Spreadsheets aren’t the answer for Finance Analytics

I just posted recently how Excel is still widely used for the budgeting and planning process in organizations. Then I received a research study from Ventana Research, titled “Finance Departments Still Lag in Using Advanced Analytics”, by Rob Kuegel. It is a well done piece that reviews the issues finance is having in adopting and producing advanced financial analytics.

 

Some off the key stats I found very interesting, especially in light of my last post:

  • Only 12% of organizations are satisfied with the software they use to create and apply analytics,
  • 71% of them use spreadsheets for analytics, a higher percentage than any other tool,
  • and 67% said spreadsheets cause problems in their use of analytics.


Once again we find the pervasive use of spreadsheets to perform functions they were never meant to do. Enterprise-wide processes that require gathering of data from multiple sources, and that need to be calculated and analyzed on multiple dimensions and shared across many users were not meant for the spreadsheet world.

 

Advanced analytics require a sound foundation

The first step in getting finance to advance their analytics is to have all the relevant data needed in a single source, one system of record for all the critical processes performed by the office of the CFO. One system that does financial consolidation and reporting, budget and planning, forecasting, and strategic and operational planning provides a single source for the advanced analytics organizations need without the need to create a data warehouse managed by IT to bring it all together. I think that for financial analytics to really provide value it needs to be owned and operated by finance because it needs to be dynamic and ad-hoc and have the financial intelligence built-in to understand account types, currencies, and financial KPIs.

 

Also, the tool to use present the final result is only as good as the data underlying it. Using spreadsheets to perform the processes, or to do the analysis is flawed. Having multiple ‘integrated’ systems that focus on a specific business process is flawed.  The real power of Financial Analytics is driven by having a unified financial performance platform as its foundation.

 

What are your thoughts? Can Financial Analytics be addressed with Excel?  Can it be done as part of IT’s BI strategy or does it need to be controlled in Finance?

 

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