Managing IT

It's OK to be a spreadsheet junkie
Beverley Head, Information Age

Until it implemented an integrated enterprise management solution, travel guide company Lonely Planet was managing the business using 40,000 different spreadsheets.
It's easy to scoff, but Lonely Planet got to be a very successful international business with those 40,000 spreadsheets - it just believed it could do better if it had better management reports based on accurate and timely information.

In the past, business intelligence systems and their ilk have largely been the province of big business and government, but medium enterprises like Lonely Planet are now also turning to such systems in their search for efficiencies and agility.

According to Rob Wells, managing director of Business Objects, more than a third of the company's 2006 licence revenues came from small and medium businesses.
"The basic requirements and needs of the mid market are fundamentally the same as the largest organisations - they want access to information quickly and from a trusted source. And they suffer from having sales directors around the country who believe that their Excel spreadsheet is the truth and their core financial system is telling porkies," said Wells.

However, Associate Professor Beth Walker, director of the Small and Medium Enterprise Research Centre at Edith Cowan University, warns that there is no such thing as an homogenous SME, and for many small companies if the spreadsheet approach works, then there's little point in upgrading to a bigger more complex computer system on the vendor's say-so.

Although Australia has a huge population of small and medium enterprises, only a small percentage of them would be ripe for investing in business intelligence, according to Prof Walker.
According to the Australian Bureau of Statistics there are 1.86 million businesses operating in Australia. Of those, 1.79 million have fewer than 20 people working in them. A small fraction of those micro businesses are what she refers to as "gazelles" - fast movers with lofty ambitions - and many of them do have advanced information systems.

But for a great many more, "MYOB does the job". For those small businesses which actually don't want to grow (and this she claims is as many as half of them) installing information systems geared at growing the business can be counter-productive she warns.
"Whatever you do, ask if it adds value. If it does then it's probably a good idea. If it's going to take you time, and money with no clear benefit then it's probably not."
She said that a lot of the information systems that small and medium businesses do implement are required for compliance; for tax purposes or meet the requirements foisted by Australia's three layers of government. Staying a spreadsheet junkie may be just fine for many successful businesses.

"The mid market Australian firm still does it on Excel", John Hoffman, general manager of Altis Consulting confirmed. He believes though that businesses that want to grow, (and do )grow, taking on multiple product lines or services, or moving into new markets, will have to look at more sophisticated business intelligence tools.

Whatever the vendors and consultants say, even committed medium businesses find the migration from management by spreadsheet to integrated information system a challenge. Lonely Planet for example, found that in spite of its planning in advance of the migration to an SAP integrated information system, it was under-resourced in just about every area, and regretted not talking to other small and medium businesses about their experience in moving to integrated information systems.

And while many large enterprises have their own internal or consulting business analysts, able to identify the information reports required by managers, and translate that into an information systems specification for IT, smaller companies often struggle to crystallise what they want - or just as importantly know when to stop asking for more and more reports just because they can.
Michael Horsfall is systems developer for Perth-based Cash Converters. Like Lonely Planet his company wanted access to a single view of the truth. It had been running non-relational Domino databases along with a range of other data systems which held information vital to obtaining a clear view of the company's workings.

In the past, store managers were cutting and pasting data from the Domino databases into spreadsheets, and then sending these across to head office. "Management was saying that they had not got the information to help them make business decisions," according to Horsfall. After implementing Business Objects' Crystal Reporting he said there is a single view of the information available and "we have done a reconciliation report that was taking an accounts person three or four days and now takes 10 minutes".

Cash Converters has a particular need for improved reporting following the December 2006 passage of new anti money laundering and counter terrorist financing legislation which will require many businesses, especially those involved in financial services, to overhaul their reporting systems. Companies involved in lending, leasing, hire purchase, asset management (there are 70 designated services affected by the new rules) must maintain detailed records about customers of those services. Prof Walker expects many SMEs to get caught up in the new compliance regime.

Even without the regulatory stick, Doug Goethal technical director of eBI, believes that business intelligence is a growing issue for small and medium companies. But where in large enterprises business intelligence is championed by the IT director pushing upwards the benefits of technology, in smaller companies demand is often seeded by management according to Goethal.
The challenge comes in balancing management's hunger for more and more information reports with IT's ability to deliver. "It rips the efficiency out of the IT team - but it can turn them from being a cost centre to being a profit centre," Goethal said.

Michael Horsfall has limited the ability to create reports initially, although "In the future we'll be giving this to the managers to build the reports they want".

Gavin Cooke, director of technical services at Altis, warns against companies seeking too much information, and getting bogged down by reports, however: "If you have more than five key performance indicators then you are fooling yourself. We know of one business unit with 216 KPIs and the executives say they use the Powerpoint printout as a doorstop."

Cooke believes companies need to identify the handful of KPIs that they need to monitor and focus their efforts on those - but he warns that "As an organisation is maturing and developing the indicators will change."

For any organisation, of any scale, considering an adventure in business intelligence it is worth remembering that there is no off-the-shelf product; intelligence and insight comes from careful analysis of needs which then acts as the foundation for whatever technological solution most closely fits the bill. Sometimes, for some companies, that will still be a spreadsheet.

In any case picking the technology should be the last step taken when companies design a better information system. According to John Hoffman "In the real world, IT says 'good we've got a budget let's buy a new toy'."

Gavin Cooke stressed: "They should ask what problems the business is trying to solve, and identify the outcomes required and then the data and the people they need to provide those outcomes, and lastly the technology.

"I've seen BI projects where a company replaces one BI tool with another. It's like a builder saying it's a crap house because my hammer was useless."

To adapt his vernacular, it might not be a crap company just because of a spreadsheet. Business intelligence will often make a good company better, but it will rarely rescue a dud.