardless of how you slice it, it's important to recognize that with every technological leap forward in accounting, there is the opportunity to create documents that are enriched (packed!) with more and more useful information, simply displayed and ever more easily customized.
As the market for cloud-based collaborative tools that offer great value heats up, how can accountants work smarter and refine the signal to noise ratio to find the right tool to leverage their own business while helping their clients?
Spreadsheets - A Brief History
Long before the start of a money-based system of exchange, accountants were hard at work counting and tallying with great accuracy. Paper spreadsheets are of a much more recent origin - dating back several hundred years. We don't often think of the size of paper as a technological advancement but for the handwritten spreadsheet, it was a game-changer.
Spreadsheets caused a paradigm shift in how accountants could record, store, display, explain and tally data and are noted as one of the signs of 'modern' accounting. With 5 columns and 20 rows, and born from sheer late night necessity, the computer spreadsheet happened sort of by accident in the labs of Harvard Business School in 1961. With the ability to scroll rapidly through the data and calculate it both laterally and vertically, the information age fully met the field of accounting.
Since that time, while spreadsheets have become more intricate and the features that they offer more user-intuitive, there have been few changes to the basic structure of the spreadsheet program.
The Granddaddy: Excel
Currently, Excel software is available for Windows, macOS, Android and iOS; however, don't confuse availability with efficiency. Jam-packed with features that have helped endear them to users all over the world, there is a new kid in town. Until recently, the world was trying to figure out where to go with them next - there seemed no place left to climb to - today's modern, feature-packed jack-of-all-trades spreadsheet was the pinnacle.
Overall, accountants like the orderliness of explicit information captured in spreadsheet form. However, business owners are often a different story. Canvassing who you prepare spreadsheets for will confirm what you already know: most business owners would rather get a sunburn rather than sit in a meeting with a dim understanding of spreadsheet data on which strategic decisions depend.
Anyone will contend that spreadsheets are very susceptible to user error, so much so that the more intricate and useful they become, the more vulnerable they can be - an inverse relationship. Similarly spreadsheets are highly time-intensive to create and manage, and often the quantity of actionable strategies are limited - either because the data itself is difficult to discern meaning from, or those who can both interpret and action that data are busy running the business by other means.
Finally, the nature of a vulnerable and intricate spreadsheet is that we as creators are less incentivized to share and collaborate because granting write-access means that we stand ready to have our creation ruined.
Cloud Based Spreadsheets are a Great Transition, not an End Point
Neither evolutionary dead-end nor path to the future, the pared-down functionality coupled with the increased collaborative nature of the cloud-based spreadsheet is a great transition tool to help businesses, business units and their financial teams to find an economical way to cope with the future of collaborative business tools.
Tools like Google Sheets offer the first step into the cloud and bring the foremost benefit of cloud software with easy sharing and no version control issues, as well as being highly flexible. For the foreseeable future, accountants will be able to capitalize on some considerable strengths of cloud-based spreadsheets, but the speed, complexity and demands of business mean that the spreadsheet has constraints that other tools do not.
Cloud-Based Apps are the Future of Millennial Business
Truth be told, we're in a post-spreadsheet era for many core business tasks.
This situation started as soon as spreadsheets began to create barriers to communication instead of facilitating communication. Think I'm exaggerating? I challenge you to poll business owners to find out the ratio of time spent decoding the spreadsheet compared to time spent making decisions that stem from the data.
My point is that globally, we've come to a point where spreadsheets are a barrier to meaningful business communications instead of facilitating communications and driving strategic actions. There is no further place that the spreadsheet can take us.
Instead, a fresh paradigm has appeared with the advent of cloud computing and the concept of an app that has a razor-focus on a particular user need. Together, cloud computing and the app mentality are changing the face of business.
Picture software that has been designed to easily share data. A design that is user-friendly, living securely on a remote server, offering access for your stakeholders, customers or clients. Access is transparent, and revoked just as rapidly when a project ends - regardless of whether they're in the same building or across the country.
There are no version control issues, since the one, rapidly refreshing version of your information automatically saves every minute and refreshes across all users at the speed of the internet.
Instead of being concerned that someone has an 'old copy' that is stored locally on their computer, or that decisions are being made with outdated figures, that time can be channeled into higher order collaboration and strategy.
There is a brief and mostly painless learning curve. No more personnel nightmare of paying for your team to be out of the office learning about Excel for a week or so. With highly intuitive user interfaces, apps keep the learning curve short and to the point - often they depend on automatic import of existing data and a series of intuitive choices to help customize the information.
Mistakes and formula breaks still occur - after all, to err is human. Often, these don't cascade the way that spreadsheet errors frequently do. Spending hours checking for a formula or data entry mistake is far less common with apps. Similarly, the structure of information contained in an app is fixed while still allowing for a great deal of flexibility, and due to this structure and design aesthetic, information contained therein conveys more dynamic meaning than the standard 'number in a box' that spreadsheets provide where information is highly vulnerable, low context and depending on the size of the sheet, isolated from meaning.
Having the right tool to do the job has been a hallmark of the professional across many fields for centuries - it's time for businesses to make best use of what cloud tools can offer. New cloud tools are super-specialized powerhouses that connect together to offer highly readable, up-to-date essential data that remains as flexible as your needs demand.
Interested in learning more? Dryrun is a cloud-based app for cash flow; budgeting and sales forecasting that keeps razor focus on your future. With unparalleled support and great pricing, we're loved by accountants and business owners throughout the world.
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