INSIGHTS

The Tyranny of Spreadsheets

As a former sales and marketing guy, I am more than familiar with spreadsheets as a not-so-good tool for managing the avalanche of data generated by the front office, even before the big data craze.

Name a department or function in business and it’s easy to find people using spreadsheets to manage it — often poorly, but through no fault of their own. Consider this list: financial reporting, revenue management, professional services automation, human capital management, compensation management, contract management, order fulfillment, CPQ, inventory management, supplier management — and I am sure there are more examples.

Spreadsheets’ shortcomings are well known. They capture a moment in time, and when you change the data in a cell, it’s a new deal — there is no database supporting the data, so there is no historic record of anything unless you go through an elaborate process of saving repeated versions of each spreadsheet. If you do that, good luck reconciling anything.

SFA Makes Some Headway

CRM fought the spreadsheet wars at the beginning of the century, with sales force automation gradually replacing spreadsheets in about half of all sales organizations. That’s right, half. I’ll bet you thought SFA’s penetration rate was higher, but there’s still a lot of white space. CRM or SFA were relatively easy things to sell. After all, SFA deals with revenue generation, and who doesn’t want to improve revgen?

However, large numbers of business processes, especially in the back office, still are under the weight of spreadsheets, despite the fact that there are quite good applications to support them.

This point was brought home last week, when I was invited to serve as a judge for FinancialForce.com’s Customer Excellence awards to be given out at Dreamforce. (I don’t know who won, so don’t ask.)

In use study after use study, I was both impressed and a bit taken aback by the number of business processes these companies had relied on spreadsheets to perform. They replaced spreadsheets with inexpensive cloud apps, and all of them came out winners.

What was most revealing, though, were the impressive results that came from freeing a business from the overhead of recording data in spreadsheets, managing the sheer number of them, extracting information and compiling reports, all through brute-force methods.

Companies routinely reported enormous reductions of time and costs, resulting in better information flow to managers, more timely responses to customers, and ultimately greater profitability — in part, because things didn’t go missing.

In the old days, you could look at all of this and say, “Yes, but a spreadsheet is virtually free, and software to run in my data center is a million bucks.” It was a persuasive argument.

Curiously, spreadsheets have filled their niche for so long precisely because they filled it well. It’s the niche that’s changing, and that’s causing big problems. Spreadsheets, with their snapshot view of reality, turn out to be just right when you operate in a transaction environment. They record the data when the transaction takes place, before everyone moves on.

Today, though, we’re transitioning aggressively into process orientation, and data needs to be collected throughout a process so that analytics can assess the next best offer or action. These are all things that require more data, and spreadsheets are bad for them.

Inexpensive, Easy-to-Use Apps

The introduction of cloud computing and software platform technologies has made having access to competent applications cheap and easy. Moreover, if you still want to build rather than buy, development on a platform has never been easier.

This isn’t a column about Salesforce per se, but go to Dreamforce and look at all the components available in the Lightning product set for rapid codeless application development.

Now, with a solid knowledge of a business, it’s as easy for any businessperson to define an application today as it may have been to develop a spreadsheet just yesterday.

The payback that businesses are likely to reap from adopting a platform strategy and using development tools and point solutions built for the platform is potentially huge. I think of it as the next big iteration of IT — the next automation revolution that will boost profits and drive productivity.

A release from the tyranny of spreadsheets is a revolution indeed.

Denis Pombriant

Denis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at denis.pombriant@beagleresearch.com. You can also connect with him on Google+.

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