Enterprise 2.0: Show me the money (a spreadsheet might help)

Looking at some of the early reflections on the Enterprise 2.0 conference, the point about return on investment (ROI) and benefits has come up time and time again.

Proponents of Enterprise 2.0 have heralded the shift in the discussion to this issue with offered few answers, but meanwhile the nay sayers continue to point and laugh saying ‘show me the money!’ These critics have pointed out that executives can see the tangible value of three-letter acronym systems, like CRM, ERP, MRP, etc, but not this vague slack sounding Enterprise 2.0 thing. The argument is that they don’t want this vague ‘social’ stuff, they want process specific systems that someone can give a no mucking around bottom line sales pitch business case for, using proper management sounding speak (e.g. speak like we do).

I’m going to step out of that crowd and suggest that perhaps we need to look at this a little differently. For the benefit of the nay sayers, I’ll try to stick with something they should be very familiar with – spreadsheets.

Historically (I’m talking IT years here), spreadsheets have been pretty much ignored by the research community. There is a small clique of researchers interested in spreadsheet risk (a real issue by the way, where financial transactions are concerned) and vendors who are interested in pointing out the problems so they can sell business intelligence solutions. But there is very, very little on the business benefits.

I had trouble finding recent figures, but today there must be absolutely millions of businesses around the world that quite literally run mission critical business processes using spreadsheets. If the City of London is a proxy for other global financial centres (PDF), then I think we can argue that the global economy runs on spreadsheets. In fact, a regulator actually stated:

“Spreadsheets are integral to the function and operation of the global financial system”
Which brings me to this point – the spreadsheet clearly has more than just some passing  value to organisations, it has vital importance.

But if this is true where is the business case for spreadsheets? Further, where is the neatly categorised list of definitive and all encompassing use cases? And I’d like a statement of ROI for each with that too.

Looking back at the history of the spreadsheet, the idea was inspired by observing the frustration and tedious process of a university professor creating a financial model on a blackboard. (hmm, sound like user centred design anyone?) Some people recognised the wider potential – an original review of VisiCalc said this:
“VisiCalc isn’t as easy to use as prepackaged home accounting programs, because you’re required to design both the layout and the formulas used by the program. Because it is not pre-packaged, however, it’s infinitely more powerful and flexible than such programs. You can use VisiCalc to balance

your checkbook, keep track of credit card purchases, calculate your net worth, do your taxes – the possibilities arc practically limitless. Using VisiCalc does require a minimum amount of programming skill, but it’s far easier to prepare a VisiCalc model than to write an equivalent BASIC program.

Who should buy this program? At $200, it is almost as expensive as an Atari 80OXL. Anyone who has need for more than one accounting package, however, would do well to consider buying VisiCalc instead. With a minimum of effort, you can have VisiCalc performing most functions offered by the home accounting packages, and then some.”
But today, spreadsheets are more than just about numbers. Like cockroaches, spreadsheet have continued to thrive despite the growing (perceived) sophistication of modern enterprise information system. They record data, drive barely repeatable processes, they are spread around by email systems and people use them to address problems that other systems fail to solve. I promise you, the success of every high end TLA system is backed up by spreadsheets. These spreadsheets, often combined with collaboration tools, fill gaps not just in the agility of those TLA systems, but they support more fundamental information sharing and collaboration so that people can actually use and make use of those same systems.

For example, I worked on a strategic IT project for a large, global company where some idealists wanted to push for day 1 reporting from their financial system. But other wise and experienced voices in this field pointed out that day 2 or 3 should be the real aim. Why? Because they needed to collaborate and resolve issues in the data that was coming in from different parts of the organisation first before they committed that data. Note, the point of the argument wasn’t that we shouldn’t bother with the TLA system and just use spreadsheets, but simply that we should look at the holistic processes and often social/collaborative work practices involved.

Bringing this back to Enterprise 2.0 [or what ever your social software term of choice might be] I’m not suggesting the spreadsheet is an exact analogy. However, there are many similarities worth bearing in mind, particular around the concept of emergence that is at the centre of the Enterprise 2.0 definition:
  • Its what people do with it that adds value;
  • What you can do with it is only limited by your imagination (I’ll let you think about the implications of this);
  • Once you have the software, it doesn’t take a programmer to apply those ideas, although you might need a few superusers; and
  • Implemented incorrectly, it can introduce risks.
If you still don’t agree, then I suggest you put your money where your mouth is: Have a go at suggesting to CFO’s that there is no sound evidence-based business case for the spreadsheets and in fact the evidence that does exist creates risk. The only sensible thing to do, and to avoid all this spreadsheet hype of course, is to immediately remove spreadsheets from the corporate network. And think of all that money we’ll save in licensing. That makes good business sense, doesn’t it?

What do you think?

8 thoughts on “Enterprise 2.0: Show me the money (a spreadsheet might help)

  1. My take on this is that there is and always will be a sound business case for spreadsheets in a generic sense. Here’s what I would say:* they are a general purpose tool (as you point out above)* when used well they permit dramatic cost savings (cost outs) when compared with other analysis methods* when used well they permit presentation of and access to data that may otherwise be impenetrable* they enable a productivity increase for most staff members.In summary – costs down, productivity up. And, in some cases, sales up too based on the presentation aspect. A true winning tool for business.Now, many of the same arguments can be made about the Enterprise 2.0 tools, too. It’s just that the distraction potential and learning time for the tools represents a major shift from spreadsheets.I’m not saying that these cannot be overcome, or that spreadsheets don’t have both of these problems, too. It’s just that these problems in Enterprise 2.0 land are just so visible, and as yet unsolved. Sit down with a blank wiki, or a blog or a “team workspace” or a micro-blogging/messaging environment and some users are overwhelmed by what needs to happen next.When changes do start to happen it can feel like a fire hose or sprint to keep up with what’s happening. Quite real problems. Quite real costs. Costs that initially diminish the business case because unless the change is well managed they erode the business value. And they can do so almost immediately.Interesting angle to take.Well done.As an aside, I heard an Excel guru make the point that almost any spreadsheet with a degree of sophistication that runs over 100 formula cells (and was unaudited) was likely to contain an error.That should really slow all of us down.

  2. John – so many points, I feel like I need to write another post to discuss then! 🙂 I believe your initial points are correct, but unfortunately there is little hard data to back up your assertions. Like you, I can only talk about what I’ve experienced, which would appear to back up most of your points. The only issue I’d deviate on is the ease of use argument. Similarly, any kind of user driven computing can create problems – but as you point out, we have new ideas for dealing with some of those issues with collaborative spreadsheet solutions. BTW the error rate in spreadsheets is well known by the some specialists, but most users are blissfully unaware.Scott – I read your reply to Oliver’s post and your other comments. Firstly, I’m certainly not a true believer in the sense I think you mean. Secondly, the point was about taking a different perspective to the question of value and business cases. Nothing to do with VisiCalc, except to chart the history of a tool (the spreadsheet) that is clearly critical in many organisations and often augments the success of big ticket systems, yet we lack the hard data to back up its worth but no one in their right mind is going to banish the spreadsheet on that basis. On the other hand try searching for “ERP failure” (for example) and see what comes up – I’m sure the CFO’s involved thought those projects looked good on paper at the start.

  3. It seems to me that trying to justify ROI is the same as any other IT implementation. Align the solution to business needs. Business projects create business value. IT is called upon to provide tools to help business projects succeed. If the tools help a project succeed, then they will are justified. I see social software as a tool that will continue to be used by the business for many projects. Keeping track of those projects’ success will further justify the software over time. If things progress as many of us expect, social software will become like email is today. How much do we spend each year on email without business justification? Email is a tool that the business relies upon to increase productivity. We all understand that intrinsic value today. Perhaps one day social software will be viewed in a similar fashion.

  4. Hi James. I appreciated your post and agree with your core point. I was reading this Fast Company interview with Roger Martin from Rotman School of Management – in a different way I think he’s making the same point, but in this case specifically related to “design thinking” (which to me is an important part of Enterprise 2.0 both in implementation and the value to business) – http://is.gd/4PRxp

  5. This obsession with direct ROI is paralyzing business in significant ways – it’s also an example of how loss of control at departmental level & centralization have (hopefully) reached their peak. Discretionary budgets are truly non-existent & strict command & control rules.

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