Democratizing Financial Spreadsheet Empires

Those who have followed Profitbase this fall are likely familiar with the character Ron. Together with his colleagues, Ron, the finance department’s wise elder, has been indispensable in completing the budgeting process. This is because he possesses decades of deep knowledge about all the spreadsheets created since 1988.

He is also at an elite level in all types of spreadsheet programs and takes great pride in managing and preserving spreadsheets. With all his insights and skills, he has perfected the approach to creating annual budgets over many years. The problem is that this process relies heavily on Ron actually being available to guide the company through it. When he’s not in the office because he’s off to watch the Excel World Championship, it becomes an impossible task for Jonas and Sara to get started.

Personally, I have enjoyed the comic strips that have been created, and the response from the public has reassured us that we have managed to bring a smile to people’s faces with relatable situations.

But there is one piece of feedback that has made me reflect a bit recently. It’s when several people have said or written, “Ron is the king.” This hits the nail on the head but perhaps in a more serious way than most people realize.

For Ron is indeed a king… or, since we are above average enthusiastic about Star Wars at Profitbase, we can say that Ron is an emperor of a financial spreadsheet empire.

There is, of course, more reasoning behind this conclusion. To provide some context, I can share the findings from a survey Profitbase conducted this fall among Norwegian companies. We asked a sample of one hundred CFOs, controllers, and CEOs a very simple question:

“What do you consider to be the biggest obstacles or challenges the finance department faces in working more efficiently with budgeting and forecasting?”

A recurring theme in the responses can be summed up in one word: dependency on key individuals.

This was not surprising to me. It often comes up in meetings with new customers who want an overview of our software. But it’s something else to see it confirmed across a larger sample.

In addition to confirming dependency on key individuals as a pain point, we also tested a hypothesis about why this is such a widespread problem. The same survey revealed that more than 60% of respondents only used spreadsheets to work on budgeting and forecasting for the company.

I can clearly see a relationship between how significant the problem of dependency on key individuals is in a company’s financial planning and management and how reliant the company is on spreadsheets.

For clarity’s sake, I should specify that I am not anti-Excel or against using spreadsheets. As tools, these programs are fantastic. BUT, like all tools, there are jobs these programs are well suited for… and jobs they simply are not the optimal tool for.

Budgeting and forecasting is an area where organizations can quickly outgrow spreadsheets. When the volume, speed, and variety of financial data increase, the complexity becomes so great that financial functions need systems that enable effective collaboration.

It’s not ideal to email spreadsheets back and forth. This way of working means it’s only a matter of time before rows and cells are accidentally deleted, someone breaks a link, or messes with a formula that causes serious follow-on errors. Besides the risk that mistakes are likely to happen, there is no good way to track changes made to detect and correct such errors.

This is something most people realize. But instead of taking the next step beyond spreadsheets, too many fall into the trap of wanting to restrict access to critical spreadsheets.

This makes things worse because, like the empires of history, too much “power” is concentrated in too few hands. And even though there’s nothing malicious about the spreadsheet emperors, there’s only so much they can manage as individuals. This means that even if they are razor-sharp and can work magic with spreadsheets, the company is vulnerable because things can slow down or come to a complete halt if these key individuals are not available. If these individuals were to “abdicate” by leaving, it can be a challenging task to find replacements.

Such concerns disappear almost overnight if one takes the step beyond working solely with spreadsheets and starts using more modern software for budgeting, forecasting, and other financial planning. A very good example of a company that did this long ago and has benefited from the opportunities for high degrees of collaboration in daily operations is Solstad Offshore ASA.

Through the integration of complete models and driver-based input, the shipping company can collaborate effectively in planning, ensuring healthy operations from top management down to each vessel.

No business function is an island. Neither sales, marketing, logistics, finance, nor Ron can work in isolation. I don’t think I’m exaggerating when I claim that effective collaboration has become business-critical. Therefore, it is important to be wary of spreadsheet empires. And if they have already emerged, it should be a high priority to democratize them.