One area I have focused on over the past decade has been spreadsheet alternatives. I've been using spreadsheets for over 30 years and for most of what I do it is an indispensable tool. However, desktop spreadsheets were designed for individual productivity - they do a poor job when they are used in repetitive, collaborative enterprise-wide applications. In addition to being notoriously error-prone, they are a poor tool for planning, reviewing and reporting on business operations because desktop spreadsheets have a limited ability to handle more than a couple of dimensions at once. Over the years people have developed adaptations to the desktop spreadsheet's inherent weaknesses. Usually, however, the spreadsheet model designs are very brittle; that is, making changes often will 'break' the model and require workarounds and time-consuming restructurings. Worse, we find that highly experienced users (for example, those people that have been using spreadsheets for five or more years and spend at least half their working day working with them) fool themselves into thinking the time-consuming things they do to get around the limitations of spreadsheets as evidence of their superior productivity.
I have written before about Quantrix and its Data Navigation capabilities, a spreadsheet alternative that I believe represents a useful compromise between the usability of the desktop spreadsheet and the power of a traditional business intelligence tool. I recently had a conversation with a customer of theirs - a large financial asset management company that at times acts in a merchant banker/private equity capacity, investing in businesses along with its clients. In other words, these are not investments in passive asset classes but one where the investment managers have an active participation in running the business. For this reason, the number of variables they need to analyze and record go far beyond the set of data that portfolio managers typically work with. Having an active management role, they need to plan, set benchmarks and review results for the underlying business. Because it is a business, it will have revenue, expenses, accruals, non-cash expenses, interest and taxes to consider (that is, a full set of accounting data and the need to produce a full set of pro-forma basic financial statements). Because it is a business, you need to be able to extract data from financial and other enterprise systems. As conditions warrant, cash will be distributed from the business to the investors. Since it is an investment portfolio, specific assets may be purchased and sold by the business and this will happen much more frequently than it would with a business operator. Consequently, he models are large - typically ranging from 40 to 80 million cells. On top of this, since it's an investment portfolio, the manager needs to provide the investors with ongoing, periodic reports tailored to each investor's investments. It's a demanding list of requirements.
You could try to produce these sort of reports with spreadsheets but it would be time consuming and painful. Ultimately, you'll make compromises (less detail, reduced frequency) or use the time of a lot of skilled people on a non-value added activity. Indeed, the customer had been producing these reports using spreadsheets before adopting Quantrix. The difference is that now it takes one-third of the time, requires only half as many people. On top of that, the reports are more detailed and now can be better tailored to specific client requirements.
You could try to produce the reports and do the analyses and calculations using a BI tool or perhaps a dedicated planning application. However, you would need to have associates and analysts who were well trained in using these tools (an unlikely scenario) and spend considerably more implementing the system. Quantrix does require training, but considerably less than BI tool: the customer indicated the people in his organization were up to speed in about a month. I believe the increased productivity should more than make up for the time invested.
Although the use case example I've mentioned is specific to the asset management business/financial services sector, I think it applicable to a wide variety of businesses, especially in bringing together financial and operational planning elements. Desktop spreadsheets are enormously useful but they should not be used for everything. Companies that are using spreadsheets to do even moderately complex business planning and analysis should look into Quantrix.
Let me know your thoughtsor come and collaborate with me on Facebook,LinkedInand Twitter.
Robert Kugel CFA - SVP of Research