Death by Spreadsheet

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Spreadsheets – was it love at first bite for you? Nearly everyone uses spreadsheets in some form or another and for anyone involved in a pricing or finance team, spreadsheets are the de facto tool of choice. Since the launch of VisiCalc in 1979, the grid of rows and columns, formulas and their results have been the killer application for a generation of personal computer users in business.

If you’ve got it, haunt it right? And the reasons for the rise of spreadsheets are clear and well known. There are very low barriers to adoption, as when the software is included on nearly every desktop and laptop produced and the layout is intuitive, taking inspiration from notepads and calculators that are familiar to all. As a result, spreadsheets are ubiquitous in business and are used in many functions.

And it the broom fits, fly it – for a pricing team they are invaluable. A well-constructed spreadsheet allows a user to analyse the data whilst brokering a deal by rapidly calculating margins and discounts and changing the financial components of transaction with ease. With their excellent What-If capability, a spreadsheet exemplifies an agile approach to business modelling.

But Halloween puns aside now (as we’re running out of them), when we visit organisations looking to implement Configuration, Pricing and Quoting (CPQ) systems we get introduced to the people involved in pricing, and the spreadsheet-based models they have created or that they use.

We normally find that the users of the spreadsheet-based models encounter the following challenges:

  • Complexity – what was once a simple spreadsheet has now become a monster. This in turn leads to problems in…
  • Maintainability – very often its just one person who created all the logic, who knows how it all interrelates and who therefore owns that spreadsheet. This makes it hard to change as the business evolves. This can be even more dangerous with a single point of failure for the system. More importantly, what happens if the person who created and manages that spreadsheet leaves the business?
  • Data problems – it’s very rare for anyone to document or actively manage the data model for spreadsheets. This results in inconsistency, redundancy of information and has big potential for costly errors.
  • Version control – what’s the latest version? What are the consequences if the wrong one is used? How are they communicated, distributed and eventually retired?
  • Security – while password protection is possible, its a basic form of IT security. Given the commercially sensitive cost and deal information that these spreadsheets contain, a stronger approach to keeping data safe is really needed.
  • Scalability – Our good friend Frank Sohn makes a great point that spreadsheets can be an excellent short-term solution for CPQ however he too concludes that scalability is one of the major limitations for a growth or large enterprise.

So, we can see that for a pricing team, spreadsheets can be a great tool, but one that has some serious limitations for enterprise deal construction. And the constraints of spreadsheets don’t stop there -they extend to their use in the wider organisation, where our experience shows us that the problems can become amplified. When considering the “C” and “Q” of CPQ we see further restrictions of spreadsheet use:

  • Products are hard to define in a spreadsheet if there’s any level of complexity. Conditional rules are really hard to set up, and the user experience of a spreadsheet is rarely sophisticated enough for B2B sales.
  • Approvals are hard to manage too. We often see spreadsheets which need printing out with signature boxes for offline approval. In the age of e-signature and online approvals it’s hardly a cutting edge or robust solution.
  • Integration with related systems can be a big challenge. Sourcing data from spreadsheets and trying to meaningfully share it with CRM, customer service management, stock control, contracts and other supporting systems is often a real issue. Without integration, users will need to re-key data and manually check for accuracy. The human factor adds the risk of errors and wastes time.
  • Sharing spreadsheets is easy enough by email, or on shared file systems, however true collaboration with real-time updates can cause problems of concurrent access. In this collaborative age you need tools that let users work together on a deal.
  • From a sales perspective, spreadsheets don’t provide an effective way to promote cross-sell and up-sell opportunities to users.
  • High quality data driven documents simply can’t be generated easily from the data in a spreadsheet. This reduces the speed of response to the customer and misses the opportunity of providing well-designed, professional and relevant responses to customer’s enquiries for quotes and proposals.

Don’t get us wrong – spreadsheets are a really amazing tool. We love them and use them in our business. And we know many organisations that have an awesome blend of a professional CPQ system as the backbone of their deal construction process, using spreadsheets to deep-dive and perform iterative analysis when necessary.

Overall this is just about using the right tool for the job, and making a conscious, informed and mindful decision about what tools you employ. As your deal spreadsheets grow in scale and complexity, and as they reach out of the finance and pricing team and start to touch sales, just make sure you consider whether you are giving all your team the professional tools they need. Don’t leave it too late and suffer from death by spreadsheet – get your deal data out of Excel and into the CPQ cloud.

If you’d like to talk to one of our expert consultants about how CPQ could benefit your organisation please don’t hesitate to get in touch.

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