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Spreadsheet Heaven

The battle to replace Excel with dedicated budgeting and planning software takes an unexpected turn.

There’s a certain irony to one of the trends sweeping across the market for business performance management (BPM) tools. The humble spreadsheet — heavily criticized by makers of specialist BPM software — is making a comeback. And intriguingly, it is the BPM vendors themselves who are pushing spreadsheets back up to the coalface of finance.

For the past 25 years, finance departments the world over have relied on electronic spreadsheets — especially Microsoft Excel — to handle tasks such as budgeting, planning, reporting, and forecasting. Accountants and analysts have grown to love the simple, intuitive workings of spreadsheet programs, and to prize the ease they bring to business modeling. Indeed, many observers reckon that electronic spreadsheets were the “killer application” that drove the phenomenal spread of the desktop PC.

But as companies grew in size and complexity over the past two decades, and as the need for better and faster information increased, the shortcomings of Excel as a BPM tool started to outweigh the benefits. For a start, spreadsheet programs don’t scale well — they are poor at accommodating lots of different users, and struggle to consolidate data files from many different sources. Issues such as data security and workflow management are equally troublesome.

It is for this reason that a new breed of dedicated BPM software has sprung up in recent years. Playing on a theme of “Excel hell,” companies such as Hyperion, SAS Institute, Business Objects, and Cognos have all released software aimed at providing the perfect BPM solution for finance teams. Effortlessly pulling in data from across the company, such products promised powerful analysis and reporting capabilities with none of the challenges inherent to mere spreadsheets.

But after years of bashing electronic spreadsheets, vendors of BPM software have undergone something of an about-face in recent months. Rather than distancing themselves from Excel, suppliers of BPM tools have started to embrace the arch-enemy as their new best friend.

The reason? “Client demand,” says John Van Decker, a financial software analyst at Meta Group, a U.S.-based IT research firm. “Finance teams recognize the advantages that BPM software gives them, but they’re still really addicted to Excel.”

Much of that addiction stems from the fact that spreadsheets offer a range of benefits that BPM software has been unable to match. In particular, spreadsheets offer unparalleled flexibility when it comes to building business models. Users, for example, can tailor their spreadsheets with complex formulas and functions in a way that traditional BPM solutions have often proved too rigid to emulate.

Robert Kugel, a director at Ventana Research, another IT research firm in the US, agrees with Van Decker. “In our recent research,” he says, “we found Microsoft Excel functionality was the most important feature users were looking for in a dedicated budgeting and planning application.”

He highlights the fact that many companies have developed “planning or operational models in Microsoft Excel that they don’t want to give up.” And then there’s the fact that finance staff feel so comfortable with the Excel environment that they are reluctant to learn a new system.

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