• Michael Sena

Why so many firms use inefficient spreadsheet systems?

Even when your company hires Excel Experts & VBA Programmers, inefficient spreadsheet systems might hinder the performance of your teams for reasons you might have not considered.

This article describes the mechanisms that preserve and hide analytical inefficiencies, depraving Company Directors from accurate intelligence and Specialists from the well-organised work environment.


Introduction


Company budgets quite rarely include performance improvement position. Vertical information flow often fails to capture the decreasing efficiency of Excel-based systems and processes. That disincentives analysts and their line managers to drive spreadsheet automation and standardization, preserving antiquated and time-consuming systems of broken Excel files.


1. Lack of awareness


The headcount growth limits the agility of change and identifying the root causes of inefficiencies. The higher we go in the company verticals, the less granular work efficiency perception is.


A Financial Analyst knows all the report production steps. The colleague covering for their sick leave has a rough idea and uses some workarounds. The line manager captures and benchmarks workloads and addresses roadblocks. By the time the information gets to the department lead, it is often aggregated or simplified to only influence resource allocation decisions.


The people in power to initiate change don't get to use it, line managers are incentivised to pursue short-sighted goals and analysts work inefficiently, committing avoidable and costly manual errors.


2. Budgeting constraints


On top of information asymmetry, traditional budgeting methods tend to not capture the productivity and focus on cost reduction, failing to account for value creation as outlined in this CIMA publication about the Beyond Budgeting.


It pays off to consider the cost/benefit ratio, project ROI, output quality and work sustainability as well. If automation and standardisation of financial models would make our team of 10 analysts save 10% of their working time, it's worth the effort. It's like magically creating a new, full-time employee that doesn't cost us extra money and relieves other colleagues from boring elements of work.

Even if you hire an external Spreadsheet Consultant or VBA Macro Programmer the investment would typically break even in less than 12 months.


3. Status quo


Let's now focus on people directly involved: line managers and their direct reports. Even if they realise the company benefits of innovating spreadsheet-based processes and systems, they would rarely be incentivised on the personal level to engage in it. Despite clearly benefit the company, initiating process and performance improvement poses for them risk more severe than the potential benefit. That encourages taking no action and not paying attention to the elephant in the room.


4. Case study


Case in point? A team of Business Analysts having to manually process data and produce reports due to use of old, broken templates and no deployment of VBA macros.


The Analysts would like to focus on producing actionable recommendations, fostering cooperation with other departments and creating more granular dashboards, but they spend 85% of the time on copy-pasting, manual data cleansing and handling errors. They are however afraid that change may:

  • make their work redundant

  • replace them with software developers

  • introduce technical complexity

  • temporarily require more work

  • simply fail to benefit the company.


Their manager of team leader might share some of the above concerns and also worry about:

  • the shrinking of the team (possibly lower responsibility, prestige, salary)

  • being held accountable for the failure

  • not having sufficient decisional power.


Even if the entire team and manager would want the change or be aware it's inevitable, they might be afraid to suggest it, given the uncertainty of what the other party decides.



5. Equilibrium - prisoner's dilemma


This situation is often a variation of the so-called prisoner's dilemma, widely described in the Game Theory, further complicated by the delay of gratification. In the short run, it is for both sides a choice between the nuisance of inefficient work and additional effort required to initiate change. It's a bit like having a leaking or partly-clogged pipe, but instead of water, it delivers data and intelligence. You can live with it, but it's not efficient and problem won't solve itself.



If the team could consult with the manager and they would all be willing to take the initial risk and additional work, they would obviously agree to change it. In reality, however, there would be also uncertainty over the other party's decision and the risk associated with it. Especially when successful change might mean just a pay rise, while failure being made redundant.



6. The remedy

So how to fight with antiquated Excel-based systems beyond ad-hoc spreadsheet repair?

Here are some useful methods:

1) Create an employee-friendly, non-judgemental system to encourage improvements. Recognise and reward initiators and enablers, even let them take some small risk

2) Foster communication and encourage feedback across seniority levels. Let employees review their managers. Allow the upper management to see processes through the Junior Analyst's lenses


3) Define process ownership and encourage intrapreneurship. Include process and system improvement in the job descriptions of managers and analysts. Let them know what level of authority they have


4) Don't allocate 100% of your analysts time to production of deliverables. If they create reports and dashboards all the time, they would not follow the Kaizen philosophy of continuous improvement. Allow for other fruitful activities that build know-how and long-term value, such as procedure documentation, workflow design, employee induction and succession planning


5) Consider involving an expert external to the underlying challenge. That reduces bias, prevents conflict of interest and detaches strategical decision making from operational focus. You might consider for that role an employee from outside of the department or hire a Spreadsheet Consultant skilled in process improvement.


This article is a part of the article series, uncovering how to use the full potential of Excel & VBA macros to make work efficient and drive user-friendly automation. Read this eye-opening guide to find how can you future proof your department with Excel by refusing to play Spreadsheet Jenga.

It has a galore of useful facts and you can learn which popular TV host fears Excel.

Follow us on LinkedIn to see more articles like this one. If you are looking for MS Excel Experts or VBA Programmers to escape the spreadsheet prison or just have some old Excel files repaired and automated, contact us here for a free quote.


Author:

Michael Sena.The founder of SENACEA

– Microsoft Excel & VBA Consultancy

and Training Services Provider, based in London City, operating in the entire UK.