Ventana Research has been advising companies to eliminate standard spreadsheets for any enterprise-wide, collaborative purpose. This type of spreadsheet is still a vital productivity tool for individuals, but it lacks critical technological capabilities (e.g., the ability to enforce data integrity and referential integrity) and therefore is not well suited to company-wide, ongoing operations. While standalone spreadsheets were once the only choice, companies now have more options. One of these is Actuate’s e.Spreadsheet.
Ventana Research defines financial performance management (FPM) as structuring financial systems and processes to promote efficient, accurate and timely execution of finance/accounting functions in order to provide an organization with reliable information and analysis to enhance its performance. Finance organizations play a strategic role in managing the performance of a company. Actuate has embraced FPM, offering a suite of software that streamlines execution of core processes in finance organizations and provides actionable information to business units. One attractive aspect of Actuate’s offering is its e.Spreadsheet. We recommend that companies seeking alternatives to standalone spreadsheets take a look at Actuate’s e.Spreadsheet.
The standalone spreadsheet (e.g., Microsoft’s Excel) is the core piece of software for any individual working in a finance organization. Two decades of use has produced a high degree of familiarity with it. Not only is it used to perform calculations and store information, it is also used to generate reports and functions as a simple programming tool for non-specialists.
At the same time, standalone spreadsheets have numerous defects when used as part of any repetitive or collaborative enterprise-wide task (see “When Good Spreadsheets Go Bad,” June 15, 2004). Standalone spreadsheets are inherently uncontrollable. Errors are routinely introduced as end users collect and transform data. Time is wasted finding and correcting these errors (or worse – not finding them and making decisions based on inaccurate information). As “best practices” are developed in individual spreadsheets, they are not always shared across the business and may disappear if the person is reassigned or leaves the company. For US public companies, spreadsheets can pose control risks that are at odds with sustainable Sarbanes-Oxley Section 404 compliance efficiency.
Actuate’s e.Spreadsheet (an option with Actuate 8) seeks to give enterprises all the advantages of using spreadsheets (chiefly familiarity and training with native Excel functionality) while eliminating the major issues. It offers many critical features and capabilities needed for collaborative, enterprise-wide processes that are not available (or as easily achievable) using Excel. Companies can pull information from a wider set of heterogeneous data sources, enforce cell locking more consistently, easily apply time dimensions (e.g., 4-5-4 quarters, 13-column years, etc.) more readily, and incorporate rules-based calculations for metrics.
The software also enables organizations to control access to data, ensuring that the right information is used consistently. It allows centralized control over which data and formulas within spreadsheets users are able to change. Yet it also allows end users freedom to do their normal ad-hoc analysis and report generation. Actuate 8 also provides capabilities for automated and controlled distribution not available with standalone spreadsheets.
Enterprise spreadsheets are an emerging category of software, sold either separately or (as in the case with Actuate) as part of a larger offering. We believe finance organizations’ awareness of enterprise spreadsheets is low but growing. Our recent financial reporting and consolidation research illustrated that most finance people are not aware of the control issues standalone spreadsheets pose. There are multiple offerings available, many from small start-ups. We expect the most successful offerings will be from vendors that offer its capabilities as additional or complementary pieces of a larger offering rather than as a stand-alone product. The big question is whether and when Microsoft will offer something like this. Such a move is still at least several years out. We were intrigued by that company’s acquisition of Groove Networks since it might enable Microsoft to build enterprise spreadsheet capabilities on a peer-to-peer type architecture, something quite in keeping with its overall Office approach.
Ventana Research asserts that all finance departments in organizations with more than 1,000 employees must adopt enterprise spreadsheets for processes that need to be controlled against errors and fraud. The closing process is just one example of this. In our judgment, companies also can use them to enhance overall efficiency, versus using standalone spreadsheets in broad deployment of data and data-driven processes. Although in theory standalone spreadsheets are capable of doing many things “for free,” in reality making them actually do the work becomes so time consuming and costly that it never happens, or they consume too many internal resources to be efficient. We advise those that are considering their options in this category to look at e.Spreadsheet from Actuate.
Robert Kugel is CFA, VP & Research Director - Financial Performance Management at Ventana Research.
Ventana Research is the preeminent research and advisory services firm helping our clients maximize stakeholder value with Performance Management throughout their organizations. Putting research in a business and IT context we provide insight and education on the best practices, methodologies and technologies that enable our clients to leverage assets to understand, optimize, and align strategies and processes to meet their goals and objectives.