To Bridge or Not to Bridge: When Excel Models Are a Better Path than ERP
More and more companies are contemplating either implementing a new ERP (enterprise resource planning) system or upgrading their current ERP system. With promises of full visibility, improved reporting and planning, and complete customization, the growing belief is that once implemented, ERP can deliver an eloquent, seamless, long-term solution to virtually any analytical need.
There is no doubt that a properly implemented ERP can make day-to-day operations and long-term planning more efficient, but ERP isn’t necessarily the answer to everything. Sometimes the bridge solution is your best bet! There is an emerging trend towards using Excel models as temporary, medium-term solutions to resolve immediate data and financial analysis, planning, and reporting gaps.
The Business World Is Changing
As complexity and unpredictability in modern global business increase at an exponential rate, agility, cross-functional visibility and collaboration, and insightful analysis have become fundamental aspects of organizational decision-making. It is no surprise that businesses of all sizes are looking to upgrade their systems.
Successful ERP implementation is a lengthy process, often covering anywhere from 6 months to 2 years after a vendor is selected. In most cases, the need for better reporting, analysis, and insights is identified early and can’t wait until ERP implementation is complete. The easiest and most common solution is an Excel model to fill the gaps.
Excel As a Bridge Solution
Complex issues can be effectively modeled in Excel with well-designed and constructed, heavily tested models to achieve the desired results. Whether an Excel model is expected to be used for months or years, in order to properly address business needs it is essential to spend the time initially in the planning and information gathering phases to fully understand how the business works and how the information will be used. It is equally important to audit and test the model prior to implementation.
A Best-in-Class Excel model will be intuitive, dynamic, flexible and transferable. It will have gone through extensive scoping and planning before design and construction even begin, with frequent stakeholder communications. After a detailed needs assessment, the development phase will include stakeholder reviews, feedback, and modifications until the model is near-complete. The final stages in development must include rigorous testing to ensure accuracy, completeness, data validations and proper data flow.
A considerable amount of time and effort goes in to developing an effective interim solution. Throughout the process, stakeholders invest in fully understanding their needs and gaining a deeper understanding of the data interactions. This ultimately results in a dynamic, fully customized, user-friendly model.
Oftentimes the interim Excel solution is a preview of what has been envisioned with the future ERP solution. And since all of the scoping and design has already been done, and stakeholders will be trained on all aspects of the model, when ERP comes online it should be an easy transition, right? Not so fast…
Misconceptions of ERP
Despite the many advantages of ERP, there are some key areas that need to be carefully considered before abandoning an effective Excel model that is performing exactly as expected and needed.
Customization is one of the most compelling aspects of ERP, but it isn’t necessarily what it seems. Customization in ERP typically refers to the modular makeup of the software, allowing an organization to implement and use only the functional pieces that are needed. This, in and of itself, is a significant benefit to an organization, but it doesn’t mean that the built-in processes within the software will fulfill the organization’s needs.
Frequently, out-of-box solutions require some form of further modification or strategic customization that can easily be underestimated or get out of control. Strategic customization within the software takes time, effort, expertise and money. More importantly, this type of customization can undermine the built-in best practices in the ERP software, potentially impact data flow within the system, and ultimately make future upgrades more difficult, risky and costly.
For complex issues or analyses that are somewhat unique to an organization or simply not part of an out-of-the-box solution, the amount of customization that has been built in to the Best-in-Class Excel model may not be replicable in ERP without compromising the integrity of the system, or even at all.
In certain circumstances, a Best-in-Class Excel model can and should be a highly effective, integral piece of the larger, intelligent, interrelated, cohesive ERP solution, enhancing proficiency, throughput and ease-of-use across the business.
Agility and Ease-of-Use
As a live, interconnected system that serves as a single source of information throughout the organization, ERP is excellent at consolidating data within an organization and improving visibility across departments.
Standard reports, such as income and cash flow statements, and dashboards are included in most ERP suites. On the other hand, to get the most out of reporting capabilities in ERP, BI (Business Intelligence) functionality, that gives users a better ability to view business trends and metrics, is an option that is generally offered as one or more additional modules and is typically not “out-of-the-box”.
Unfortunately, these BI tools, while very powerful, are still predominantly for elite users and not for average business analysts. Furthermore, without proper training, being able to pull and piece together information to create meaningful analysis within ERP is not as intuitive as one would think.
While standard reporting is normally part of the out-of-the-box ERP solution, most ERP software packages require some additional BI functionality to truly develop the types of reports and analysis that are critical for business operations. Although the consolidation of data in ERP puts every conceivable piece of information at the user’s fingertips, in most organizations there are very few BI power users that can use the functionality effectively. Far too often this expertise falls to IT, who, while being excellent programmers, do not necessarily have the proper level of business acumen, understanding of business flow or understanding of the business needs to be relied upon to develop the critical analytical reports the business will use.
The key users of the analysis need to be able to work effectively within the reporting system to interpret the data correctly, understand where the information is coming from, identify anomalies, and be able to undertake root-cause analysis. They also need to be able to react quickly to changing business needs and adapt reporting and analysis accordingly. Is the proper infrastructure in place to ensure the right people have the right level of training and support to use BI functionality effectively? Critical analysis should not be dependent upon the availability of one or two experts, nor an organization’s IT queueing system.
One of primary concerns around using Excel as technology is the ability to collaborate. Most cloud hosted ERP solutions have built-in controls for managing multiple users – allowing remote and on-premises workers to access information in real-time, at any time.
Historically, Excel has been limited in this area, whether because spreadsheets are saved locally and isolated from the rest of the organization, or multiple individuals are accessing the spreadsheet and saving different versions (albeit in a shared location), whereby change management and version control become issues. This becomes even more problematic when multiple individuals need to access and alter documents at the same time.
With the increasing popularity of cloud-based Office 365, issues with collaboration in Excel are being addressed. Because Office 365 is entirely cloud-based, Office files and programs can be accessed from any location on any licensed device, in real time.
In addition to improved accessibility, there are collaboration and versioning features of Office 365 that are also highly beneficial. With shared direct access rather than email attachments, anyone who needs to contribute to or edit a document or spreadsheet can work on the same version and get real-time changes as opposed to having to maintain multiple copies that must be combined. Versioning is another incredibly useful feature that saves each version automatically, allowing users to go back to an older version as needed.
Even without implementation of Office 365, with the proper design, protections, and file process protocols, many of the collaboration issues around Excel can be addressed.
The many benefits of ERP are undeniable – among other things, they allow businesses to run smoother by consolidating and protecting data across the organization and automating processes between functions.
As your business transitions through an ERP upgrade or new implementation, you may consider, and would likely benefit from, a Best-in-Class Excel solution to fulfill an immediate need. Having gone through extensive scoping, planning, design, construction and testing, this Best-in-Class interim solution will be an integral part of your business until ERP is fully deployed.
Before you abandon the technology that, having been built specifically for your business, is doing exactly what you need and want it to do, remember to consider:
- Can this technology be replicated in ERP without compromising the integrity of the data flow of the system?
- What is the ROI on ERP customization to reproduce this technology? Will the ERP solution be better than the Best-in-Class Excel solution?
- How will future ERP upgrades impact this customization or vice-versa?
- Will a BI add-on be necessary to replicate the technology? Are there sufficient BI experts within the organization that will be able to respond to the changing needs of the business with agility? Is there a willingness to invest in BI training for key users?
ERP in and of itself is not necessarily the final answer to all of a business’ needs. There are many circumstances where a Best-in-Class Excel model can and should be its own module – a highly effective, integral piece of the larger, intelligent, interrelated, cohesive ERP solution, ultimately enhancing proficiency, throughput and ease-of-use across the business.