Robert Kugel's Analyst Perspectives

Investigate User-Friendly Spreadsheet Alternatives

Posted by Robert Kugel on Apr 18, 2013 10:11:35 AM

I’ve been using spreadsheets for more than 30 years. I consider this technology tool among the five most important advances in business management of the 20th century. Spreadsheets have revolutionized many aspects of running an organization. Yet as enthusiastic as I am about them, I know the limits of desktop spreadsheets and the price we pay if we fail to respect those limits. The essential problem arises when people use desktop spreadsheets for purposes beyond what they were originally designed to do. Desktop spreadsheets were designed to be a personal productivity tool, and they are good for prototyping models and creating analytics used in processes, performing one-off analyses using simple models and storing small amounts of data. They were not designed built to be used to manage or support repetitive, collaborative enterprise-wide processes. As a rule of thumb, when a spreadsheet is used by more than six people six or more times, it’s time to look for an alternative. Otherwise, errors and inconsistencies easily creep in and undermine the accuracy and value of important data.

But long-time business users, especially the most skilled ones, keep on using spreadsheets inappropriately. They often rationalize continued use by insisting that the ease with which they can create spreadsheets is a reasonable trade-off for the problems they routinely encounter (especially errors and excessive time spent maintaining shared spreadsheets). As well, these persistent users typically believe that alternatives to desktop spreadsheets are too expensive and require substantial training. But this view is out of date. Today, there are relatively inexpensive spreadsheet alternatives that address their common shortcomings and are designed for business users, not IT professionals.

One area where spreadsheets are commonly misused is as a “data off-ramp” vr_ss21_business_intelligence_and_spreadsheetsfor business intelligence and other systems, leaving the highway of reliability for a back road that is hard for others to follow. Our recent benchmark research Spreadsheet Use in Today’s Enterprise found that three-fourths (74%) of companies use spreadsheets and BI systems frequently or all the time. This also applies to other enterprise data sources such as ERP or CRM systems. Ad-hoc analyses or reports, prototypes and exploratory models are examples of work that’s probably best done in a desktop spreadsheet. And many of those who use a spreadsheet as a data off-ramp are not abusing the technology. However, when people use desktop spreadsheets to repetitively create analyses and reports that they share with others, they are creating a problem. Downloading data from an enterprise system into a spreadsheet severs the connection between the source system and the report. This is a root cause behind inefficient processes that ultimately blunt the effectiveness of company executives and managers. It also can present governance and compliance issues since these spreadsheets may not be controlled and therefore may not represent the source information properly and may contain material errors.

What people usually find missing when they employ desktop spreadsheets as an enterprise system off-ramp is revealed in the top three vr_ss21_most_wanted_spreadsheet_capabilitiescapabilities that research participants find absent in their spreadsheets. Heading the list was the ability to make real-time connections to company data from within the spreadsheet, cited by three-fourths. Dumping BI system data into a spreadsheet model and/or a report is handy and expedient, but doing so severs the link to the source systems, rendering the data static. Maintaining the link to data ensures that those viewing the numbers are seeing the most up-to-date version. It cuts down or even eliminates the time spent recreating the analyses and reports to produce an updated version and reduces the probability that people will be looking at different versions of the report. Nearly as many participants said they’d like to be able to drill down into the underlying data when using spreadsheets. Again, by severing the link to the source data and lacking multidimensional links to that data, users are unable to uncover the numbers that are behind the numbers in their static spreadsheet. This same root cause is behind the desire by almost as many (72%) who want decision-makers to be able to refresh and filter the reports that they receive.

The most interesting fact about these research findings of what users would like to have in spreadsheets is that these capabilities are already available in software that is easy to use and, for many companies, affordable. For many years desktop spreadsheets were the only solution, but today inertia is the main reason why more organizations aren’t using spreadsheet alternatives. Few people are aware that affordable and easy-to-use alternatives to desktop spreadsheets exist, and fewer still are looking for them. Companies – especially their finance departments – need to find ways to automate mechanical repetitive tasks to free up resources for more useful and productive activities. Desktop spreadsheets are an indispensible tool, but they are not capable of doing everything well. There are a wide array of applications that can help – you just have to look for them. We recommend making that effort now.


Robert Kugel – SVP Research

Topics: Office of Finance, Operational Performance Management (OPM), Reporting, enterprise spreadsheet, Analytics, Business Analytics, Business Intelligence, Governance, Risk & Compliance (GRC), Visualization, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Information Applications (IA), Information Management (IM), Risk, Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), benchmark, Financial Performance Management

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.