David Smith, Principal Solutions Architect, Kaleidoscope
Author bio: David Smith is a qualified Management Accountant and Principal Solutions Architect at Kaleidoscope. He has spent 30 years building financial models across technologies and industries, with the last 20 years focused on specialist modelling tools. He authored the 'Planual'; the Anaplan book of modelling best practices and particularly enjoys solving the problems people say can't be solved.
AI + Excel: why it's still the wrong answer for Financial Modelling
My conclusion from three decades working in this space is simple: spreadsheets are the wrong tool for modelling a business.
I know that's a bold statement. But stick with me.
If you work in finance, you have spreadsheets. Lots of them. And you will almost certainly know that they are fragile, prone to hidden errors, hard to maintain and harder still to control — especially when they are linked across teams and multiple people are involved.
Many hard-to-manage, fragile and error-prone spreadsheets scattered around a business lead to stress, late nights and, more critically, wrong and inconsistent information flowing through the organisation. The kind that impacts your ability to make the right decisions.
The AI + Excel promise
"You can't have escaped the AI + Excel messaging flooding your feeds and inboxes."
Without a doubt, the recent evolution of AI and LLMs has been extraordinary. Coupled with Excel, it sounds like an attractive proposition if you are struggling to maintain your spreadsheets — the solution to all your spreadsheet woes, if you believe the hype.
I'm afraid I disagree.
Don't get me wrong, spreadsheets are great. Until they're not.
Spreadsheets are fundamentally limited by their inherent architecture. They don't have structure. They are not designed to scale. Adding more formulas — or more complexity to existing formulas — just adds to the calculation overhead. Eventually, spreadsheets will crash. Yes, you can split them up. But do you really want more spreadsheets to manage? They are not designed with connectivity or version control in mind. You all know the chaos that ensues with broken links and multiple versions of the same metrics.
So is adding an opaque AI layer really the solution?
Do you understand the result? Can you really trust what is built? It reminds me of the old waterfall software development method — take a bunch of requirements, disappear, and deliver them back in a kind of black box. Not very fast, efficient or effective. That's why it was replaced with more agile and collaborative methods. Once you hand over control of the logic to something you can't fully see or validate, you are at its mercy.
It is like following sat nav on a diversion. You often don't know where you are, so you have to rely entirely on it and hope it's taking you the right way.
And there is no guarantee you will get modelling best practice. AI tools are designed to be generative — ask the same question twice and you may get inconsistent or hard-to-decipher results.
I have seen the argument that we should "keep people comfortable and leave them in Excel." All very admirable. But if you always do what you've always done, you will never find out what else is possible. Often the best results come from pushing ourselves outside of our comfort zone.
There is a better way
Spreadsheets coupled with AI are still the wrong tool for running a business. If anything, adding an opaque AI layer makes the situation worse — there is now another layer you cannot easily interrogate or trust.
To model a business accurately, you do not need better spreadsheets. You need a model that is performant, structured, transparent, and easy to maintain and change.
Difficult to achieve? Yes. Impossible? No.
At Kaleidoscope, we are building just that. We are embedding AI into the platform to act as your own internal consultant. Using our decades of experience in modelling best practices in the FP&A space, we take your spreadsheets and turn them into a coherent, transparent, well-built and structured set of models — easy to understand, maintain and adapt. A platform with enterprise performance at its heart that scales and adapts as your business changes.
It is easy to stick to what you know. But when you look through a different lens, you might see things differently.
You might like what you see.