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Excel Heaven - Or Is It Hell?

by Gary Cokins, Consultant, www.sas.comWednesday, October 14, 2009

This article is an excerpt from Chapter 21 of Gary Cokins’ book, Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1) John Wiley & Sons (www.wiley.com) , 2009. Permission to publish granted.

Spreadsheets such as Excel can be a dragging anchor that impedes progress toward adopting the full vision of the performance management framework. Disjointed spreadsheets, that I refer to as the spreadsheet-itis disease, have been a nuisance that have now become a serious problem. This is not only because their use involves cumbersome and untimely reporting, but because it denies people a single, unified view of a vital data-one version of the truth.

There may be good spreadsheet reports within a given department, but generally the rest of the organization is not aware of them. Additional pain results when others recreate their own version of the same report—a wasteful duplication of effort. With multiple spreadsheets, when data differs, which are the right numbers?

Linked spreadsheets, some perhaps a decade old, and disjointed legacy systems are just not dynamic enough, nor are they flexible. Finally, problems with maintaining undocumented or documented spreadsheets surface when the employee who personally developed the spreadsheet transfers to elsewhere in the organization or departs it altogether. And it gets worse.

When data is stored on clients’ computers (e.g., a laptop or personal computer) rather than on a server or a Web-accessible source, this means the data is not stored centrally, making dissemination and analysis difficult. Nonintegrated data means that assumptions in one person’s plans will likely not include the most recent version from someone else’s assumptions and plans. Most spreadsheet users have a widely held misconception that their spreadsheet application is some sort of database. It’s not. It is a calculator effective at manipulating and viewing data, but it is not particularly good at storing and managing it in a reliable, secure, scalable way.

Spreadsheets are also poor at handling sparcity where a substantial number of cells are blank. You drag around the deadweight of a lot of ‘‘0s’’ with only a few cells populated with real data—not a very efficient use of computer memory or processing power.

Organizations cannot continue to spend 80% of their time collecting, copying, pasting, and reformatting data, 10% weeding out errors, and then realize in the remaining 10% that the resulting data is not structured in a way that allows it to be analyzed. They cannot rely on undocumented macros and formulas when no one remembers how to maintain them—or the business policy they were invented to support.

The hard truth is that most organizations are not equipped with managerial information that is properly structured to make prudent business decisions. A robust enterprise performance management framework integrates multiple methodologies in near real-time, and it converts transactional data and its summaries (think =SUM(A1:A25)), into meaningful and relevant information for analysis and decisions. The more that spreadsheets clog the front-end, the back-end where the payoff is becomes obstructed.



Gary Cokins, CPIM


Gary Cokins is an internationally recognized expert, speaker, and author in advanced cost management and performance management systems. He is a Manager of worldwide performance management solutions, with SAS, a leading provider of business analytics software headquartered in Cary, North Carolina. Gary received a BS degree in Industrial Engineering / Operations Research from Cornell University in 1971and an MBA from Northwestern University's Kellogg School of Management in 1974.

Gary began his career as a financial controller and operations manager for FMC Corporation and he has been a management consultant with Deloitte, KPMG Peat Marwick, and Electronic Data Systems (EDS). Gary’s third book, Activity Based Cost Management: An Executive’s Guide has ranked #1 in its topic on Amazon.com. His two most recent books are Performance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1)

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