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Summary
Ventana Research recently completed benchmarking research into how companies use electronic spreadsheets. People use this software extensively for a range of activities, foremost among them reporting and analysis. While spreadsheets were designed to make ad-hoc reporting and analysis easy, we found numerous issues that illustrate why they are a poor choice for recurring financial and management reports. By their nature, spreadsheets lack data and referential integrity; this inherent weakness makes it difficult to address the issues they pose without replacing spreadsheets with other technology. Until recently, the alternatives were too cumbersome, especially for end users. Now, however, replacements for spreadsheets exist that make it possible for end users to work with spreadsheet technology in a more controlled environment.

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One routine use of spreadsheets is as a reporting tool, and they have no equal when it comes to ad-hoc reporting. Yet when used for recurring reports, especially those that are passed around among workers, they become error-prone time-wasters. In companies that have business intelligence (BI) systems in place, people typically use reports as the starting point for spreadsheet-based analysis and communication instead of using the BI tool. This situation exists because most business users have not had (and do not want) the training needed to use traditional BI reporting systems.

People also grab data from central IT systems and use it to perform additional analysis to create presentation materials. Often the changes they make are not simply the addition of a “percentage change” column but the creation of pivot or dynamic matrix tables that incorporate data filters or live charts. Some users may even incorporate Visual Basic code to automate additional steps in a process. When reports become this complex, many things can go wrong. For example, half the participants in our research (sponsored by Actuate and Compassoft and media partners BI Review, DM Review and Intelligent Enterprise) reported they find major errors in data and formulas in the most important spreadsheets they use. Slightly more than half (54%) said duplicate versions of spreadsheets are common. Four in 10 said out-of-date data is always or frequently a problem.

When we asked about potentially useful improvements, the second-most popular response (after automating the process of finding errors and broken links or macros) was to automate the design and delivery of reports people receive in spreadsheets. This choice was particularly popular with people who work in IT departments since they most frequently confront the spreadsheet-driven reporting problems. Here again, there are products that facilitate this improvement and, particularly for relatively large companies, are practical to implement from the standpoints of cost and IT support requirements.

Assessment
For years, companies have used spreadsheets for reporting and analysis, often in ways for which the tools were not designed. As a result, organizational productivity is been held back and individuals battle errors, out-of-date information and dueling spreadsheets with conflicting data. For years, companies and their employees have been willing to live with these issues because there have not been real alternatives. Today, however, practical solutions exist that enable companies to automate the creation of their complex and important recurring spreadsheet reports. For their own good, companies – in both their finance and IT organizations – ought to make the effort to understand the available options that can increase employee productivity and reduce problems in data integrity and data quality.

Related Research Notes
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Resolving the Spreadsheet Paradox
Practical solutions to spreadsheet problems exist

The Better Spreadsheet
It’s possible to retain ease of use while increasing control and accuracy

Scoping Out the Emerging Spreadsheet Management Market
Ventana Research forecasts rapid growth in demand through 2011

Midsize Companies Need Better and More Visible Information
Research shows considerable gap between what they have and what they need

A Better Spreadsheet Alternative
Actuate’s e.Spreadsheet Addresses Standalone Spreadsheet Shortcoming