This year has been the year of spreadsheet distress. Spreadsheet errors have been blamed for a number of high profile corporate meltdowns including one in the rail franchise bid process for the West Coast mainline that is said to have cost the tax payer around £60m.
Spreadsheet calculations represent up to £38 billion of private sector investment decisions per year and simple errors could be putting billions of pounds at risk. With so many high profile incidents filling the newswires, it may seem unlikely that the spreadsheet is set for a reprieve in 2017. However, new developments in IT are set to allow businesses to cling on to their beloved spreadsheets in 2017 and make them robust enough to satisfy regulators and auditors who have already indicated that they consider them, in their existing state, to be a major potential risk.
For the uninitiated, it can be hard to see the appeal of a spreadsheet when sophisticated enterprise systems are available as an alternative. However, the downside of these systems is that nothing can be completely spontaneous and more often than not, the busy IT team needs to be called in to tackle what the spreadsheet is capable of doing in a fraction of the time.
Large businesses still like to use spreadsheets to analyse data but difficulties arise because their sheer size can make them very difficult to handle leading to multiple copy and paste operations that burn up huge amounts of time. Yet people persist because spreadsheets free them from the meticulous clutches of I.T. and they get the control and flexibility they long for.
Keeping track of all changes
Instead of consigning much loved spreadsheets to history, one option is to connect them to the cloud so that users can enjoy the simplicity and comfort of using a spreadsheet at the ‘front end’ with a connection to a very complex (but well-hidden and transparent to the user) cloud ‘back end’ that does all the difficult work. Existing spreadsheets and other disparate data sources (such as MS Access and core ERP) can now be integrated into one next generation enterprise spreadsheet solution with none of the large-scale data migration issues once experienced and with minimal disruption.
The real beauty lies in the fact that it is possible to keep a complete track of every change made to every spreadsheet cell by every user at every point in time since document inception. This is invaluable for forensic audit and for industrial grade security and eliminates all of the risks. This means that it is possible to automate business processes without any disruption and carry on using a familiar tool without any of its’ well- known problems.
At first glance, the solution looks and feels exactly like working with a set of normal spreadsheets: there are no changes in business processes and no additional training is required. The difference lies in the fact that every spreadsheet is enhanced by a connection to a secure cloud server so that as each member of the team changes data in their local spreadsheet, updates are synchronised in the cloud and a single version of the truth is always presented in real time.
With regulators likely to take an increasing interest in their use over the next two years, this marks an important step forward in finding a way to improve data quality and validity and eliminate one of the biggest risks associated with spreadsheet use; the lack of an audit trail.
High street bank cuts FCA and MI reporting time from 15 to five days
One High street bank has found that connecting its’ spreadsheets to the cloud has enabled it to streamline its practices without losing time or having to retrain members of the team. Faced with serious financial and time critical pressures from the FCA, the scale of the challenge facing the bank was daunting as one shared spreadsheet held 80,000 active cases of customers under review and 250 advisors were forced to read and write to it concurrently. Because of the severe performance and system outage problems, the bank had to find a solution that was innovative and that would not take months to implement.
By connecting their spreadsheets to the cloud, advisers now just handle their own cases instead of manipulating 80,000 records at a time. This has reduced the network traffic by a factor of x10 to x100. Each user sees one version of consistent, current data and only what is relevant to them.
This new infrastructure has enabled the programme to meet its commitment to the FCA and reduce the time taken to produce FCA and executive MI reporting from 15 days to five days and significantly reduce risk of incorrect data in reports.
Difficulties in ad hoc group wide reporting overcome
One of the biggest problems faced by groups that have acquired new companies or branches over a period of time, is a lack of uniformity of reporting and presentation. Because separate reports are required to meet the requirements of each audience, often, additional resource is needed to produce third party reports and these specialist reporting requirements are not adequately catered for by DMS providers.
We recently worked with a company that had circa 25 subsidiaries and divisions distributed around the world and the group finance team had considerable work to do at each month end to produce consolidated Management Accounts. There was a real reluctance to get rid of the many sophisticated spreadsheets built over the years that defined their process but they realised that a solution needed to be found to automate their monthly financial close.
Spreadsheets were used to consolidate the trial balance data extracted from each of their subsidiaries, which led to multiple copy and paste operations, to data quality risks as well as consuming management time. The main consolidation spreadsheet was a complex single point of failure. It had been created some years previously, by an accountant who had subsequently left the company and had never been fully understood by members of the current financial team.
As new subsidiaries were added the complexity involved meant real pressure to get the monthly management accounts prepared in a timely manner.
Benefits of an evolving system
The company explored a number of alternatives that held little appeal until they discovered they could connect their spreadsheets to the cloud. The immediate tangible benefit is the management time being saved and the correspondingly faster time to reliable accounts.
Users benefit from an evolution of their current system and the eradication of having to work with constantly out of date data and collaboration and versioning issues. Everyone sees the same live, up-to-date and clean data on their desktops.
The demand for combining the best of the old with the advanced technology of the new is a trend, which I believe will resonate in 2017. Businesses are tired of investing and embracing new, tech that fails to live up to the hype. Why reinvent the wheel when you can simply improve it? As we enter 2017, we should not overlook older business tools which simply need a new business model to remain valuable.
In 2016 we have seen businesses borrow from and add to older technologies in order to offer new solutions that combine the best of old and new worlds. This use of smart technology to deliver next generation Enterprise spreadsheets has the potential to put an end to a problem that has resulted in almost one in five large businesses suffering financial losses and ultimately will put power back in the hands of business users. The tidal wave against spreadsheets is finally turning.
Brian Donnelly, CEO, Synapse Information Limited