Spreadsheets are ubiquitous, heavily relied on by organizations to manage data and make critical business decisions. Spreadsheets are an excellent tool for independent analysis. The problem is that they are often stretched far beyond their home territory. Furthermore, spreadsheets tend to have limited scalability beyond the desk and the fidelity is constrained by the organization’s ability to invest in additional technology capability to manage its reliability.
It’s imperative to note that the goal of inputting data in a spreadsheet is not to get an answer, but to get the correct answer. Often a wrong answer is much worse than no answer at all. There are a number of features of spreadsheets that present a challenge to error-free analysis. It is extremely common for data to be added to a spreadsheet after it has been created. The augmentation of data can go wrong, rendering a correct spreadsheet incorrect. Even the most experienced practitioners, using all the armory at their disposal to prevent mistakes from creeping in as they work, will make common errors from time to time. The requirement in organizations to work under huge pressure to achieve deadlines makes the probability of error even higher. Some of these errors will be caught by the fail-safe mechanisms built in. But some will not.
Additionally, many spreadsheets take all night to compute. These computations can be complicated and commonly fail. However, when such spreadsheets are replaced by capabilities more suited to the task, it is not unusual for the computation time to be cut to a few minutes and the process much easier to understand.
Why Do Organizations Continue to Use spreadsheets?
The technology acceptance model holds that there are two main factors that determine the adoption of a technology: the perceived usefulness and the perceived ease-of-use. Perception need not correspond to reality. The perception of the ease-of-use of spreadsheets is to some extent an illusion. It is easy to get an answer from a spreadsheet, however, it is not necessarily easy to get the right answer. Thus the distorted view. The difficulty of using alternatives to spreadsheets is overestimated by many people. Safety features can give the appearance of difficulty when in fact these are an aid.
The hard way looks easy, and the easy way looks hard.
When Do Spreadsheets Go Wrong?
In a recent survey conducted by Daptiv, it was revealed that 76 percent of IT organizations still rely on spreadsheets for critical decision-making purposes. Spreadsheets are good when small amount of data needs to be managed. However, the "spreadsheet as database" is not always easy to maintain. At some point of enterprises will need specialized application capability to manage their database for managerial purposes. Research, such as that reported by Raymond Panko in "What We Know About Spreadsheet Errors", has found that most of the spreadsheets used by organizations contain errors—and that a considerable number of those errors are serious. In one case reported in Panko's research, the error would have caused a discrepancy of more than a billion dollars! Finally, academics have published studies of the prevalence of spreadsheet error and have sought to identify circumstances dangerous in the context of error and other circumstances that are regarded as safer. Therefore, unless spreadsheets are being used for single functionality, it must not be overburdened with complex calculations and codes.
One of the most widely used tools for project management in software teams today is the spreadsheet. Although fairly cheap and easy to use, spreadsheets are extremely vulnerable to errors. They hide problems that can hinder the success and create more costs than one has planned for. Here are some of spreadsheets’ inherent limitations:
To be fair, spreadsheets aren't the only models that contain errors. We all know that software has its fair share of bugs. But the sheer number of spreadsheets, coupled with "homespun" development, and the difficult of reviewing their logic, makes spreadsheet development the Wild West of the modeling community. If you are using spreadsheets for anything more than individual prototyping in your organization, I would recommend you to seriously consider replacing them with models that are more suitable.
In our day-to-day project management and PMO activities, the easiest and the most important thing to miss is plan for ahead what happens AFTER we cross the finish line. So technically speaking, once project managers hand over the reins of the completed project to the business owner, their job is just half done. For a project to be considered complete, project managers must focus on the other half, which is “Benefits Realization”.
Benefit realization is the confirmation that the value a project was expected to generate really does get delivered. In our everyday project management lives it is easy to get buried in details around task management, risk mitigation, resource capacity, balancing budgets and all the other moving parts. We often forget why we set out to do the project in the first place: the delivery of a product or service, an enhancement or improvement, or a capability. For example to meet some new regulation, standard or market demand. But what if, after we deliver the goods, and did exactly what the customer asked for, we realize that all the effort and resources we used to deliver the project don’t amount to what they were supposed to? That’s exactly what benefits realization is all about.
We’ve all heard of ROI – return on investment. It is the concept of an investment of some combination of resources (people, money, equipment, etc.) yielding a benefit to the investor. A high ROI means the investment gains compare favorably to investment cost. As a performance measure, it is one of the best methods to evaluate the efficiency of an investment. ROI does not exclusively have to be in financial terms. It can easily be an operational advantage, an improvement in position, or other positive change. In order to compare the efficiency of a number of different investments we need to compare like measures, which is why a financial ROI is one of the most commonly used. Unfortunately, without benefits realization, our ROI is simply a guess. And that is why benefits realization is so important.
I’ve discussed with many of our clients about this and have found out that there is a need for a wide degree of maturity around the realization process. This is an indication that while the concept of realization is gaining interest, it is still far from a mature practice. Which presents a great opportunity for those organizations that are not doing it – now is a great time to implement this practice.
How to launch a benefits realization initiative?
One of the best approaches involves setting goals, tracking against those goals and including a ‘hand-off’ step, similar to the passing of the baton in an Olympic relay race. Tactical steps you can take include:
One last point is that it isn’t always about the money. Sometimes projects generate other value, such as an improvement in customer satisfaction, or increase market share by launching a game changing product. It is important to be able to quantify the value of these types of projects even if they do not generate direct revenue or cost improvements. Many organizations call these ‘Level 2” or “Indirect Benefits”.
Finally, is a project complete without benefits realization? To the project manager who’s already run their marathon and marked the project as complete, I expect their answer to be ‘yes’, but common sense tells us otherwise. As a best practice, one of the most important factors in a projects success isn’t “how we did it” – coming in under schedule or under budget – but “what we did” – that the project delivered what it set out to do.