Living with kryptonite

Unlike kryptonite, most users want to keep Excel. Rather than replacing or banning it outright, firms should impose light controls governing its use. A staged transition makes the most sense. For example, recurring formulas can move to shared calculators within a unified data ecosystem designed to handle the bulk of today’s Excel data. Unified data environments with open architecture can still use Excel as an end-user interface, with proper data management in the back end.

At the firm level, careful planning can identify where and how to extend or replace Excel with unified tools and data sources. Such a transition should consider the following steps:

Map and rank spreadsheet usage by criticality: Not all Excel workbooks are created equal. Some are more operationally significant than others. Creating a ranked spreadsheet inventory will reveal files where inconsistent or broken formulas can cascade into financial misstatements. A ranked inventory will also expose high-volume files where repetitive manual data entry generates errors and bottlenecks.

Impose containment on high-impact files: The riskier or more impactful the spreadsheet, the more controls should be put in place to regulate access and preserve file integrity. Containment buys time for data unification and mitigates the adverse effects of overreliance on Excel. Interim safeguards include:

Imposing access controls to reduce or eliminate uncontrolled copies.
Implementing light regression testing to validate critical formulas.
Inputting hard-coded outputs to preserve the integrity of calculations across reporting cycles.

Migrate calculations into shared services: Spreadsheet flexibility is wasted on standard firm-level private credit calculations (such as accruals, covenant checks, coverage tests, or waterfalls, for example) because contractual definitions govern them. The proper place for these formulas is not an Excel workbook run by individual staff members, but a unified data ecosystem, preferably in shared microservices that can return standard outputs.

Move key formulas into unified data ecosystem: Repeatable logic can be extracted from Excel spreadsheets and codified into services attached to the unified data ecosystem. Calculation lineages then become auditable while changes to definitions propagate across portfolios instantly. Analysts can stop authoring spreadsheets and start consuming data products, improving performance in their core function.

Standardize reporting: Investor, risk, and regulatory reporting often suffer from inconsistencies due to different assumptions and data sources across workbooks. Standardizing reporting from a unified data ecosystem ensures that every pack originates from the same source, dramatically reducing reworking at quarter-end and strengthening institutional credibility during investor and regulator engagements.