Enterprise Spreadsheet for Enterprise Planning

VentanaMonitor™

Summary

Cognos has introduced two Microsoft Excel extensions in its Enterprise Planning solution. One is an interface to Cognos Enterprise Planning - Contributor applications. The other is a module that makes it easy for individuals to load data from their personal spreadsheets into Contributor applications and incorporate it into a plan. The former is a new licensed product and the latter is included with a Contributor license.

Ventana Research advises companies to eliminate stand-alone spreadsheets from their budgeting process (see “Budgeting: Stop The Madness!,” 10/17/03). As an alternative, enterprise spreadsheets address the shortcomings of the stand-alone variety (see “When Good Spreadsheets Go Bad,” 6/15/04). We think budgeting and planning applications that offer both enterprise spreadsheet interfaces and web-based interfaces provide organizations with a high degree of flexibility to align software to their specific enterprise budgeting and planning processes.

Assessment

In our recent budgeting and planning research, we found that Microsoft Excel functionality was the most important feature users were looking for in a dedicated budgeting and planning application. There are two reasons behind this: 1) the desire to maintain existing spreadsheet model functionality and 2) the widespread familiarity with the spreadsheet interface. Ventana Research advises companies to eliminate stand-alone spreadsheets from their budgeting process. As an alternative, enterprise spreadsheets address the shortcomings of the stand-alone variety. We think budgeting and planning applications that offer both enterprise spreadsheet interfaces and web-based interfaces provide organizations a high degree of flexibility to align software to their specific enterprise budgeting and planning processes.

Many organizations have developed planning or operational models in Microsoft Excel that they do not want to give up. Companies can leverage their investment in these models and import them into Cognos Enterprise Planning without a great deal of difficulty. We suspect, however, that one reason companies have been reluctant to adopt a dedicated budgeting and planning tool is they would rather not have to do the “work around” and prefer no training to any training. Ventana Research believes becoming proficient in building Enterprise Planning models is not especially difficult for Microsoft Excel power users.

Moreover, there are times when it may make sense for these models to continue to exist in Microsoft Excel, while establishing persistent links from the spreadsheet to the planning system. There are three instances where this may be the case:

1. Complex operational models where generating information for the company-wide budgeting and planning function is of secondary importance. For example, a majority of treasury departments use Microsoft Excel for cash management and other treasury functions. In practice, these models would never be incorporated into Enterprise Planning, yet data elements created by these models are critical to the budgeting and planning process.

2. Models that are used infrequently or are generated for a specific purpose. Companies contemplating an acquisition, a new product line roll-out, a new distribution channel, or anything else that does not fit neatly into an existing planning model and does not warrant creating a new one immediately.

3. Personal models that build on information that is far more granular than the organization wants to capture, or that uses a personal calculation method, or simply incorporates individual formatting to suit personal tastes and requirements.

The electronic spreadsheet was the “killer application” that drove adoption of personal computers. In the quarter century since VisiCalc was introduced, spreadsheets have been used by the vast majority of employees that work with computers. Almost all people in finance or analyst positions within an organization are familiar with Microsoft Excel, so having this interface means companies do not have to provide training to end users to make them productive in the application. This is particularly relevant in the budgeting and planning area because most people participating in the process only interact with the system a few times during the cycle, which for a majority of companies takes place only once a year. Although our research has found that training people to use budgeting and planning applications is not difficult (particularly since most have a grid interface that behave very much like Excel), having a Microsoft Excel interface eliminates a barrier to moving to a dedicated application for budgeting and planning.

Cognos Enterprise Planning has coexisted with Microsoft Excel in that users have been able to import models from Excel into the system, and the application’s browser interface has many Excel features. However, these new additions enable Enterprise Planning users to work natively within an Excel environment when they choose to. Incorporating Excel spreadsheets into Enterprise Planning makes sense from a practical standpoint, and if it encourages more companies to adopt a dedicated tool rather than relying on standalone spreadsheets, Ventana Research views this as a good thing. However, users (particularly budget administrators) must be aware of the limitations that will always exist with Excel applications so they do not inadvertently create gaps or inconsistencies between a spreadsheet front end and Enterprise Planning.

Market Impact

Having an Excel interface will eliminate an objection that many companies have to adopting a dedicated budgeting and planning application, and will help to expand the market. It also removes a point of differentiation enjoyed by budgeting and planning applications that use Excel as their interface (e.g., OutlookSoft and SRC Software). By offering both Microsoft Excel and web-based interfaces for enterprise budgeting and planning, Cognos extends its ability to meet global organizations’ requirements.

Recommendation

Ventana Research urges companies to eliminate stand-alone spreadsheets as a tool for managing detailed budgeting and planning. Standalone spreadsheets are the root cause of most of the issues preventing the budgeting and planning process from becoming a more useful performance management process. We advise companies that are looking for a dedicated application that offers a driver-based approach to planning and the ability to support an Excel front end to consider Cognos Enterprise Planning.

Robert D. Kugel is CFA, VP & Research Director - Financial Performance Management at Ventana Research.