But as finance departments grow more frustrated with spreadsheets and more interested in tapping the powers of analytics, as IT departments devote more resources to solving parts of the BI puzzle, and as vendors channel more and more resources into their applications, these complaints may abate. As Rogers says, “The time saved in finance thanks to BI tools is now devoted to more-strategic imperatives.”
Russ Banham is a contributing editor to CFO.
Cutting Through the Static
When Jeff Nemy joined Northern California Public Broadcasting as CFO in 2006, the company was approximately two months away from acquiring two TV stations. That would complicate budgeting in the best of times, but Nemy soon found out it was worse than he feared. When he asked for a copy of the current forecast, he learned that there wasn’t one.
Worse, creating one would require the consolidation of approximately 600 spreadsheets from nearly 200 business units. “Consolidating all those spreadsheets would take up to six weeks,” Nemy says. “It almost made me walk out the door.” But he didn’t. A budget was produced and then a search was launched, for business planning and consolidation software (virtually synonymous with BI). Nemy ended up implementing OutlookSoft (now owned by SAP) for everything from budget consolidations to dashboard analysis to the establishment of three-year rolling forecasts. “We’ve cut many weeks off our budgeting-and-forecasting process, which provided important time for value-added analysis,” he says. “I get reports now in a ‘cube’ that I can slice and dice by department and project.”
The software cost less than $250,000, which Nemy says the company recouped in the first year, thanks in part to the system flagging a looming budget shortfall in time to cut discretionary spend and boost revenue with added pledge days. In its second year, says Nemy, “I would estimate the software produced a fourfold ROI.”
Although spreadsheets haven’t disappeared (in fact, Excel serves as the front end to OutlookSoft for departmental users), Nemy says he has firm control over the templates. “They’re locked, so people can put in numbers only where I want them,” he explains. “My job is remarkably easy compared with what it was before. Spreadsheets alone are folly for organizations with any level of complexity.” — R.B.
Blame the spreadsheet or the user?
The spreadsheet is a wonderful tool that no one ever learns how to use properly, says Richard Block, a CFO leadership partner at Tatum LLC and adjunct professor of management accounting at Babson College, where he teaches courses in managing operations and cost. “No one seems to take a course in it, but instead typically learns it from the person sitting next to them in the office.” Combine that lack of knowledge with bad practices and the spreadsheet’s inherent power, he says, and “the potential for misuse is high.”
To ensure documentation is accurate and complete, Block, a former CFO, advises that users clearly identify the purpose of the spreadsheet; note who wrote it, when, and how calculations were performed; clearly label specific columns and rows; and avoid a common breakdown — long comments typed into cells that block data in adjoining cells — by clicking the “Wrap Text” feature.
Most important, he cautions against dumping a massive spreadsheet at the CFO’s cyber-doorway. “The smart thing is to delete all tabs that are not relevant to what you need the CFO to look at, copying and pasting [into a new file] only those tabs that require perusal,” he says. “If more scrutiny is requested, you can always send the whole file later.” — R.B.