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25 May 2011

Spreading the news

By Mark Nashman

Clarity Systems | www.claritysystems.com

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T raditional desktop spreadsheets have been unable to match the multi-dimensional needs of the modern business, and despite there being viable alternatives on the market, many users are unwilling to think outside of the box, row or column, argues Mark Nashman.

Why does the Office of Finance rely so much on spreadsheets during the budgeting, planning and forecasting process?

Mark Nashman . Spreadsheets like Microsoft's Excel have revolutionised how businesses - especially their finance departments - operate. That's because they give people the ability to automate calculations and quickly create financial models and reports. Yet, versatile as they are for individual productivity, spreadsheets were never designed to be a platform for repetitive, collaborative company-wide processes such as budgeting, planning and periodic reporting.

What makes spreadsheets so problematic?

MN . Spreadsheets have three serious problems:

1. Spreadsheets contain mistakes

On their own, desktop spreadsheets are notoriously error-prone. Over the past 25 years dozens of academic and corporate studies have repeatedly confirmed this. Some of these show that even when spreadsheets are carefully audited, mistakes in data and formulas remain. Half of spreadsheet users find major errors in data and formulas in the most important spreadsheets they use in their job, and that addressing these errors consumes a noticeable amount of their time.

2. Spreadsheets are not a good distribution platform

Second, desktop spreadsheets were designed as an individual productivity tool, not as a way to support company-wide processes. When used collaboratively to collect and manage data, desktop spreadsheets must be linked up and consolidated, tasks that even highly experienced spreadsheet users find difficult and time-consuming. Worse, when they are used as a distribution platform for, say, budgeting and planning, dozens or even hundreds of spreadsheets are emailed across the organisation to be filled out and returned. The original spreadsheets may contain errors that go undetected, or those entering data or doing subsequent calculations may make mistakes, or both. In any of these cases, it's difficult for anyone reviewing the data to spot an error.

3. Spreadsheets are an awkward reporting platform

Third, desktop spreadsheets are an awkward reporting platform because they have a flat file structure. A flat file is one in the form of rows and columns, with no relationships or links between records and fields other than the table structure that is defined by the row and column headers. This architecture is two-dimensional, which works well for accounting tasks. Yet businesses inherently are multi-dimensional. 'Dimensions' are the ways in which information about business operations can be characterised. For example, people typically want to look at sales over a given time period by business division, by geographic regions, by customer, by product. Pivot tables are the main way businesses attempt to overcome the lack of dimensionality in desktop spreadsheets. These work reasonably well with a small number of dimensional views but they become increasingly unwieldy if you want to do extensive multi-dimensional analyses of the data.

Is there a way to address these problems but still use Excel?

MN. The paradox of spreadsheet use is that despite all of their shortcomings, business users overwhelmingly embrace them as their tool of choice and do not want to give them up. ("You can take my spreadsheets away when you pry them from my cold dead fingers" seems to sum up the attitude of many.) The source of this paradox is the extensive training and experience many people have with spreadsheets.

With CLARITY 7 it's possible to have the best of both worlds. CLARITY 7 is a single, unified corporate performance management application that integrates financial budgeting, planning, consolidations, analytics, scorecards and dashboards. It offers an Excel look-and-feel so people can work comfortably in the familiar spreadsheet environment. Yet because it's designed from the ground up for enterprise-wide use it eliminates most of the problems of spreadsheet errors and the difficulty of pulling together information from multiple sources.

Spreadsheets are a handy, versatile tool. But they were not designed to do everything. Today, companies using them to perform repetitive and collaborative tasks wind up wasting time overcoming spreadsheets' inherent shortcomings - valuable time they should be devoting to more important work.


As President & Chief Technology Officer of Clarity Systems, Mark Nashman is responsible for the development of company, product and technology strategy. Mark has driven the development of innovative solutions for the Office of Finance and has been instrumental in creating a global organisation to deploy these solutions.

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