Integrated Business Planning with Spreadsheets; the fragile final mile
After many years in consulting, I am still surprised to find that even organisations with sophisticated transactional forecasting and supply chain capabilities still rely on spreadsheets for their final mile of decision support in core organisational processes such as Integrated Business Planning (IBP).
It feels like having a Formula One car with a homemade steering wheel.
Such organisations understand the importance of having the right technology in place, fit for the job, to support their people, with systems in place to cover most organisational processes, but they fail to carry through that vision to their decision-making platform.
While it is common for both business planners and finance teams to love their spreadsheets, these roles tend to have disparate systems and processes. The expression ‘Mind the Gap’ comes to mind. For example, the basis for a plan, the assumptions, don’t roll up and down; dollarized views are missing; and financial integration is poor. These are all gaps that introduce risk.
And so aggregated planning, scenario analysis and simulation, portfolio and product modelling, and often large volumes of associated reporting are done in spreadsheets. Spreadsheets are also used to manage transfers and reconciliations of data shared between teams and geographies, for master data management and to hold critical enterprise data as a “source of truth”.
Why are executives and decision makers analysing data, creating what if scenarios, and planning and handling large volumes of data using spreadsheets?
In larger organisations, I think the love for spreadsheets is born out of frustration with core systems. So many look over at the monolith of the ERP they have and resort to spreadsheets. SAP, JDA, etc, just can’t accommodate these tasks easily and so spreadsheets become the place to get things done. Tools like BPC and Hyperion border at the edges of technical coding complexity and so spreadsheets look like an attractive way out. Often the alternative is dependent on a technical resource and involves a frequently lengthy, maybe bureaucratic process to get the job done.
It’s not just the spreadsheets; decision support content sits in file systems, email and task-based tools. When a business says “I did IBP without technology”, they typically mean that they worked with what they have got. Technology is fundamental.
As attractive as it is to resort to using spreadsheets to drive planning and decision-making, it also carries risks for organisations. We discuss the 9 most common reasons we come across of why using spreadsheets for your planning process introduces risk in our eBook ‘9 reasons why spreadsheet-based planning is risky for your business‘.
ERP is not the answer. Hard wiring forecasts and scenarios that a business may or may not execute in an ERP is not the place to do it. I recently did a review in a business where, to the surprise of IT and top management, and despite a substantial investment in SAP, the business was run off a parallel system of spreadsheets: 124,000 files in 16,000 folders busting at the seams. Rolling integrated business planning under these circumstances is almost an impossible objective. These processes need more flexibility, more agility.
I often hear that “we have to get the process right and understood before we look at technology”.
On the contrary; technology may well be the enabler of the IBP process. Planning is about digital collaboration, shared understanding, context and ultimately effective decision making. Planning should also incorporate the ability to learn, improve plan accuracy and ensure strategic alignment. These considerations cannot rely on spreadsheets without significant compromise, risk and fragility.
The role of spreadsheets as an initial wire frame to help determine a future solution is even open to question. Modern decision-making platforms can fundamentally reinvent and disrupt conventional spreadsheet approaches. If you need to create a straw figure of a process, then create your capability in a fit for purpose platform.
BOARD is such a platform: a spreadsheet killer, owned by the business and able to provide scalable enterprise processes – a modern decision-making platform.
At Professional Advantage we recognise the importance of Integrated Business Planning (IBP) and have been working with Stuart Harman of Oliver Wight Asia Pacific to highlight the key features. In a recent video interview, Stuart talks about ‘Why aren’t spreadsheets a long-term solution?’.
For more information on Professional Advantage and Integrated Business Planning, click here.