CFOs - HOW DO YOU STOP THE SPREADSHEET-SPIRAL™?

28th October 2018

1.Spreadsheets: The Ultimate Disruptor

Spreadsheets are without doubt the accountants’ favourite tool and there is no sign of that love affair abating soon. A recent FSN research study highlights that just 32% of CFOs believe that finance functions will be able to move away from spreadsheet reporting by 2030. Businesses talk obsessively about disruptive technologies, but if ever there was a technology that turned the accounting world on its head, it was the spreadsheet.

It’s universal popularity vests in its flexibility and the ease with which finance professionals can program complex algorithms and even applications for themselves. The spreadsheet is simultaneously liberating and empowering. But ironically, since its introduction in the early eighties, the unfettered growth of spreadsheets is starting to choke off the process innovation and progress that ushered in its success.

 

 

2. From ‘Hero’ to ‘Handicap’

So successful is the spreadsheet that in some circumstances it has become a hindrance. Unwittingly perhaps, businesses have become excessively reliant on spreadsheets for critical parts of their financial processes. What began as a supreme personal productivity tool has in many situations morphed into an accounting monster that is poorly controlled, documented and managed. So profound is the potential impact of errant spreadsheets that a staggering 75% of CFOs express deep anxiety (lose sleep) about the possibility of an undiscovered spreadsheet error in their reporting process.

To make matters worse, CFOs struggle to sort the ‘wheat from the chaff’, with 43% conceding they simply do not know which of the hundreds or perhaps thousands of spreadsheets deployed in their organizations are high risk. 

So why is the spreadsheet mountain growing and what can be done?

3.The Spreadsheet-Spiral™

The proliferation of spreadsheets is well known and documented, but a new FSN study, the “Future of Financial Reporting”, which encapsulates the views of nearly 1,000 senior finance professionals globally, shines a light on the principle causes for the first time.

It finds that 71% of organizations rely on spreadsheets for data capture in all or most of their business units. But a spreadsheet-bound reporting process remains impervious to change. 49% of organizations are unable to change their organizational structure without enormous disruption and 46% rely on their IT function to make changes which introduce further delay and disruption. Frustrated that they cannot respond to change, 69% of finance functions introduce more spreadsheets to ‘paper-over’ the cracks. This leads to even more dependency on spreadsheets, kicking-off a new round of the spreadsheet-spiral™.

4.Demolishing the Spreadsheet-Spiral™

The research lays bare the reasons for the growing mountain of spreadsheets, namely an inability to change the ERP and CPM systems that underpin financial reporting and an over-reliance on the IT function to effect change. 

Most of the ERP and CPM systems in use today were designed for a different era, namely, one of double-digit business growth and predictable macro-economics. By contrast, today’s businesses must contend with a distinctly different environment: one characterized by low growth, fewer opportunities, higher risk, tighter margins, disruptive start-ups and technology-infused business models. Change is at unprecedented levels and consequently businesses need systems, processes and people that can change with them.

Deploying next generation ERP and CPM systems in the cloud that are capable of responding to change is not only necessary for breaking up the spreadsheet spiral, it is also more profoundly the key to business continuity and growth.

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