Spreadsheets and Performance Management:


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The lure of the spreadsheet is easy to understand: it is simple enough for beginners, yet powerful enough for experts. For over 3 decades, spreadsheets have been the tool of choice for financial professionals, yet they are widely derided as error prone and lacking the controls required by large organizations.

This eBook outlines the role of spreadsheets within enterprise-level organizations and how Axiom EPM has embraced Excel in a unique and innovative way.

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Spreadsheets and Performance Management:

  1. 1. SPREADSHEETS AND PERFORMANCE MANAGEMENT The Good, the Bad and the Ugly A publication from:
  2. 2. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 2 The modern business planning landscape INTRODUCTION Excel for the enterprise Axiom EPM offers the Excel integration and robust performance management functionality that larger organizations demand. The unified platform extends the capabilities of Excel—leveraging familiar Excel business modeling, not complicated script logic—to support both finance professionals and business users. Designed to capitalize on existing investments in and knowledge of Excel, Axiom EPM transforms spreadsheets into a highly scalable enterprise-grade application suite. www.axiomepm.com The ubiquity of spreadsheets The spreadsheet dominates the modern business planning landscape. Throughout all levels of an organization, those responsible for any aspect of planning interact with spreadsheets, and the average finance professional spends at least 25% of their time maintaining them. Their appeal is understandable: they provide an environment that every finance professional understands and the familiarity, syntax and flexible modeling that are simply not possible with packaged applications. These reasons help explain why spreadsheets have remained the de facto choice of finance for planning, modeling and reporting since the days of VisiCalc and Lotus 1-2-3.
  3. 3. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 3 Excel and performance management While the spreadsheet is an excellent tool for small tactical projects, even the most sophisticated Excel users struggle to use them to perform robust planning and management reporting. In this eBook we’ll discuss why organizations struggle with standalone spreadsheets, the benefits of an integrated enterprise performance management solution, how the use of spreadsheets can be more expensive in the long run. Rethinking spreadsheets and performance management The best of both worlds We will also describe why Axiom EPM is the natural choice for finance teams that want to leverage their existing Excel skills either on-premise or in the cloud, while providing unmatched modeling flexibility, enterprise controls and optimized reporting for better organizational decision making. www.axiomepm.com
  4. 4. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 4 Why companies struggle with Excel standalone Axiom EPM Performance Management Survey, September 2013 The benefits of Excel are not under dispute. Their simplicity belies a complex tool powerful enough to support high- level applications and modeling. What is in question is whether they are the best tool to support an organization’s business objectives. Many industry experts deride the use of spreadsheets as part of a closed-loop performance management process because they tend to be error-prone, they lack the level of control required by larger institutions and waste valuable resources on mundane activities. www.axiomepm.com WHAT ARE THE CHALLENGES ASSOCIATED WITH USING EXCEL?
  5. 5. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 5 Indeed, when spreadsheets are pushed beyond the boundaries of their intended use and utilized as a planning tool across a larger enterprise their numerous shortcomings and challenges come to light, some of which include: Some of Excel’s shortfalls They’re labor intensive: Uploading, downloading, emailing, reconciling and consolidating are a few of the manual tasks associated with spreadsheets in the context of budgeting. The lack of real time data aggregation with no easy ability to create scenarios means that finance has to initiate a tedious round of data collection and fixing broken links each time management wants to see the results of an updated assumption or an alternate version. They lack data integrity: The manual nature of stand-alone spreadsheets opens the organization to data integrity issues. When every user who accesses a spreadsheet represents a potential risk to the integrity of the data it contains, the numbers cannot be trusted and the entire process becomes handicapped and called into question. They’re unable to model the enterprise: While spreadsheets can support robust modeling, they’re weak from an enterprise perspective. The ability to create a large-scale model across multiple product categories, product lines, business units etc., inclusive of operational drivers, is virtually impossible. Organizations using spreadsheets tend to turn budgeting into a data collection exercise vs. an enterprise modeling exercise – which greatly reduces the value. www.axiomepm.com
  6. 6. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 6 Excel Chaos www.axiomepm.com #NUM! #DIV/0! #VALUE! #NAME? #REF! #N/A Version control and supplementing with Excel These shortcomings along with numerous others result in what many call Excel Chaos, a term that conjures a burgeoning number of rogue spreadsheets with dubious or untraceable data and no audit trail. Yet despite the pervasiveness of this dissatisfaction, finance organizations do not want to give up their beloved Excel spreadsheets. Even among those who choose to implement a purpose- built budgeting system, an overwhelming 87% continue to use spreadsheets to augment the system and conduct off-line modeling.
  7. 7. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 7 Thomas Otter, Research Vice President at Gartner, explains this Excel preference: To be sure, rarely do business users rave about great experiences with enterprise software. Within the performance management domain—budgeting, forecasting, consolidations, profitability, analytics, and reporting—users tend to get in and out of these applications as quickly as possible, often with Excel models on the side. Otter advises software vendors to ask themselves some hard questions about their design thinking. At Axiom EPM, our design thinking from the beginning has been focused on the office of finance’s preference for Excel. EPM software and design thinking Excel hell … is the fault of enterprise software failing to provide an alternative.
  8. 8. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 8 In addition to performing the most critical task of producing and reporting upon useful, collaborative and accurate data, a unified performance management solution should also complement and enhance Excel’s capabilities to satisfy the organization’s need for complete flexibility and control. Benefits of an integrated performance management platform include scalability, data storage and access, multi-dimensional reporting, security, and process management. The benefits of an integrated EPM solution Scalability: The use of standalone spreadsheets is manageable in low user count environments, but completely out of the question in medium to large user populations. The goal in serving large user populations should be the delivery of robust business models that are unique to the individual without requiring manual intervention from the system administrator. Well-designed performance management software allows organizations to design budget templates and calculation methods that align with different business segments. And at the touch of a button, data is populated and formatted into unique planning workbooks with no manual intervention required. Data Storage and Access: The organization’s performance management data sources must be clearly defined, easily accessible and trustworthy. Formerly disparate operational and financial data sources— budgets, models, reports—are managed and stored in a single platform with common structure and definition to be used in a consistent manner across the organization. This results in accurate and trusted data that can be used confidently in decision making. Security: Standalone spreadsheets are nearly impossible to manage from a security perspective. Passwords can be applied to spreadsheets, but the design was never intended for a broad audience with various rights and authorization levels. Data should be stored in a secure repository that can then be accessed and manipulated via a simple web interface. www.axiomepm.com
  9. 9. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 9 The benefits of an integrated EPM solution, continued Performance management software solutions should embrace and maintain the financial modeling capabilities and ease of use that financial professionals know and appreciate, while ensuring the data integrity, security, workflow and enterprise performance that the organization requires. The result is actionable information that the organization can trust and understand to enable better decision making. Multi-Dimensional Reporting: Organizations must aggregate and present data across their multi- dimensional landscape. Using a consolidated performance management platform rather than standalone spreadsheets eliminates the need to use formulas to consolidate data across linked stand alone files. Successful performance management enables real-time and ad hoc access to insightful and actionable information. Information delivery must support the regular production reporting cycles of the organization as well as the instantaneous ad hoc requests that arise. Process Management, Workflow and Alerts: A rich performance management platform should meet an organization’s workflow and approval needs. Users can define a set of process steps to cover any administrative process, including assigning ownership and due dates and then tracking the completion of these steps. Fully documented workflows can be maintained with detailed steps–parallel or dependent, as appropriate–with clear delineation of ownership, while alerts can notify owners and stakeholders as needed. Finally, it provides a permanent audit trail for the process, including who completed a task and when. www.axiomepm.com
  10. 10. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 10 Why many software programs fall short Excel “add-ons” The popularity of Excel has led nearly all performance management vendors to offer an Excel add-in to their solution. However, this “bolt on” approach often falls woefully short of providing what users want. In most cases, Excel is little more than a lens looking into a complex database where the core business logic is created and managed. While this may strike some as ideal, the result is less than optimal. Relegating the calculation logic to database script typically results in either a system too unruly to maintain, or one that’s too simple to model the enterprise. The lack of user friendliness inherent with script-based systems causes users to either give up attempting any level of sophistication within their models or work “off-line” in Excel for rogue modeling deemed too cumbersome or complex for the core system.
  11. 11. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 11 Why Axiom EPM is the natural choice User-based security Process management, automated workflow, alerts and notifications Integrate data from any internal or external source Highly scalable and flexible ROLAP data model Complex modeling to the most granular levels Finance owned and maintained with limited IT support Flexible and quick modeling Syntax known to office of Finance Familiar User Interface Robust modeling application Hundreds of functions and rich formatting options Owned and managed by Finance Why Axiom EPM? Axiom EPM recognizes and delivers what users like about spreadsheets while solving what’s problematic about them. By embracing the finance friendly nature of Excel and expanding upon its capabilities in order to address the needs of the enterprise, Axiom EPM allows finance teams to retain all of what they know and love about Excel, while having financial governance, corporate standards and process efficiency needs met as well. The result is both “sides” are addressed with negligible sacrifice. Further, the Axiom EPM relational data architecture, combined with a modeling layer based on Excel, fully supports virtually ALL planning requirements, allowing decision makers the ability to quickly model proposed initiatives and make dynamic inserts of data on-the-fly without significant effort.
  12. 12. www.axiomepm.com SPREADSHEETS AND PERFORMANCE MANAGEMENT / 12 Within the realm of financial budgeting and planning, there will always be arguments for and against Excel’s capabilities, but despite its faults and deficiencies, any attempts to replace or eliminate the spreadsheet have fallen short. To overcome Excel’s shortcomings, organizations should leverage a performance management solution that expands upon the finance-friendly nature of Excel while eliminating the error-prone functionalities of standalone spreadsheets to satisfy both the departments of finance and IT. AXIOM EPM’s UNIFIED PERFORMANCE MANAGEMENT SOLUTIONS Alleviating repetitive, labor- intensive tasks and streamlining performance management operations enables organizations to better focus on strengthening operational processes, resulting in more profitable growth and an overall greater user experience.