Controlling is using Excel for Reporting, as Decision Basis, and for Business Analysis

Numbers of studies show great Excel representation as tool in controlling departments, as basis for Reporting from Excel, for Business Analysis and to make Decisions from Excel.  Study made by Deloitte for German market with questions what tools are used and what tools are known to users is presented in Figure 1. Occurence of controlling aplications in Germany. Results show that 50% of companies use only ERP systems in combination with MS Excel as controlling platform (Reporting, Business Analysis, Decision Making, Planning and etc.). There is no specialized application known to be used more than 50% of surveyed users (1).  Only SAP platform is represented with 20% in planning process and all others are represented with 10% share and less. Due to fact that SDAP is widely used ERP platform (2), it’s logical why it’s so often used in planning process and in many other processes.

Figure 1. Occurrence of controlling applications in Germany. (3)

In this article whenever table calculator is used its actually MS excel since it’s so widely used. Although, in further text Excel will be analyzed only as basic application without additional functionalities implemented via VBA macros or add-ins. Any usage of VBA macros or add-ins Excel is then concerned as specialized planning, reporting and decision application not table calculator.

Fact that table calculators are so often used in process of controlling defends Pendse N. His statements are: „End users will not renounce usage of table calculators“ and „Even with access to multidimensional databases, table calculator is most popular application.“(4)

One of the cause of huge Excel popularity describes Radden N.:

„… table calculator works despite the fact it does not work according to standards, company practice or any other systematical approach“(5).

Although Rodden says that serious efforts to switch to advanced unified  BI platform did not result with total displacement of table calculators from controlling processes. To similar conclusion came Howcroft D. For question why are users so satisfied with using Excel he gives simple answer „commodity zone. … users feel comfortable during usage and regular budgeting with help of Excel“(6).

1.1    Excel disadvantages as controlling platform for reporting, decision making and business analysis

Main disadvantages for using Excel for Reporting, Decision Making and for Business Analysis are:

1. Set of table calculators is not perceived as IS element in company
2. Time to make operative plan and forecasting is too long
3. Mistake susceptibility
4. Lack of versioning
5. Connectivity with IT architecture is only declarative
6. Limited number of rows and columns
7. Data access is not adequately restricted and secured
8. Dimensional problem

It is important to highlight that in many corporations awareness is very low about data quantities used in processes of planning, reporting and business analysis. Also among quantity of information there is lack of awareness about no data access authorization in Excel.

Buckner D. brings one bank manager as an example who categorically claimed that table calculators are not used. His claim was crushed within several minutes with several hundreds of examples.(7)

One example from author experience during implementation of BI systems in 2006 was to find on server copy of “My Documents” which belonged to highly ranked manager in company. In the directory was copy of Excel document with celeries of complete company together with models of bonuses and similar. Excel was not protected even with password…

1.1.1     Set of tables from table calculators is not perceived as company’s IT source

In researches made by Panko R. appears that huge amounts of data are contained and stored in tables, usually in net of mutually linked 200 tables. Table net and its logistic infrastructure is called grey instance of IS infrastructure because it’s not recognized as element of IS in company. Therefore it’s not under anybodies jurisdiction(8). On tables work many employees with different access, reading, writing and editing rights and system of delegating rights does not exist.

(1) Deloitte. „Eine Standortbestimmung zur Planung in deutschen Unternehmen“. Source: http://www.controllingportal.de/Fachinfo/Planung/Deloitte-Studie-Eine-Standortbestimmung-zur-Planung-in-deutschen-Unternehmen.html [12.9.2007.]

(2) Al-Mashari M. i Al-Mudimigh A.,(2003), ERP implementation: lessons from a case study  . Source: http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=A4340FE3B5B98C7710BCC0AA039BEF00?contentType=Article&contentId=883575 [2.11.2007.]

(3) Wunder, T. i Thomson, J. (2006) Want to be more effective CFO Strategic Finance vol. 1/06

(4) Pendse, N. The origins of today’s OLAP products. Source: http://www.olapreport.com/origins.htm [3.11.2007.]

(5) Raden, M. (2005) Shedding Light on Shadow IT: Is Excel Running Your Business. Source: www.hiredbrains.com/proclarity.pdf  [19.9.2007.]

(6) Howcroft, D. (2006) Spreadsheets and the financial planning process: a case study of resistance to change. Journal of Accounting & Organizational Change; Volume: 2., Str. 265.

(7) Buckner, D. (2007) Auditors praised by FSA for improving spreadsheet compliance. Source: Http://www.accountingw eb.co.uk/cgi-bin/item.cgi?id=170552 [3.11.2007.]

(8) Panko, R. (2007) A Framework for Controlling Spreadsheets for Regulatory Compliance and Good Practice. Source: http://panko.shidler.hawaii.edu/SSR/Mypapers/SS-ComplianceControls-COGSWP2007-1.doc [29.10.2007.]