The Importance of Excel in Business

Microsoft (NASDAQ: MSFT) Excel is a spreadsheet software application used to store, organize, and analyze data. It was released in 1985 and has grown to become arguably the most important computer program in workplaces around the world. In business, any function in any industry can benefit from those with strong Excel knowledge.

Excel is a powerful tool that has become entrenched in business processes worldwide—whether for analyzing stocks or issuers, budgeting, or organizing client sales lists.

Finance and Accounting

Financial services and financial accounting are the areas of finance that rely on and benefit from Excel spreadsheets the most. In the 1970s and early 1980s, financial analysts would spend weeks running advanced formulas either manually or (beginning in 1983) on programs like Lotus 1-2-3. Now, you can perform complex modeling in minutes with Excel.

Walk through the finance or accounting department of any major corporate office, and you will see computer screens filled with Excel spreadsheets crunching numbers, outlining financial results, and creating budgets, forecasts, and plans used to make major business decisions.

Most users know that Excel can add, subtract, multiply, and divide, but it can do much more with advanced IF functions when coupled with VLOOKUP, INDEX-MATCH-MATCH, and pivot tables.

Marketing and Product Management

While marketing and product professionals look to their finance teams to do the heavy lifting for financial analysis, using spreadsheets to list customer and sales targets can help you manage your salesforce and plan future marketing strategies based on past results.

Using a pivot table, users can quickly and easily summarize customer and sales data by category with a quick drag-and-drop.

Human Resources Planning

While database systems like Oracle (ORCL), SAP (SAP), and Quickbooks (INTU) can be used to manage payroll and employee information, exporting that data into Excel allows users to discover trends, summarize expenses and hours by pay period, month, or year, and better understand how their workforce is spread out by function or pay level.

HR professionals can use Excel to take a giant spreadsheet full of employee data and understand exactly where the costs are coming from and how to best plan and control them for the future.

You Can Do Anything With a Spreadsheet

Using Excel for business has almost no limits for applications. Here are some examples:

• When planning a team outing to a baseball game, you can use Excel to track the RSVP list and costs.
• Excel creates revenue growth models for new products based on new customer forecasts.
• When planning an editorial calendar for a website, you can list out dates and topics in a spreadsheet.
• When creating a budget for a small product, you can list expense categories in a spreadsheet, update it monthly and create a chart to show how close the product is to budget across each category.
• You can calculate customer discounts based on monthly purchase volume by product.
• Users can summarize customer revenue by product to find areas where to build a stronger customer relationships.
• Use complex calculation methods, like Sharpe ratios.

Excel Is Not Going Anywhere

Excel is not going anywhere, and businesses will continue to use Excel as a primary tool for diverse functions and applications ranging from IT projects to company picnics.

Working knowledge of Excel is vital for most office-based professionals today, and stronger Excel skills can open the door to promotion and leadership opportunities. Excel is a powerful tool but cannot function alone. It takes a savvy computer user to take advantage of everything Excel has to offer to provide the best results for their company.