When I talk to finance teams who are thinking about investing in finance systems, the most common phrase I hear is "We are far too reliant on spreadsheets".
So what's the problem with spreadsheets. Like most aging accountants, I've loved and loathed spreadsheets from the days of Classic Lotus, Wysiwyg, Supercalc through to Lotus for Windows and then modern day Excel.
When I was getting into finance, the key skill you needed was to be able to be proficient in a good spreadsheet. A nicely crafted spreadsheet was a work of art.
In the early days when we were all getting to grips with rows and columns in a window, each week somebody would find some new functionality and then show it off. the next week, we'd all be using it. We were pushing boundaries, spreadsheets were fun....................well most of the time.
The guys who were the best at spreadsheets soon got promoted, they became leaders because they were good at spreadsheets. They were masters of the keyboard shortcut, their hands moved so quickly fingers twirling so fast they were in a blur. The ones who were really good had mastered the holy grail of the modern spreadsheet, a macro!
We were constantly being called by the network guys in IT asking us to delete some files from the network because we were taking up too much space. Didn't these idiots understand that our wonderful spreadsheets were items to be treasured, cared for.....not deleted......that was spreadsheet murder!
Problem is that when the spreadsheet kings got promoted, these works of arts were passed down to the next generation of young & keen accountant. In my first job as a management accountant, my colleague and I were in charge of a monster spreadsheet called "RESPONSE.xls". I never really understood the name but this one file produced the management accounts for the whole of a blue chip company. It was big, very big and full of file links to a hundred other spreadsheets that were saved in the same folder.
The source files were maintained by other guys in the team and sometimes they would make changes to the file which would screw up the link. Setting up the file and refreshing the links would take at least a day but the worst task was the reconciliation.
My mate and I would spend days reconciling to the source spreadsheets. The reconciliation had manual numbers input that seemed to stay in there forever. We didn't understand all of these reconciling numbers. Once I can remember asking the 'creator' of the spreadsheet what one of her numbered was and she burst into tears. To this day I'm not sure why she cried but she didn't know what the reconciling number related to, so it stayed. After all, the file only balanced when we left it there.............
As management accountants we would spend 2 weeks completing the month end and then 2 weeks trying to improve the process, making the spreadsheets more automated was the flavour of the day........bring on the macros. Don't ask how we fitted budgets into the process, I do remember it was not during daylight hours.
During this time we were all studying for our accountancy qualifications too. It all seemed very bizarre because the subjects we were learning at college were tax, law, economics, consolidation logic but nothing about Excel or Lotus. There seemed a wide divergence between theory and practicality.
Now with the
power of hindsight, I can now see that what we were learning was absolutely
relevant. We were learning the concepts,
the process to follow, NOT the tools.
The tool of
the day was a spreadsheet but in today’s modern world the tool is often a
system. The concepts and processes are
still the same……………just different.
So is there a
place in the modern world for the spreadsheet?
ABSOLUTELY –
YES
However the
key to many successful processes is to match the right tool with the process
you need to accomplish. If you’re
producing the management accounts for the whole of a blue chip company, as I was
in 1995, then this is wrong.
For quick
unstructured ad hoc analysis, there is no better tool than the humble
spreadsheet. Use it with joy in your
heart – IT IS ALLOWED.
Modern EPM
solutions such as Oracle take it a stage further using what they call
Smartview. Use again for adhoc analysis
but with the benefit of being able to draw down live data from your internal
systems.
Fantastic –
is there anything better?
So in
summary, when I see customers today and they say "We are far too reliant
on spreadsheets" I have to correct them.
The spreadsheet will have it’s place in history……..we just have to use
it correctly.
It reminds me
of the following analogy, “Guns don’t kill people, people kill people with guns”.
Don’t shoot
the spreadsheet!!!!
