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Excel Hell Part 1: How the FP&A Process Starts Going South

Excel Hell Part 1: How the FP&A Process Starts Going South

When I began supporting FP&A organizations a few years back I was introduced to a whole new vernacular as is common when you switch lines of business or any other discipline in life.  I had used Excel on and off, from version 1.0 on, for the better part of twenty five years.  Didn’t seem too bad a product to me.  It’s still around so I figured it must be somewhat laudable.  I even heard once that it was Bill Gates favorite software.  But I wasn’t using the software as an FP&A expert.  I was using it as a Project Manager, Executive, or some other incarnation of management.  I had no idea what EXCEL HELL was…Come to find out…it’s real!

Many FP&A experts rely so heavily on Excel that they entrench themselves so deeply toward a southbound infinity that they end up trapped “forever” in Excel Hell.  I originally laughed when I heard the term.  It was easy for me to say from the side lines, “If you are trapped, then just get out.”  Forget your silly alliteration.  But I had underestimated the symbiosis between FP&A and Excel.  So I decided to investigate.

I wanted to know just what made up this notion of Excel Hell.  Having been an enterprise systems advocate for the last thirty years I was perplexed at how FP&A organizations had trapped themselves inside an application never meant to be a system like an Enterprise Performance Management (EPM) tool.  After my investigation I found that here’s where it all went to “H-E-double toothpicks”.   And why I STILL advocate for a real systematic solution.

EXCEL HELL THE EPM SOLUTION
The collection of actuals, historical data, and comparison scenarios all in separate spreadsheets.  You have to bring them all together in one Financial Package to present to the board or executive leadership. Enterprise Performance Management tools exist as one integrated database with the capability to store actual, historical, budget and forecast, and comparison scenario data all in one place.  There is no bringing together.  There is simply point and click and reporting all off of the same infrastructure.
The constant building, rebuilding, realigning, validating, and testing of spreadsheet templates (examples include: budgeting forecast for revenue, cost of sales, preloaded budgets).  These constructs rob precious time for analysis.

 

EPMs, like Host Analytics, allow for template creation much the same way as Excel by using a familiar Excel-like user interface that can actually capture Excel formulas and/or MDX coding.  You can copy templates in seconds and have an unlimited number of templates.  However, unlike Excel, all of the templates already lay atop a common construct; your segment data.  In that common construct you can reference numbers, formulas, and amounts in other templates so that you are not constantly going back and forth to verify the propagation of changes.  Furthermore, every number need only be stored in ONE place so maintenance overhead again is reduced.
Multiple users, different locations, different time zones.  This often leads to an excessive number of spreadsheets.  The users have different schedules making the budget calendars tough to manage.  You have people out on vacation who may need proxies.  It’s tough to get the right section of the budget to the right person given the calendar crunch.  This means more spreadsheets to manage and more individuals to coordinate for managing those spreadsheets. Ultimately, that’s more errors to trace and fix.

 

With an EPM tool you have the ability to create one shared, 24×7 access, template for whatever data you wish to capture across the organization.  Furthermore, because the users share the template inside the system the population of template users come to the template (spreadsheet) which is managed centrally by the FP&A team.  There is no sending of information out to the field hoping it finds its way back to the FP&A team…and “oh by the way” is updated when it’s returned.
Multiple companies, divisions, departments, product lines.  Again, this often leads to an excessive number of spreadsheets.  And again, this means more spreadsheets to manage and more individuals to coordinate for managing those spreadsheets.

 

EPM tools allow for the secured Budgeting and Planning across several dimensions like company, department, product, etc. often up to 12 planning dimensions.  Those dimensions are planned within templates and are centrally controlled by the FP&A team.  They are then accessed 24×7 by a secured user population.
Linked spreadsheet files make distribution not only difficult to manage but difficult to execute.  Spreadsheets, especially those used in the FP&A process, contain multiple links.  This administrative overhead means there’s more time spent managing the links instead of managing the data.  And when that data doesn’t balance you have to dig and dig through the links to find the source.   Some files are so linked that you have to set notifications just to remember to continuously refresh them. Templates (i.e. Spreadsheet Files) are linked only as references into one template from another.  Thus the “linking” concept with spreadsheets and EPM templates are the same.  However, because templates are all part of an underlying construct there is no refreshing of references.  Dually, the references of information are not singular.  You can reference multiple accounts at one time from multiple sources, all into one row in a template.  And you can keep adding references well after the initial reference has been established and no updating of the existing references are necessary.
The provision of multiple versions of actual, historical, and forecast scenario data make management of the spreadsheets ominous and makes rework (wasted effort) of the same spreadsheet almost axiomatic.

 

While EPM software makes the multiple versions issue of the same template go away it also allows for unlimited versions of newer and comparison related templates, for example a quarterly or monthly reforecast of an existing budget to actuals comparison.

 

Are you beginning to see the picture here?   There’s real value in Enterprise Performance Management.  However, in the interest of saving your now scalding eyeballs we are going to stop here.  If you want to finish this walk through Excel Hell, click onto OMG, Excel Hell is Real, Part 2.

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