The Swiss army knife of business management, Excel is used in companies everywhere. The trade-off of its flexibility is that it allows for a lack of structure and auditability. Replacing Excel with a new software would not solve the weaknesses that it has created. Only training in the best techniques of performance managing and software tools will produce relevant, reliable and rapid analyses.
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Excel is a powerful and indispensable software tool used by everyone. This is understandable: it is a true Swiss army knife. It offers flexibility, speed, autonomy and many other functions. It is commonly known that « business » deadlines are more reduced, and that the IT departments are sometimes overloaded. Furthermore, the latter request, reasonably, written specifications, an exercise which even the users complain about. Therefore, they prefer to develop their solutions themselves.
The trade-off of the exceptional flexibility of Excel is that it allows for lack of structure, rigor and auditability. Excel makes it possible to mix in the same sheet, data, formulas and other output designs. Many people use it in this way. Even though it is possible to label fields and write formulas in clear text, this is used very little.
In reality, we essentially see spreadsheets only usable by their creator, inauditable, badly made… and wrong. I will simply refer to our latest experiences, a balance sheet from a small company in which two million euros were missing, and a dashboard from the executive board of a large international group in which numerous KPI were false. The formulas had probably been correct initially, but the subsequent copying and pasting and the changes of managers led to erroneous conclusions. More surprisingly, even among the big users such as financial controllers, we regularly witness very faulty techniques.
Another limitation of Excel, at the time when volumes of data issued from ERP increase exponentially, Excel is not sufficient for the use of a very large number of lines. Experts, including the software editors, will undoubtedly point out that Excel is not made for this and that other solutions exist. They are absolutely right, however it does not prevent that, for lack of more autonomous means, even the users fall back on the only software tool that they have at their disposal.
What has changed in decision-making tools is that for several years, more friendly and rapid solutions have existed for analyzing data bases from ERP. Even better, the cost of training is lower than Excel or other more traditional BI software. However, as a Steinway does not make the pianist, the data analysis program does not make the analyst. After the « wow » effect produced by these new graphic decision-making programs, we see people buy them, but they either continue to apply a part of these bad techniques inherited from the past or abandon them, disappointed. To rise above these challenges, we would recommend a decision-making approach « business and tools » in four steps:
- Understand the concept of performance as it is defined by financial controllers: effectiveness and efficiency in creating the dashboards. Know its different levels of maturity from the simple production of statistics (figures) to the indicators of performance (one figure related to a reachable objective) until the notion of an improved action plan forms.
- Know how to write a detailed data analysis: This is not about publishing multiple reports, but rather about making a relevant demonstration by executing all of the major contributors by beginning with them (a helpful example would be Pareto and the 2 x 2 matrices).
- Master the analysis and data modeling of data and its processing: the idea of structuring data in a « table », the knowledge of joins, the culture of the verification at minimum.
- Discover and appropriate the new analytics tools (going from simple files to a usable database) and multi-analysis (flexible decisional tools)
Through the comprehension of this process of performance management, we will resolve the use of Excel for everyone involved, and we will learn to use the right tools in the right context.
Michel BALDELLON – Anne VINAGRE
Co-founders Check’nDo and Check’nDo Education
This tribune had been published first in French in Les Echos.fr