Larry Reader’s patience had worn thin. It was becoming increasingly clear to him that too many financial decisions rested on homegrown spreadsheets packed with too much impenetrable data and too few answers. The result was a crippling condition that Reader calls “spreadsheet overload” but which many others refer to as “spreadsheet hell.”
Reader, the CFO of Duke Manufacturing, a privately held manufacturer of commercial-food-service equipment for restaurants, hospitals, and schools, was about to join the I’m-fed-up-with-spreadsheets club. Membership often hinges on a sudden realization that, for all their virtues, spreadsheets are the IT equivalent of a screwdriver: useful for many things but too often employed for the wrong chore simply because they happen to be close at hand. And cheap.
But as anyone who has ever used a screwdriver to chisel wood, poke holes, scrape paint, or pry things apart knows all too well, sooner or later they break under the strain of all that misuse.
That was the case at Duke, where an already stretched finance department would assemble spreadsheet data, key it into enterprise resource planning (ERP) systems, and then spend far too much time tracing the sources of resulting errors. “It was difficult to determine where the original data even came from,” says Reader. “Forecasting and budgeting were tough activities, to say the least.”
That has long been a common lament, and has, over the years, pushed companies to explore a range of business intelligence (BI) software applications to either augment spreadsheets or, at bolder companies, virtually replace them. That slow migration got a boost from the Internet, as companies began to realize that Web-based BI software allowed a new freedom in how users input and shared the data at the heart of most budgeting-and-forecasting operations.
Now, companies may be “on the cusp of a new generation of business-intelligence tools,” declares Boris Evelson, principal analyst in BI software at Forrester Research.
Just in time, too. By some estimates, corporate digital data volumes will grow 30 percent a year to reach 1 zettabyte (a zettabyte is a “1″ followed by 21 zeroes) by 2010. As all that data ushers forth from ERP systems, companies have a choice: drown in it or leverage it for better decision-making. The latter is nearly impossible without BI and related categories of software (such as analytics), which are optimized to extract nuggets of gold from mounds of informational ore.
The new generation that Evelson alludes to is characterized by two things: vendor consolidation and new licensing options. While the BI market remains crowded, it has become noticeably less so over the past 18 months as top-tier vendors such as IBM, SAP, and Oracle have made large-scale acquisitions to beef up their BI offerings. And, from the high end to the low end, many vendors now offer “software as a service” (SaaS) licensing options that essentially allow customers to rent the software rather than spend large sums to buy it outright.
The latter development may provide many more companies with a cure for their spreadsheet headaches. “In the past, if there were any problem whatsoever with the spreadsheet we would spend all day figuring it out,” says Bryan Rogers, vice president of finance at Chicago-based insurer Unitrin Direct.