We hear a lot today about the importance of “data-driven” decisions. Far too much decision making in business, so the argument goes, is based on instinct and experience instead of hard facts. It’s a reasonable point. But the fault is typically not with the decision makers. When decisions have to be made quickly, and the pertinent data is not available or not trustworthy, then instinct and experience are all there is to go an. To make decisions that are truly data driven, you need fast access to reliable, in-depth data. And that often means going “beyond spreadsheets.”
Spreadsheets are among the most popular business tools ever invented. They’re great for enhancing personal productivity. But they’re not well suited to large-scale, collaborative planning, budgeting and forecasting. Mistakes are common. And the larger the spreadsheet, the greater the possibility that a small error will be repeated and magnified, compromising the spreadsheet’s value as a decision-support tool.
The analysts at the Aberdeen Group are among those who have looked at corporate planning, budgeting and forecasting and the issues with spreadsheet-based processes. In a survey of 167 organizations, Aberdeen found version control to be the most frequently cited problem with spreadsheets, followed by manual input (“time-consuming, inefficient and subject to mistakes”) and lack of security.1
Aberdeen recommended that most organizations update their processes, taking a “beyond spreadsheets” approach that uses modern technology, such as enterprise performance management (EPM) solutions, and “removes the negative aspects of spreadsheets while retaining their benefits.” Going beyond spreadsheets does not mean abandoning them entirely, or rendering obsolete the hard-won spreadsheet skills of the finance team. In fact, most modern tools have user interfaces that “mirror the look and feel of spreadsheets.”
Furthermore, Aberdeen found that the Best-in-Class organizations that have adopted the “beyond spreadsheets” approach “are over twice as likely to have real-time updates to financial metrics, enabling quick decisions and the ability to reforecast.” Most important, they found that better access to data led to better—not just faster—decision making, and better business results. Those Best-in-Class organizations showed significant improvements in several key performance indicators (KPIs), with revenues up 12% compared to 9% for all others in the survey; productivity up 6%, compared to 2%; and operating margins up by 6%, compared to 5% for all others.
So, if you’re looking for the concrete business benefits that data-driven decision making has to offer, it’s worth taking a look “beyond spreadsheets.” Read the Aberdeen white paper to learn more.
1 Nick Castellina, Beyond Spreadsheets: The Next Level in Planning, Budgeting and Forecasting, Aberdeen Group, March 2014