VideoDavid Klementz ran smack into this cult of the spreadsheet when he became CFO of Albertville, Alabama-based Progress Rail Services in 2002. At the time, he wanted to move the railroad-services specialist to a single data source B&P system — one that didn't revolve around Excel. The merits of ditching Excel seemed obvious to Klementz. "As a senior manager, you need to have better visibility of your business," he explains. "As long as the data's in Excel, you don't have the visibility you need."
Selling finance staffers on the switch to a relationship database took some doing, however. "Workers often use spreadsheets as a crutch," observes Klementz, noting that this dependence makes it difficult for finance managers to maintain anything but an aerial view of a company's performance versus projections. His solution? "I finally told my accountants I was going to take Excel off their computers."
It never came to that. In 2003, Progress Rail deployed SAS Institute Inc.'s Financial Management planning software. With that Web-enabled program, finance-department workers can run multiple versions of a budget without compromising the integrity of the data. Klementz believes the software eventually will help shorten Progress Rail's budgeting cycle to three months, allow for more frequent analysis, and eliminate a whole lot of typing.
The elimination of scut work would seem to be a big selling point for the makers of B&P software. Surprisingly, the argument doesn't always play. Consultants point out that many finance chiefs don't necessarily care if staffers are at the office at 2:00 a.m. during budget season. And contrary to rumors, it's not because their hearts are three times too small. "CFOs put in those kinds of hours when they were controllers," explains one management consultant. "They see it as a rite of passage."
When Excel Doesn't
Maybe so. But asking a well-educated, well-paid controller or financial analyst to rekey data would seem to be a monumental waste of resources. Says Kugel, "One company we spoke with said it has a Harvard MBA working almost full-time consolidating spreadsheets."
For some companies, consolidating spreadsheets is the corporate equivalent of a tooth-scraping. Often, individual departments within a business have their own set of accounts and their own spreadsheet models. That's particularly true within the finance function itself. "It's common for finance professionals to change standard spreadsheet templates," notes Chenault. "It makes it impossible to maintain any data-standard consistencies."
This sort of customization, while comforting to workers, makes it difficult for corporate planners to roll up numbers. Until recently, financial-planning analysts at Princess Cruises had little choice but to manually consolidate Excel files sent by each department during the budget season. "We were dealing with a couple hundred spreadsheets," recalls Clint Allen, manager of financial planning at the company. "And that doesn't include one-off tools."
The shortcomings of this approach were magnified after the terrorist attacks of 9/11. As bookings thinned out, executives at Princess looked to max out the profits on every cruise. The maxing involved moving ships around at the last second, depending on (among other things) the profitability of routes, fuel expenses, and port costs. "We needed data immediately," says Allen. "The limitations of aggregating data from spreadsheets became obvious."
Last year, Princess deployed a new B&P package, Cognos Planning, from Cognos. The application, says Greg Bozigian, director of financial planning at Princess, enables financial-planning analysts at the company to spend more time on analysis and less on "mind-numbing consolidation of data." Using the application, company managers are able to roll up accounts into defined P&L categories. "It's all there at your fingertips," adds Bozigian. "It's not buried in somebody's spreadsheets."
And therein lies one of the real weaknesses of Excel. Although the spreadsheet provides fairly robust analytics, the tool is limited by its lousy handling of data. "You can do this kind of [projection] stuff in Excel," argues John Iverson, CFO of Oak Brook, Illinois-base property developer Montalbano Homes. "But as the process gets more intricate, it gets fragile toward the end."
In some cases, that fragility requires the intervention of a band of outsiders to fix the problem. "The Cognos tool is much more finance-owned, much more user-friendly," notes Bozigian. "We don't have to involve IT on a daily or weekly basis."
Corner Office, Dark Hole
Phoning tech workers is not exactly what corporate planners have in mind when they speak of collaborative budgeting. Under the best of circumstances, spreadsheets limit budget collaboration to small numbers of workers. That lack of companywide input — particularly from employees outside of corporate headquarters — often leaves planners flying blind when assessing revenue prospects for the coming years. In fact, in the Ventana survey, improved collaboration was cited most often as the key to producing more-accurate budgets.
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