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TRANSCRIPT
Fast, Accurate Management Reporting:Eight Reasons Why Spreadsheets
May Be Letting You Down.
A LOOK AT THE INADEQUACIES OF SPREADSHEETS
AND AN EXCITING ALTERNATIVE
Executive summary
Spreadsheets—the good and the bad
When spreadsheets excel—and when they don’t
Eight consequences of misusing spreadsheets
1 Time wasted consolidating data
2 Decisions based on unreliable information
3 Reports that say too little, too late
4 Static reporting in a dynamic world
5 No added value over time
6 Vulnerability to staff turnover
7 Lack of a reliable audit trail
8 Inefficient report distribution
The Indicee alternative
Replace the spreadmart without the pains of big BI
How it works—upload, create, share
Indicee vs. the Spreadmart—freeing the financial professional
Conclusion
About Indicee
Appendix I
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Table of contents
Executive Summary
From VisiCalc to Excel, the spreadsheet has played an important role in
helping accountants, financial analysts, and management understand and
run their businesses.
But while spreadsheets are ideal for some tasks, using them as quasi busi-
ness systems for gathering, consolidating, and reporting on large volumes
of data from numerous sources is counter-productive. It’s like cutting wood
with a hammer.
This paper explains when spreadsheets work well, and when they don’t.
It describes the negative consequences for business when spreadsheets are
used inappropriately. And it puts forward a simple, cost-effective alternative
that increases the reliability, completeness and speed of business reporting,
freeing up time for more insightful analysis.
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Spreadsheets—the good and the bad
When Daniel Bricklin and Bob Frankston developed a “visible calculator” in the
late 1970s, they changed the face of financial reporting and analysis forever.1
Using VisiCalc, accountants and analysts could now create spreadsheets
electronically. Not only was it faster than the traditional pen-and-paper method,
it was more powerful, flexible, and efficient. It promised a huge productivity
boost. It offered exciting new analytical possibilities. And it made the job of
the business analyst in finance departments and beyond a whole lot easier.
Although you can still download VisiCalc, spreadsheets have come a long way
in three decades. With today’s de facto standard, Microsoft Excel, you can do
things not even dreamt of by early spreadsheet users. Excel is firmly entrenched
as an indispensible tool in organizations large and small.
Are you cutting wood with a hammer?
But there is a down-side. Like all good things, there is a tendency to use spread-
sheets indiscriminately—to apply them in situations best handled by other tools.
As the accountant and information technology strategist Richard Morochove
describes it:
The widespread inappropriate use of spreadsheets in business reminds me of the tale
of the poorly trained carpenter who was shown how to use a hammer to drive nails.
Since he was familiar with the hammer, he used it for all his woodworking—even for
breaking a board in two. Most people would agree that a saw is a more appropriate
tool for that job. Similarly, while a spreadsheet is well-suited for some financial
applications, it’s a poor choice for others.2
Inappropriate use of spreadsheets has become the norm in many organizations.
And whether they realize it or not, it is costing them dearly. Business analysts are
spending a disproportionate amount of time consolidating data and crunching
numbers instead of analyzing results. With so much time spent on the mechanical
processing of data, CFOs and business managers are unable to contribute the
kind of insightful analysis that enables good business decisions and, ultimately,
builds competitive advantage.
1 Power, D.J., “A Brief History of Spreadsheets,” DSSResources.COM, World Wide Web, http://dssresources.com/history/sshistory.html, version 3.6, 08/30/2004
2 Morochove, Richard. “Use and misuse of spreadsheets,” 04/2007 http://www.pcworld.com/businesscenter/article/131275/use_and_misuse_of_spreadsheets.html
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When spreadsheets excel—and when they don’t
Like sawing wood with a hammer, using spreadsheets inappropriately is counter-
productive. But how do you know when, and when not, to use spreadsheets?
In its best practices report aimed at helping understand just that, The Data
Warehousing Institute (TDWI) describes two situations where spreadsheets
make sense.3
• One-off reporting without consolidation
Spreadsheets work well for filtering and reporting on data already at hand.
Gathering and linking data from multiple sources is not required, and it’s for a
one-off purpose not likely to be repeated.
• Ad hoc analysis
Spreadsheets are also effective for “on-the-fly” ad hoc explorations and modeling
aimed at helping answer one-off questions and “what if?” scenarios. These situa-
tions are also outside the realm of standard reporting and analysis. They require
little or no data gathering and consolidation. And they aren’t typically repeated
on a regular basis.
But spreadsheets don’t work well when they are used to repeatedly gather, con-
solidate, and report on large volumes of data collected from numerous sources.
When the same process of cutting, pasting, linking, and formula building
occurs repeatedly with a spreadsheet, consuming hours or days of time, then
the spreadsheet is being misused.
These sorts of spreadsheets tend to become quasi business systems that try to
support ongoing processes like budgeting, planning, and forecasting. TDWI calls
the results “spreadmarts,” or “shadow systems.” Others refer to them as informa-
tion silos, or unstructured data. Whatever name you give it, this inappropriate use
of spreadsheets can have a serious negative effect on an organization’s ability to
be productive and competitive.
3 The Data Warehousing Institute. “Strategies for Managing Spreadmarts.” http://www9.unisys.com/eprise/main/admin/corporate/doc/TDWI_SpreadMarts_Report_Dec_07.pdf
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Eight consequences of misusing spreadsheets
Why is it wrong to use spreadsheets this way? There are many reasons.
1 Time wasted consolidating data
For starters, it wastes the time of highly trained professionals.
Spreadmarts emerge when data that is critical to understanding a business comes
from multiple sources—something almost inevitable given the proliferation of busi-
ness software in use today. Entering or importing data from those multiple sources
into a spreadsheet, and manipulating it to make sense of it, takes time—typically
the time of highly trained business or financial professionals who should really be
focusing on more value-added activities. TDWI’s research indicates that the average
analyst spends an amazing 2.5 days per week—half of their time—creating and
maintaining spreadmarts.4
Organizations hire and pay accountants and analysts for their financial and
analytical skills. Repeatedly consolidating data from disparate systems in a
spreadsheet, and devising and revising formulas, is a costly misuse of their time.
2 Decisions based on unreliable information
By its very nature, entering and manipulating data in spreadsheets is prone to
error. The results can be as catastrophic as the horror stories compiled by the
European Spreadsheet Risks Interest Group,5 or as simple as the generation of
confusing or misleading information that makes everyday business decisions
difficult and risky.
Robert Kugel, of Ventana Research, maintains that most business users “find
mistakes in data and formulas in the most important spreadsheets they use.”6
This is inevitable, as people try to make sense of massive chunks of data they
have imported, and strive to make everything work together. Even small errors
can result in time and money lost, and lead to a lack of confidence in information
that is supposed to tell people how they are performing and how to do better.
3 Reports that say too little, too late
Once you’ve entered all of that data, even assuming you’ve managed to get it
pretty much right, a spreadsheet is not a good tool for generating reports. As Kugel
goes on to explain, spreadsheets weren’t designed to analyze data with “more
than a couple of dimensions,” such as customers, products, or similar elements.7
What’s more, spreadsheet reports that can’t handle the intricacies of even a
small organization’s operations to begin with, become even less useful when their
intended audience doesn’t receive them until after their usefulness has expired.
Given the time needed to generate, produce, and share less-than-ideal spreadsheet
reports, this kind of “too little, too late” reporting is all too often the case with
spreadmarts.
4 The Data Warehousing Institute, Ibid., p. 16
5 http://www.eusprig.org/index.htm
6 Robert Kugel, Ventana Research, October 15, 2009: http://businessfinancemag.com/article/spreadsheet-alternatives-1015
7 ibid
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Are you cutting wood with a hammer?
Spreadsheets are ideal for many things. But using them to perform tasks better done with other tools:
1 Wastes the time of highly trained business professionals.
2 Introduces errors into key business data.
3 Provides inadequate information on which to base confident decisions.
4 Generates static reports, with no drill-down capabilities.
5 Fails to accumulate valuable data and add value over time.
6 Leaves organizations vulnerable to staff turnover, as new people try to understand the spread sheets that predecessors have built and maintained.
7 Doesn’t provide a reliable audit trail.
8 Makes delivering information difficult and inefficient. This leads to poor business decisions and lower productivity. And it dulls the competitive edge needed to survive and thrive.
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4 Static reporting in a dynamic world
The static nature of spreadsheets also makes them a liability when it comes to
business reporting.
As Kugel puts it, in the context of spreadsheets used for planning,” an inability to
change plans rapidly enough, and an inability to drill down to underlying causes
of actual/plan disparities in real time are just some of the almost inevitable
problems that companies face because of the shortcomings of spreadsheets.”8
Financial analysts and others concerned with an organization’s performance must
be able to look beyond the numbers they are handed—to drill down to the levels of
information where their questions can be answered and they can understand the
“why” behind the numbers. They must be proactive, agile, and dynamic—qualities
that are impossible to realize when they regularly use spreadsheets for data
consolidation, analysis, and reporting.
5 No added value over time
Spreadsheets don’t provide an efficient way of accumulating data for analysis
over time.
Building reports from scratch each month—with the same formulas and tabs
perhaps, but with all new data—means that last month’s data is left behind.
That is data that could be used for historical and trend analysis to help better
understand the business and to plan more effectively.
Spreadmarts focus on the now. They don’t provide an easy way of accumulating
data in ways that enable historic trends and variances to be reviewed and
investigated.
6 Vulnerability to staff turnover
Anyone who has done any kind of in-depth reporting and analysis with spread-
sheets knows the complexity that results too easily and quickly when formulas
must be devised and revised, tabs added and deleted, and calculations defined
and modified. Even when standards are set and best practices followed, everyone’s
spreadsheets are different. Spreadmarts tend to take on a life of their own.
It can be difficult, even for the person who generated a spreadsheet, to under-
stand, debug, replicate, and revise it. For someone new to the spreadsheet, it
can be near impossible. It can mean hours spent trying to understand someone
else’s formulas. When the person who has developed a spreadmart leaves an
organization, it can require a Herculean effort, and result in a period of chaos,
while others try to understand or replace the spreadmart.
8 Kugel, Robert, Ventana Research, October 15, 2009: http://businessfinancemag.com/article/spreadsheet-alternatives-1015
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7 Lack of a reliable audit trail
Spreadmarts don’t generate the audit trail essential for identifying and
correcting financial errors and complying with reporting regulations in an
increasingly regulated business environment. As risk management expert
Steven Minsky puts it:
One of the key challenges within the risk, performance, compliance and business
continuity areas of the corporation is the management of data in spreadsheets and other
office files ... Not only do spreadsheets lack the authentication, audit trail, and integrity,
they also lack accessibility to roll-up information into an enterprise-wide picture.9
Spreadmarts leave organizations open to potentially expensive and
time-consuming auditing issues.
8 Inefficient report distribution
Finally, after you have generated the information your people need to make
better decisions, you still have to get that information to them. Spreadsheets
were not designed to make this fast, easy, or reliable.
When spreadsheet-based reports are emailed to even a few people in different
locations, there is a tendency for them to “evolve”—to change as individuals
make adjustments to reflect their own data or their understanding of measures,
so that version control becomes a problem. Add to this the issue of file size, and
the potential for losing email attachments somewhere in the ether, and report
distribution via spreadsheet is clearly problematic.
9 Minsky, Steven, Risk Management: Problems with spreadsheets? http://www.logicmanager.com/contents/knowledge_center/blogs.php?risk_management_problems_with_spreadsheets
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The Indicee alternative
Spreadsheets are a real boon to accountants, financial analysts, and business
people needing to generate one-off reports or perform ad hoc analysis and
modeling. But using them to repeatedly consolidate and report on large volumes
of data is like sawing wood with a hammer. It’s no way to run a business.
So, what are the alternatives?
The big BI alternative
Until recently, organizations with significant IT budgets have turned to business
intelligence (BI) solutions to improve their reporting and analysis. Traditional
BI solutions gather data from all kinds of applications, assemble it in data
warehouses, massage it into meaningful information, and provide reporting and
analysis tools to distribute and understand that information.
Big BI solutions can be highly effective, but for many organizations they are
too expensive, complex, and resource intensive to be practical.10 They can cost
hundreds of thousands of dollars, take months or years to deploy, require
expensive IT resources to maintain, and demand significant user training to
become effective.
Deploying traditional big BI means spending time understanding an organization’s
information infrastructure, its data sources, the information needs of users, the
ways in which data can best be turned into the right information, and how to get
that information to users. Organizations need to plan and carry out an often long
and onerous implementation process. There are many steps. It is tricky. And no
matter how carefully it is carried out, the results can all too easily fail to live up to
expectations.
Even when big BI deployments do run smoothly, the accountants and analysts that
have given up their flawed-but-familiar spreadsheets often find they have handed
over control of their reporting process to an already overburdened IT department.
The reporting backlogs that result are frustrating for IT personnel and business
users alike.
10 Linthicum, David, “Business Intelligence projects are famous for low success rates, high costs and time overruns,” ebiz: The Insider’s Guide to Business and IT Agility.” April, 2009 http://www.ebizq.net/blogs/linthicum/2009/04/business_intelligence_projects.php
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The perils of big BI.
Enterprise BI solutions are plenti-ful and can be effective. But for many organizations they aren’t practical:
•Theirheftypricetagsmakethem prohibitively expensive
•Theytaketoolongtoplanand deploy, and are susceptible to time overruns
•Considerableusertrainingis needed before they are effective
•Theircomplexitymakesthem risky—they often fail to deliver what they promise
•Theycanleadtoreporting backlogs as financial pro- fessionals hand control of the reporting process to overburdened IT departments
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Replace the spreadmart without the pains of big BI
For many organizations, Indicee offers a cost-effective alternative.
Indicee is an online reporting and analysis solution built by the founders of
Crystal Reports—now one of the world’s leading BI solutions. Financial analysts
and other business users who are frustrated with the limitations of spreadsheets,
but not prepared to make the expensive and risky leap to big BI, find Indicee to
be a perfect alternative.
As a “software as a service” (SaaS) solution, you pay a subscription to use
Indicee, rather than having to make a big up front investment in software and
implementation services.
How it works—upload, create, share
Indicee combines data from business applications, provides a spreadsheet-like
interface for organizing the data and generating reports, and makes those reports
easily available to the people who need them. Updating reports in Indicee is fast;
it does not require the repeated cutting, pasting, and linking of data that is
associated with spreadsheets. Indicee also adds value over time by allowing data
to accumulate for historical trend analysis. And all this is done online, using a
simple upload, create, and share process.
The difference Indicee makes—a weekly reporting example
Spreadsheet Workflow Indicee WorkflowCollect business data 30 min
Import, copy, paste and type-in new data 1-4 hrs
Reconcile multi-source data sets 1-2 hrs
Build formulas and data ranges 2-4 hrs
Build pivot table, graphs 2-4 hrs
Analyze results 1 hr
Create links between worksheets 1-2 hrs
Check for errors 4 hrs
Email report to colleagues 5 min
Gather feedback 1-2 hrs
Collect business data 30 min
Upload data to Indicee 5-15 min
Create reports 5-30 min
Analyze results 1 hr
Share with colleagues 5 min
Elapsed time: 2-3 days (repeat weekly)
Elapsed time: 1-2 hours (repeat weekly)
Time saved:2 days of cutting, pasting, linkingand checking
“With Indicee we’ve been able
to move from monthly to daily
reporting, so our information is
more timely and relevant. It’s
more accurate and reliable too,
so it’s easier to make the kinds of
decisions that save us time and
money.”
– DAVID WALLACE
CONTROLLER, TERRA BREADS
Read the full Terra Breads story at Indicee.com
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Upload the data
Indicee replaces repetitive data entry and manipulation in spreadsheets with a
one-shot upload process.
Data can be uploaded into Indicee for analysis and reporting using the export files
from most business systems. Crystal Reports, comma-separated value (CSV) files,
and spreadsheet files, can all be uploaded to a secure Indicee site, where the data
is available for report creation.
Create the reports
Indicee makes it a whole lot easier to organize data in meaningful ways.
Accountants and analysts generate reports with a spreadsheet-like interface,
using plain-language questions like “What were the five top-selling products last
month?”, “How much product wastage did we experience in the past week?”, and
“Who were our leading performers this year?” The self serve interface ensures
business and finance users are self reliant for their reporting needs—avoiding
the report backlogs typical of big BI solutions.
Unlike the repetitive spreadmart approach, setting up a report in Indicee is a
“one-shot” deal. You design your report once and then update it in minutes
simply by uploading the latest data files. New questions can be asked any time,
to generate additional reports or analyses.
Share the results
Indicee also makes it easy to get reports to their users. Instead of emailing spread-
sheets, Indicee reports are made available to authorized personnel online—any
time. People sign in and use an intuitive interface to view the reports they need
and to which they have been granted access. They can use the data that makes up
those reports to perform their own ad hoc analysis, drilling-down to understand
anomalies, and identifying ways of improving business performance.
Instead of starting fresh every month, the data uploaded into Indicee accumulates.
Combined with the ease of revising reports and adding new ones, it means organi-
zations gain the ability to compare performance over time—for example, to assess
seasonal changes in product demand and other trends that help them plan and
perform better.
“Indicee reports are a godsend.
Access to fundamental sales data
in this company has gone up 1000
percent.”
“What used to take almost a full
week of inputting data into an
Excel spreadsheet now takes just
hours with Indicee. Our agents
now get the information they need
directly from Indicee. I don’t have
to export it to another system, and
they don’t have to wait for it.”
– BEN HUME
CEO, ALCO VENTURES INC
Read the full Alco story at Indicee.com
– WILLIAM SMITH,
SALES AND SCHEDULING ANALYST,
COSMETICS GIANT
Read the full story at Indicee.com
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indicee.com
Indicee vs. the Spreadmart—freeing the financial professional
Indicee addresses the shortcomings of the spreadmart with none of the
downside of big BI.
Information needed to perform better is available in a far more timely fashion.
The problem of version control caused by report distribution in a spreadmart
world is gone. And, by eliminating the error-prone process of cutting, pasting,
and linking data, Indicee enhances the accuracy and reliability of business
information.
With Indicee, valuable data is kept secure in a controlled environment, where it
can be used to generate new reports as they become needed. As data accumulates
over time, analysts can use Indicee to build a more complete picture of business
performance and trends.
By providing a fast, self-serve way to consolidate, analyze, and report on data,
Indicee liberates finance professionals from hours spent repeatedly consolidating
data in spreadsheets. It frees them to focus on the kind of analysis that makes
them proactive advisors to the business instead of back-office book keepers. And
it replaces an organization’s static spreadsheets with dynamic reporting that can
grow and change quickly as the business evolves.
Conclusion
While spreadsheets are useful for one off analysis and modeling, they are not
ideal for repeatedly creating reports from large volumes of data. A growing
community of users are now replacing their spreadsheet based systems with
Indicee. By doing so they are improving the timeliness and reliability of
their business information. They are also freeing up their analysts’ time to
develop the kind of insight that enhances business performance and drives
a competitive edge.
Find out how Indicee can enhance your business insight.
Go to www.indicee.com/solutions.
About Indicee
Indicee is based in Vancouver, Canada. The company is dedicated to helping
ordinary business users consolidate, analyze and share their business data
through a web-based software-as-a-service (SaaS) application that is both
simple and secure. Created by the original founders of Crystal Reports, Indicee
is led by some of North America’s most respected business intelligence experts,
social media innovators and software developers.
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Appendix I – Indicee vs. the Spreadsheet
indicee.com
A quick and easy upload process replaces manual data entry and consolidation. “One-time” report organization using plain-language questions in a spreadsheet-like interface organizes the data.
By eliminating the repeated cutting and pasting of data, errors are avoided, along with the tedious data entry process that causes them.
Flexible reporting and analytical capabilities, and ease of adding new data sources, provide a com-plete picture of operations. Rapid updating of reports by simple file uploads brings business insight quickly to those who need it.
Drill-down and other analyti-cal capabilities provide dynamic reporting for both the people who generate the reports and those who use them.
Data automatically accumulates online over time.
A simple, upload, create, and share process eliminates the complexity of spreadsheets, and is easily understood and learned.
Data relationships and structures are clearly defined ensuring consistency and a clear audit trail.
Secure, online access to reports for authorized personnel means no emailing is required.
Financial professionals spend less time on menial tasks and more time proactively providing the strategic advice needed to run the business better.
Accurate reports provide a single version of the truth, enabling confident decision making.
Reports can be generated more quickly and frequently, and easily revised to accommodate changing needs. The people who need them, and who are authorized to access them, can do so online whenever they want.
Reports can be revised quickly, to accommodate changing business demands. Drill down to discover the “why” behind the numbers, answer business questions, and make better and faster decisions.
A growing data base provides in-creasing value, enabling historical and trend reporting and analysis.
Reporting capabilities are not affected by changes in staff.
A reliable audit trail that saves time and helps meet statutory requirements.
Information gets to the people who need it when they need it, so they understand what is happening with the business, why it is happening, and can take steps to improve business performance.
Spreadsheet Problem
1 Time wasted consolidating data
3 Reports say too little, too late
4 Static reporting in a dynamic
world
5 No added value over time
6 Vulnerability to staff turnover
7 Lack of a reliable audit trail
8 Inefficient report distribution
2 Decisions based on unreliable
information
Indicee Solution Business Results
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