“You can’t be a high-performing business when you’re stuck in the world of spreadsheets.” So says Stu Lucko, CFO at insightsoftware.com, the creators of Hubble, a business performance management solution offering real-time reporting, analytics, and planning. Lucko has a unique perspective on this topic, based on both his experience as a CFO of a growing company and a view into the critical issues that finance professionals face.
Finance executives use spreadsheets for many tasks, including several that were never intended by the software designers. Spreadsheets are flexible and powerful applications and great tools, but a CFO’s love for spreadsheets shouldn’t be blind. A finance function that conducts each analysis by dumping data into a spreadsheet, and then manually manipulating it, is paying a productivity tax, often over and over again.
Many financial tasks require data dumps into Excel, to allow finance staff to work with the data. But it is important to remember that Excel was not created to be a data-management tool, and that all spreadsheets are vulnerable to version-control problems, hidden data and calculations, insufficient documentation, and shadow personalization.
Finance functions with antiquated and inefficient systems have no choice but to take such a manual, spreadsheet approach, which takes more time to prosecute and also creates risk for the company. It takes critical management time and effort to develop and maintain sound, effective spreadsheet practices, and it takes critical finance team time and effort to execute them. Another component of the productivity tax appears with redundant efforts among the finance team and the business, where multiple users build similar analytical models, sometimes producing markedly different results!
The (Productivity) Taxman Cometh
Lucko helps quantify the amount of productivity tax that many finance functions are paying. He cites recent findings that:
- In companies with complex reports, one man-week is wasted every month for each $150M of revenue. (E&Y)
- Businesses spend 64% of their time gathering data and only 36% of their time analyzing it. (PwC)
- The average planning cycle is 120 days! (PwC)
Calor Gas Example
Lucko also shares the case example of Hubble client Calor Gas, the leading supplier of LPG in the U.K. Calor didn’t know exactly how much the productivity tax was costing them, but they knew they had reconciliation issues and could see no easy way to resolve them. The finance team would dump sub-ledger information into Excel and then begin to sift through it manually. This manual process not only affected reconciliations, but impacted audits as well – leading to delays and increased costs to the business.
Calor was ultimately able to avoid the productivity tax by implementing the Hubble solution that:
- Ensures that the user is directly connected to a single source of data
- Enables end users to create and analyze their own reports without IT effort
- Provides reporting and reconciliation (and CFO confidence) in a single system
- Generates report and analysis quickly, to support business decision making
Finance teams that once focused primarily on meeting monthly, quarterly, and annual reporting deadlines are increasingly being asked to support ad-hoc reporting and decision support. Over-dependence on spreadsheets increases costs by robbing the finance function’s time, attention, and effectiveness. It’s time for a productivity tax cut.
For more information, go to www.gohubble.com
Next in the series: The Technology Tax.