How to Move Beyond Spreadsheets to Improve Operational Decisions

Many mid-sized businesses rely on spreadsheets for operational analysis, planning and budgeting. Soon they are drowned in multiple versions of spreadsheets, making these processes chaotic and error prone. They also find that their spreadsheets, which were extracted and created perhaps a day ago, don't have the most current operational data. As a result they often feel that they don't have their finger on the pulse of their company's operations to quickly make enough right decisions. Affordable analytics and planning technology can address this issue. However many mid-sized organizations don't have the budgets, resources and expertise to deploy such technology. This article identifies key issues with using spreadsheets for planning and analytics processes and shows a roadmap to deploy technology in an affordable manner to address these issues.

Why Beyond Spreadsheets?
In order to put this in the right business context let us start by evaluating the key strengths of a mid-sized enterprise, as well as their key constraints.

• Agility: The ability to move quickly to take advantage of a new market is one of biggest advantages of a mid-sized enterprise. Because of less organizational bureaucracy, such organizations tend to be closer to their customers and can very quick allocate resources when they sense an opportunity to introduce a new product or service. However such an organization also has limited resources and hence cannot afford to makes mistakes. Taking advantage of this agility attribute requires that executives have clear visibility into what is working well, so it can be quickly capitalized and what is not working well, so it can be rapidly addressed.
• Focus: Unlike large enterprises, mid-sized enterprises sell a narrow range of products and services. But such a sharp focus comes with a price -- there is very little room for placing wrong bets. Maintaining a very high batting average requires that executives stay very close to their customers, products and the market. Continued success lies in getting everyone within the organization on the same page, using the same set of assumptions and seeing the same version of the truth.
• Profitable Growth: Mid-sized company executives need to find a way to get profitable and sustained growth in their business. Otherwise they risk their organization either being made irrelevant by other competitors or being swallowed by someone larger. Profitable growth is a balancing act of multiple levers that executives have at their disposal. Pulling the right levers on a consistent basis requires clear insights into their business, so that they can prioritize the most important issues and then make diligent and informed decisions to proactively address them.

How does a typical mid-sized enterprise get these business insights today? Information needed to make such decisions is typically within their enterprise business systems, but not easily accessible. Most mid-sized companies use manual methods to gain insights -- they start by extracting this data into one or more spreadsheets, massage the data in them manually, and then email these spreadsheets around the company. These spreadsheet-based reports serve as the nerve center of what is happening across their business at various levels of details. Soon there are multiple versions and the entire organization is drowned in spreadsheets -- embedded in emails and in personal desktops/laptops.

In addition, spreadsheets do not have checks and balances when entering or updating data, so errors can creep in easily, creating a potential accuracy issue. As a result, mid-sized organizations find their planning and analysis processes to be chaotic and error prone. Due to delays in manually creating spreadsheets, they also find that they often don't have access to the most current operational performance metrics. Due to the nature of spreadsheets, they have to go to different spreadsheet to 'drill-down' to get to the root of the matter. As a result, it becomes challenging for them to have their finger on the true pulse of their operations to quickly make decisions or course corrections. Very often data-driven decisions get replaced with gut-based decisions.

How Business Intelligence Addresses Spreadsheet Chaos
Business Intelligence or BI addresses all the issues listed above for mid-sized companies. BI helps turn data from financial, manufacturing and sales systems into useful and meaningful information; and then distribute this information to those that need it, when they need it, so every manager within the company can make timely and better-informed decisions. It enables mid-sized companies to leverage their agility advantage by succinctly surfacing what is working and what is not on an ongoing basis and showing their impact on your business, so managers can correctly prioritize and rapidly act/react. It enables focus by providing every manager within the organization with the same version of truth, so there is alignment between strategy and operations and any disconnects are eliminated. Finally, it acts as an enabler for profitable growth by providing managers with an in-depth analysis of their business, as well as a single view of the plans, so everyone is on the same page and has a finger on the pulse of their operations. Facts instead of gut-feel drive decision making process.

So what are the capabilities of a Business Intelligence System? They include:

• Operational reports that are run on a regular basis. An example might be a supply chain planning report showing monthly demand forecast by product line, by geography and by channel.
• Dashboards can help users quickly visualize the trends and spot issues using charts, gauges and red/yellow/green light statuses.
• Ad-hoc query enables users to answer question such as, "What does actual demand compare with demand forecast for a specific product group in Japan last quarter?", or "How much of a specific part do we have in inventory?"
• Advanced analysis allows users to view data across multiple classifications or dimensions such as product, customer, region, time period etc. and slice-and-dice the data to look at various combinations, such as the sales in each region for December or which products each customer purchased last year.
• Scorecards monitor business metrics and key performance indicators (KPIs) such as customer satisfaction, profitability, and forecast accuracy per product group.
• Budgeting and planning allows you to create top-down and bottom-up plans by cost centers/general ledger codes, collaboratively finalize them and publish them to the team to monitor and manage and track ongoing performance against such plans.

However, with limited IT resources, budgets and expertise, how can a mid-sized organization deploy such a solution?

Roadmap for BI and Planning/Budgeting for Mid-sized Organizations
We suggest a multi-phase deployment roadmap. This roadmap ensures that mid-sized organizations can start with small steps, achieve success and then build upon their success. It also enables the organization to prioritize high impact areas and incorporate potential change management issues.

From our experience, a suggested roadmap for three phases of BI deployment is:

• Phase 1 (Crawl): The objective in this phase is for organizations to become comfortable with BI Technology. Hence they should focus on deploying those aspects of BI that can have an immediate impact on their daily decision making, while providing the basis for organizational learning. We recommend in this phase mid-sized organizations deploy executive dashboards and simple operational reports using the BI technology. Examples include:
• VP of operations begins to get a report of demand forecast for new products by regions
• VP of finance begins to get a weekly report on revenue, receivables and payables, as well as dashboard visibility into budgeted vs. actuals for revenue and expenses at various levels of detail
• The CEO and his staff have access to executive dashboards
• Phase 2 (Walk): The objective in this phase is to build upon the success in phase 1 and expand the scope of BI to include operational reporting, detailed dashboards, ad-hoc search query and ad-hoc analysis, as well as budgeting and planning. Examples of use cases include:
• The VP of Operations and his staff begin to get operational dashboards and reports that provide up-to-date information on inventory turns and gaps between demand and supply for key customers.
• The finance organization gets access to reports and dashboards for margin analysis, cash flow projections etc.
• Executives can do search-based ad-hoc analysis by entering a few keywords such as 'sales of fusion refrigerator" in a search box and the BI system finds and presents the most relevant search results as well as automatically generates the chart that best represents the information.
• Finance organization creates a streamlined and accurate budgeting and planning process, where department managers and the finance organization work collaboratively to create and finalize the budget
• Phase 3 (Run): The objective in this phase is to achieve pervasive use of BI -- so all decisions are made on facts rather than intuition. In this phase, mid-sized organizations can expand BI to mobile devices and roll out ad-hoc query and analysis to all department business analysts.

Summary
A BI solution enables mid-sized organizations to address the spreadsheet chaos and provides them deep and clear insights into their company to help them proactively identify, prioritize and address issues; improve organizational alignment and enhance resource utilization. With better operational insights and an effective planning and budgeting process, mid-sized organizations can more effectively leverage their core strengths such as agility and focus to grow profitably and take market share away from the competition. The roadmap provided in this article enables resource & budget constrained mid-sized organizations to start small, get key learning and success under their belt and then build upon it to make fact-based decision making pervasive within their company.

Mindy Fiorentino is Vice President of Marketing for SME (Small and mid-sized enterprises) Business Analytics solutions at SAP.