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Summary
Desktop spreadsheets have enhanced personal productivity greatly in corporations since they were introduced more than a quarter of a century ago. Paradoxically, though, they also cause users to waste many hours when using them in repetitive and collaborative enterprise processes. Moreover, desktop spreadsheets pose serious danger for data quality, creating issues that are difficult to identify and hard to eradicate, even with intensive checks and auditing. These data quality issues are business and reputation risks for companies that rely on them to calculate quotations, record data or create financial statements. Although companies have recognized these shortcomings, individuals have been reluctant to give up their spreadsheets because the ease with which they can create them outweighs, at least in their minds, the problems they pose over time. A new class of spreadsheet management software has come to the rescue of those who do not want to give up their spreadsheets and yet must be able to manage and control them. One company serving this market is Boardwalktech.

Assessment
Boardwalktech offers spreadsheet management software, a relatively new category aimed at addressing the issues that arise when people use desktop spreadsheets in corporate processes. Spreadsheets are ubiquitous in companies of all sizes around the world. They are inexpensive and versatile and provide an easy way to do ad-hoc analysis and reports, prototyping and other common business tasks. Tens of millions of people worldwide use them to manage and support a range of processes across organizations, not just in the finance department. They underpin sales and operational planning, supply chain operations and compensation management in addition to core financial processes such as treasury management and budgeting. 

Boardwalktech’s software enables companies to eat their cake and have it too by addressing the lack of data integrity inherent in desktop spreadsheets and providing the ability to manage and control  spreadsheets that underlie their business processes. Users are able to manage how they share spreadsheet data down to the cell level. As with any spreadsheet, cells linked from one (a quotation template, a budgeting template or an executive dashboard) can be linked to another (a master price list, a master salary and benefits file or spreadsheets maintained at individual business units). However, Boardwalktech’s software maintains referential integrity, so when rows and columns are inserted on either spreadsheet the cell reference is unaffected, and any changes to the linked spreadsheet update automatically. In processes where companies collect information from multiple sources, the software rolls up the data into a consolidated view in real time without this needing to be done as a separate process. Also, individuals can maintain cells or areas of a spreadsheet that link to other people’s spreadsheets while also having the flexibility of “sandbox” areas in the same spreadsheet to do whatever data collection and analysis they want for their own purposes.  Boardwalktech’s underlying database provides access control down to a cell level as well as versioning and audit trails. 

Boardwalktech addresses an important practical problem found in almost every corporation. While spreadsheets are handy, they pose three interlocking problems when used in collaborative, repetitive, enterprise-wide processes. First, controlling errors in data entry and formulas is nearly impossible. (You can get a sense of the magnitude of the problem if you do an Internet search on “spreadsheet” and “error.”) Second, the absence of effective controls makes consolidating input from multiple participants (typically by relying on e-mail attachments and the “save as” option for version control) increasingly difficult as more than a few people get involved. Third, the audit and control features available in desktop spreadsheets fall well short of the reliability and security needed in an enterprise setting. For important business processes, especially ones where the consequences of fraud or error are great, spreadsheets cannot control access with sufficient rigor or flexibility. It is difficult to uncover suspicious activity that is not apparent visually – changed formulas or hidden cells, for example. These defects create the risk of financial misstatements, mistaken decisions and errors and omissions that have implications for legal and regulatory compliance.

Although the best practice would be to execute a process using an enterprise application, it is so easy to set up a spreadsheet that it is difficult to persuade people to do otherwise. Many people understand these shortcomings but still are willing to accept them rather than taking the alternative route of executing the work in an enterprise application – even their existing enterprise resource planning [ERP] system. In the past, this decision has been easy to make because the complexity and cost of going this route has been unattractive compared to the “ease of use” and “free” access of spreadsheets.

Boardwalktech’s software has changed these cost/benefit calculations by providing a “third way.” Spreadsheet management applications reduce the cost and hassle of achieving greater control and accuracy while preserving the flexibility and ease of use of spreadsheets.

Market Impact
The spreadsheet management market is in its infancy, but it has the potential to become quite large because of the value of retaining the benefits of desktop spreadsheets while addressing their major defects. Ventana Research believes the market for spreadsheet management software may expand from about US$15 million in 2006 to US$500 million by 2011. Most vendors are still trying to build awareness in the market, and the competitive playing field is still level. Boardwalktech is one of several vendors that are attempting to develop and tap into this market. Others that offer discovery, management and control software include Cimcon, ClusterSeven, Compassoft, Mobius and Prodiance. It is not clear what steps other enterprise software vendors are considering, but were they to enter this business, either by developing their own product or acquiring one, it would substantially alter the market dynamics. For its part, Microsoft has not indicated its intentions. Its approach to addressing desktop spreadsheet issues centers on its Excel server and forthcoming PerformancePoint offering. While both of these help products address controllability and some audit issues, they compromise the ease of use and flexibility that spreadsheet management solutions offer.

Recommendation
Spreadsheet management software offers companies a way to keep familiar, easy-to-use spreadsheets while addressing their inherent error and control issues – issues that increase both costs and business risks. In the past there was little that finance and other executives could do to address these problems without having to incur the significantly greater trouble and expense of using formal enterprise systems. While we continue to advise companies to replace spreadsheets with those systems in their most sensitive processes (such as closing or post-closing activities), we assert that a best practice is to use spreadsheet management software to manage and control the hundreds or thousands of other spreadsheets involved in core business and finance processes. Finance executives in particular should familiarize themselves with the alternatives that are available and implement these solutions as soon as possible. We recommend they evaluate Boardwalktech’s software as part of this process.