How FDs can take the risk out of spreadsheets

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 taxpayer around £60m. It is estimated that calculations made using spreadsheets 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 utilising cloud technology are set to allow finance directors to cling on to their beloved spreadsheets 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 IT and they get the control and flexibility they long for.

Connected to a complex cloud ‘back end’

One option is to industrialise them and transform them into Enterprise spreadsheets that are connected to a secure cloud server designed for group financial reporting and management information. This automates the entire close process, down to P&L, balance sheet, cash flows and other required reports, saving days of laborious and error prone consolidation.

This solves the problem of a lengthy and risky manual consolidation process and speeds up reporting by automating the ad hoc reporting process so 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.

The finance team can continue to enjoy the simplicity and comfort of using a spreadsheet at the ‘front end’ with a connection to a complex (but well-hidden and transparent to the user) cloud ‘back end’ that does all the difficult work. This eradicates, at a stroke, the problem of keeping 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.

• Reduces the reporting effort via automation of the ad hoc reporting process; ensuring data integrity and 100% accuracy. Running a report is a simple process with selection from a click drop down menu. Time consuming manual intervention is eliminated
• Existing spreadsheets and other disparate data sources (such as MS Access and core ERP) are integrated and reconciled into one solution
• There is no large scale data migration and therefore minimal disruption to daily business operations
• Multi-user functionality ensures all authorised users can access and update the same data concurrently avoiding issues with versioning, copy/paste difficulties and data integrity

20 entities will take minutes, not days to complete group reporting

In practice, entities can exist anywhere in the world and all are required to submit financial data to group finance at regular intervals. With Enterprise spreadsheets, each one is connected to a cloud server via a simple spreadsheet interface from which, data is fed and all the local formats are translated to a group chart of accounts.

The data is immediately available to view upon submission to the server so they can see a real-time consolidated position of the group. This approach means that the finance team can take immediate control of modifying the fine details of the financial consolidation process and associated adjustments such as defining currency conversion logic. It has the added benefit of ensuring formulae and rules are executed correctly as well as being supported by a full audit trail that logs every change involving accounts or administrative data, which is securely stored in the cloud server.

Combining the old with the new

The reporting challenges faced by group finance directors are complex to say the least and until now, spreadsheets have proved to be most ‘straight-forward’ solution for consolidation purposes and analysis. They are the easiest choice as users are already familiar with them, they are scalable and the IT department does not need to be involved whenever a new report is needed. When weighed up against an expensive enterprise solution, the spreadsheet invariably wins hands down.

The demand for combining the best of the old with the advanced technology of the new is a trend that is set to 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. 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.

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