Around 40 percent of businesses are completely dependent on spreadsheets for planning, budgeting and forecasting. While there is no denying that spreadsheets are powerful personal productivity tools, they suffer severe limitations in the context of IBP (Integrated Business Plan) which is foremost an exercise in negotiation and collaboration. Multiple rounds of iteration have been shown to improve data quality, management buy-in and the accuracy of plans, but one cannot drive collaboration on the back of a personal productivity tool.
The familiarity of the Excel interface has its benefits. For finance professionals a grid of numbers is as compelling as a canvas to an artist, but the spreadsheets suffer enormous disadvantages in an integrated planning environment, such as the:
- Inability to create a multidimensional perspective, critical for multiple planning scenarios, without cumbersome pivot tables.
- Lack of specialized planning functionality and financial intelligence that help to populate quickly a planning model with data and preserve financial integrity.
- Lack of a data model to support an integrated business planning environment that links all operational plans to each other and to financial plans.
- Absence of data integration tools and quality management tools that permit data to be ‘harvested’ in a controlled way from underlying operational systems such as HR, Payroll and ERP systems.
- Difficulty of consolidating plans from different functional areas based on individually captured spreadsheets.
- Inability to report flexibly across business units, budget holders and other dimensions.
- Complexity of formula building and maintaining the model.
It’s Time to Stop Relying on Spreadsheets for Reporting & Planning
Neither can organizations improve work flows with cumbersome spreadsheets, generated independently by each functional area. Integrated planning is a process of negotiation between different managers across the organizational hierarchy. It requires an intimate link and dialogue – something that cannot be achieved with disconnected spreadsheets emailed between locations.
With a spreadsheet based system planners are effectively confined to operational silos where each one is cut off from the other and the key processes in which they are stakeholders5. This disconnect between responsibility centers makes it impracticable to share plans, resolve planning conflicts on a timely basis, or respond efficiently to change.
This in turn has implications for the effectiveness of planning since change is a constant feature of the business life.
In the end, those charged with planning often have to resort to impromptu meetings which in a geographically dispersed organization create logistical issues and expose the whole planning process to delay.
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