Most industrial energy buyers we talk to still use Excel for record-keeping and reporting.
But with prices now fluctuating significantly and transactions becoming more complex, maintaining spreadsheets full of data is turning costly and error-prone, causing more stress for buyers and losing money for their businesses.
So it seems that energy procurement, like other corporate functions long before, has finally reached the limits of Excel for reporting.
We see 5 limitations that energy buyers should be aware of.
1. Data entry
Industrial energy buyers must deal with an increasing amount of data, from an increasing number of sources.
That was cumbersome, but doable when quarterly or monthly reports were the norm. But with recent energy market volatility, management boards demand weekly or daily updates.
That's a lot of manual data entry, and makes the Excel reports of energy buyers error-prone, especially when dealing with multiple spreadsheets.
2. Data processing
Compared to modern professional software, Excel has limited data processing capabilities, and may not handle the large datasets or perform the calculations required by industrial energy buyers for a comprehensive analysis of market conditions and company exposure.
That's especially true for optimization challenges, which are key to good decision-making: should we use calendar futures or a mix of calendar and quarterly futures? should we spread our risk by increasing our average number of transactions per month?
Such prescriptive elements are a growing part of energy buying and hedging reports, and Excel is almost useless for them.
3. Data visualization
Granted, creating simple line, bar and pie charts with Excel is easy. But these classic visual representations may not be customizable enough to show the desired level of detail.
For example, how would you create (and continuously update) Datapred's buyometer in Excel?
This limitation can make it challenging for energy buyers to convey their findings to stakeholders or make informed decisions based on the data.
4. Time stamping
Tracking content changes over time is notoriously difficult in Excel. The only accessible options are to devote one tab per date in a single file, or to save one version of the same file per date.
By itself, that drawback almost disqualifies Excel for weekly or daily energy buying and hedging reports.
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But the problem is compounded when your reporting requires calculations covering multiple states of the same issue - for example, the weighted average price of energy resulting from the progression of your energy coverage throughout the year.
And such calculations are becoming the norm for industrial energy buyers.
5. Calculation errors
Even if you could fit these calculations into a single Excel spreadsheet, they would still be error-prone.
A simple weighted moving average takes 15 minutes to create and double-check in Excel. We are not arguing that industrial energy buyers should become financial quants, but the fact is that energy buying and hedging reports require increasingly tricky calculations.
And given the stakes for companies and the pressure on buyers, you really don't want to risk a small mistake in a formula or function leading to incorrect decisions, wasted resources, and financial losses.
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So in total, while Excel can be useful for energy procurement, particularly in smaller companies, dedicated software may be a more efficient and effective reporting option.
If you are still using Excel and struggling to manage your energy transactions, we're here to help.
Datapred is an integrated online software for energy buyers, helping them with reporting and market awareness, and decision making.
If you want to reduce the stress levels associated with your purchases, book a call now.
