Are Spreadsheets Secretly Running Your Business?
By Peter Karlson, Founder of NeuEon
Over the last few decades, we’ve evolved from building custom applications for every esoteric business function to creating outstanding foundational enterprise systems that can run virtually any company on the planet. Yes, even the most arcane businesses have a niche software provider or two that builds a specialized platform for their industry, but I can’t think of many business cases or data sets that don’t fit nicely into generic SFA, CRM, ERP, MRP or SCM system patterns.
So, today, we buy (instead of build) these enterprise platforms, configuring them to fit the business and modifying processes where needed. They are our systems of record—the sources of truth we use to run the business. At least, that’s what we’d like to believe.
In reality, our employees find many reasons to work outside these systems. Sometimes they lack appropriate access. They may not understand how the systems work or why it’s so important to use them. Often, they just don’t like the systems and prefer to work in their familiar desktop toolsets.
Another compelling reason? The need for executive information. Leaders want to see data in a specific way based on past preferences. They may like the data sorted or rolled up in a manner the system of record doesn’t support, and they often require information from several disconnected data sources. Inevitably, a savvy spreadsheet guru pulls reports and combines the output in a spreadsheet, because it’s easy to manipulate data and create the eye-catching graphics bosses want.
Relying on spreadsheets can be a slippery slope.
Using spreadsheets outside the system of record for tracking and reporting starts innocently. Then, the spreadsheets can take on a life of their own. They’re expanded, color-coded and formatted to perfection. People love them, and leaders can’t live without them. Before long, someone is doing manual, time-consuming work to update the spreadsheets weekly, and now the spreadsheets are also systems of record and sources of truth used to make business-critical decisions.
With all due respect to the great Dan Bricklin, inventor of the electronic spreadsheet, I’m always amazed at the elaborate spreadsheets people create to track and report critical business information! I’ve seen million-row sheets that track everything from the inventory status of global supply chains to year-over-year sales reports by product line. We’ve seen sizable companies build intricate trackers for things like “Available to Sell/Promise,” even though their inventory and supply chain systems can provide it out-of-the-box with little effort.
In one mid-sized company, the entire logistics and supply chain was run by a single gigantic spreadsheet everyone was terrified of corrupting. And this fear was justified—because spreadsheets aren’t controlled systems! They’re rarely password- or data-input-protected, yet often filled with proprietary, confidential corporate data and personal information, increasing the risk of security incidents and compliance issues. They’re supposed to mirror data stored in the systems of record, but once a user starts manipulating it outside those systems, things break. Formulas and data can be easily changed by accident—cells get overwritten, formulas don’t copy correctly or rows and columns are deleted. Important decisions are often based on suspect information.
Are spreadsheets really the best way to solve the problem?
It’s great to use spreadsheets to do work, massage data, analyze and experiment, but when a spreadsheet becomes operationalized, its importance to the business has increased. So, if your goal is to manage the business using your systems of record, not spreadsheets, it’s time to track those informal systems down, find out what they do and create more robust systems to solve the problem. Here’s how:
1. Identify spreadsheets that rely on information from the approved systems of record. Determine if and how that information is updated in both directions. Ask probing questions: How long has the spreadsheet been in place? Who uses it? How is it used and how often?
2. Then, analyze these spreadsheets with a systems-thinking mindset. Follow the flow. Where does data come in? Where is it captured? Where does it go? With this information, you can identify current systems that may be able to meet some of the needs and analyze gaps where they cannot.
3. Plan to create the necessary capabilities using secure, governed systems you may already have in place. For example, you could create an executive-level dashboard within the actual system of record, which teaches the executive to use and trust the system’s data and eliminates the labor needed to produce the information in a spreadsheet. Alternatively, you could leverage your BI tool to pull data from systems of record and original data sources, often in near real time, and display it in a visually appealing way that is more accessible to executive users. And finally, for those who still need to work in spreadsheets, you can set up data connectors, which pull data from the systems of record into a spreadsheet that can be used to display the information in the familiar way leaders prefer.
Ready to do away with shadow IT?
We often talk about “shadow IT”—those groups that put so-called “shadow systems” in place and manage them outside of IT, often without their knowledge. A vendor recently suggested “informal systems” may be a better, less derogatory, term. And my definition of an “informal system” extends to one that operates outside of, or instead of, the systems of record.
Their use has grown exponentially in recent years, partly driven by easy access to cloud apps for things like file sharing, collaborating and creating social connections. Users are comfortable downloading and using apps and services to help them do their work. And they’ve been creating Word docs and Excel spreadsheets for decades.
This isn’t going to change, and your employees aren’t being nefarious. They just need solutions! Finding these informal, yet mission-critical, systems and replacing them or augmenting their capabilities with enterprise-grade systems will help both leaders and users do their jobs in a way that works best for them—and for the business.
This article was originally posted on Forbes.com