CFOs are Caught in a Spreadsheet Spiral
By Henry Umney, Director, ClusterSeven
CFOs are caught in a spreadsheet spiral whirlwind and it seems that they are unable to find a way out of it. This is greatly impacting and even exacerbating the challenges that finance departments face in meeting the reporting demands from internal and external authorities. This a finding of the latest research by the FSN Modern Finance Forum entitled “The Future of Financial Reporting Survey 2017”.
The survey shows that there is a high dependency on spreadsheets with 71% of organisations using the tool to collect data across business units. But of course, given the volatile economic environment and evolving regulatory landscape, finance departments often need to develop new or change existing business models. Most businesses deploy sophisticated enterprise systems, but these technologies aren’t able to deliver against the agility demands of the organisation due to their complexity. 46% of organisations today are dependent on the IT function to make amends to their reporting structures in these enterprise systems. This causes delays, leaving CFOs with no option, but to resort to spreadsheets to fill the functionality gap and use these end user computing (EUC) applications to plaster over the reporting processes. This cycle continues endlessly.
Spreadsheets are used for a wide variety of financial processes, data manipulation and aggregation with multiple information sources feeding into these applications. The problem with unstructured and uncontrolled use of spreadsheets is that it becomes difficult to guarantee the accuracy of data residing in these applications. Definitive polices and controls around spreadsheets usage is lacking in many organisations; and consequently, there is a lack of visibility of the data lineages and interconnections among spreadsheets and other EUC files. This greatly increases the risk of the use of these tools for precise financial reporting as typically anyone can create a new business-critical financial process, with no checks and balances to ensure accurate data usage in the model.
On the other hand, by adopting technology, finance departments can institute end-to-end control of spreadsheets across their lifecycle, transparency around their data and data lineage – from creation through to decommissioning. Additionally, they can ensure that the business-critical processes residing in spreadsheets are appropriately incorporated into the core enterprise systems at the right time, based on organisational and regulatory requirements. This approach helps maintain ‘one version of the truth’ at all times in the business; and breaks the spreadsheet-spiral that is challenging many CFOs and their finance departments.
An infographic of the findings on this topic is available.