No doubt about it, we live in a future straight out of the Jetsons. Self-driving cars? Check. Robots to do my vacuuming? Check. Smartwatches? Check. The only thing still missing is my personal jetpack and weekend vacations to the moon. A guy can dream, can’t he?
But despite living in a bright and shiny future, many finance teams still struggle with a reporting issue that’s straight out of the Flintstones. I’m talking about data accuracy.
According to the Adaptive Insights CFO Indicator Q4 2016 report, more than half of CFOs say they’re still generating reports by exporting data out of their enterprise resource planning systems and into Excel. Now, Excel is a great tool. But static spreadsheets have three major drawbacks that make accuracy an issue: human error, disparate systems, and version control.
The spreadsheet struggle
Let’s look at human error first. While everyone tries their best, mistakes are bound to happen when people have to copy and paste numbers from one spreadsheet to another, manually input numbers, or link up multiple cells in complex formulas. Just one typo can throw off all your calculations—and your results.
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I remember personally reviewing my 25-tab spreadsheet after submitting my estimate for a $350 million direct material budget. My audit found an error in one cell. Out of 25 linked tabs, I had one error. What should have been a formula was a hard-coded number. Well, that error increased the budget by $11 million. I thought I was going to be fired.
So why are we in finance building spreadsheets by hand in the first place? That brings us to our second issue: noncompatible systems. Not only do diverse systems force us to cobble together spreadsheets; they also introduce inconsistencies in metrics, data, and calculations.
And once you email that spreadsheet off to get input, accuracy completely flies out the window. As multiple copies are worked on by multiple people and emailed back and forth, it’s impossible to know who entered what data, where their numbers came from, or whether they accidentally changed something they shouldn’t have. In fact, often it’s impossible to know which version of the spreadsheet is the most up-to-date.
I am sure all of us in finance have had the problem of sending off spreadsheets to be filled in only to have them come back with actuals changed, formulas missing, and broken VLOOKUPS! What was supposed to be an easy aggregation of data now becomes a half a day Sherlock Holmes investigation of who broke the formula and why numbers don’t tie together.
The high costs of spreadsheets
Now multiply these accuracy issues by the dozens of board packages, quarterly performance reports, financial statements, business unit P&L statements, and more that a finance department creates each year, and you can see why verifying accuracy has become such a problem. It all comes down to time.
As your team has to produce more reports using more data from more sources, fixing source system challenges and data-gathering issues to improve accuracy should be your No. 1 priority.
Clarity from the cloud
As you can see, CFOs still relying on static spreadsheets need to move into the future if they’re going to have a hope of running a finance function that can keep up with tomorrow’s challenges.
The first step is automation. Rather than requiring you to manually input data or email spreadsheets back and forth, cloud-based software can automatically pull data from all your sources to reduce errors. Not only will this save your team hours of time, but you can then see exactly where the data came from to make verification a snap. You’ll then have more time to do things like drilling into the data—even down to the transaction level—to reveal valuable insights.
In fact, once you completely automate your data collection and ensure integrity, you’ll be able to create a single source of truth for your company. While it might sound like one of the Jetsons’ wildest visions of the future if you’re still slogging along with spreadsheets, trust me, it’s possible. With it, you’ll have all the accurate data you need to plan and predict your own future. Hopefully, one that includes jetpacks.