Spreadsheet Hell
February 3rd, 2010
Have you spent millions on traditional software solutions only to find that many of your managers still rely on spreadsheets for their mission critical decision making?
If you answered yes to this question then your business could be suffering in Spreadsheet Hell.
So how is it that so many Fortune 500 companies, among others, having invested literally tens of millions of dollars in traditional software licenses and the associated hardware, network connectivity, data integration and internal IT overhead still find their key management personnel more dependent than ever on spreadsheets and one-off databases at the points of execution – where profits are made or lost?
Is it due to the fact that most traditional enterprise level solutions (ERP, BI, SCM, et al.) don’t provide enough actionable information? If so, then what exactly is actionable information anyway? Well actionable information should reveal opportunities for improvement while they are still opportunities for improvement. So actionable information is information delivered in the smallest interval necessary to isolate the root causes of variation while there is time to implement corrective action(s).
And while it’s fair to say that most enterprise and even manufacturing execution systems fall far short of this objective, Spreadsheets and one-off databases don’t do a much better job either; unless of course a significant amount of human capital is poured into the daily and more likely hourly data entry tasks necessary to get only slightly closer to a “real-time” performance reporting interval*.
This sorry state is Spreadsheet Hell. In spite of the heroic efforts of many to keep these so called “decision support” systems up to date, the irony is that while they are intended to manage process and minimize variation, by their very nature, they often only introduce more variation to management perspectives on performance resulting in different versions of the truth that serve to further obscure the total cost to produce product and achieve margins.
Moreover, notwithstanding the excessive time spent maintaining these systems, that incidentally typically only utilize static data and are highly susceptible to error, the output is not usually widely distributed to all who need it. Finally, as your business grows they only become more complex and difficult to manage.
So if you know your business is in spreadsheet Hell, share your perspectives on the particulars of your situation; we would like to hear from you.
*Real-time in high speed processing operations like those found in the petro-chemical industry among others is typically defined in terms of milliseconds or seconds; while in a Hospital or discrete manufacturing environment minutes or fractions of an hour are more the norm. And, while defining the correct performance reporting interval may be highly situational, it is none the less crucial to uncovering the hidden business value where variation persists.
One Response to “Spreadsheet Hell”
I wish more people would write blogs like this that are actually fun to read. With all the fluff floating around on the internet, it is refreshing to read a blog like yours instead.