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Incombustible infrastructures: dousing the risk of spreadsheet fires in the financial sector

Incombustible infrastructures: dousing the risk of spreadsheet fires in the financial sector 41

By Gabriele Albarosa, CEO, LiveDataset

It’s no surprise to anyone that banks and financial services organisations face an immense amount of auditing. When numbers are your business, your books need to be immaculate.

There are gargantuan systems developed to facilitate this process. Huge business-wide software packages, often procured at great expense and after extensive consultation, designed to streamline and centralise the control of business data. In theory, they reduce risk and save a huge amount of time.

That theory doesn’t take into account the ubiquity of spreadsheets across such organisations. In fact, they’re so widespread that it doesn’t often occur to us to challenge them. Research from FSN suggests that 43% of organisations don’t know how many spreadsheets they use. It’s not just for menial roles either: NetSuite Brainyard suggest that CFOs spend over two hours a day in spreadsheets.

While they’re considered quick solutions to irritating issues, these unscalable documents are actually a real threat to governance, planning and compliance processes. Think of them as a fire hazard: unproblematic until they’re under serious pressure… at which point they could burn the whole system down.

Little fires everywhere

So: why do so many banks and financial institutions tolerate this? How can we leave fire hazards strewn throughout our virtual offices, only to be taken by surprise when they ignite?

For the most part, it’s a marriage of convenience. Spreadsheets provide a common and easy means of organising data, taking mere minutes to kick into some sort of functionality. They’re fast, easy, cheap, and familiar, giving you enough tools to organise problematic datasets.

That’s all well and good in and of itself. But if you’re relying on such mechanisms to feed into a wider industry platform, you’re using spreadsheets for applications that they’re not really designed for. Whether it’s budgeting and reforecasting, debt tracking, operational scorecards or compliance reviews, short-term spreadsheets quickly morph into long-term processes — and that’s where problems start to arise.

For one, their independence from wider business systems makes the organisation extremely dependent on the individuals who had developed the spreadsheet for quality control, accuracy, and keeping the document up to date. The money, time and training invested in a comprehensive digital transformation programme can be wasted if new systems are dependent on flawed data.

Furthermore, their publicity is at the discretion of the author. If that employee leaves the business, or spends time off sick, the knowledge and convenience facilitated by that spreadsheet can be lost entirely. Consequentially, for these reasons, managerial staff are often unaware of their existence.

All of this amounts to a combustible cocktail for human error. It’s possible for audit processes to be entirely compromised due to their reliance upon flawed data, compiled by an employee who gatekeeps its correction. For financial organisations, that’s a severe threat.

Fire prevention

What banks and financial institutions need to protect themselves from such operational danger is a more sophisticated approach to the integration of these little conveniences. Spreadsheets aren’t an evil in and of themselves – but they cannot be allowed to undermine department-wide solutions.

In the same way that we treat these obstacles as fire hazards, we can apply a safety-first ethos to identifying, handling, and eliminating them. A fire prevention approach can be summarised in three actions: “Anticipate. Act quickly. Adapt.” When we start to think of rogue spreadsheets as little fires throughout a business, that approach begins to make a lot of sense.

  1. Anticipate

The first step is always about understanding the status quo and identifying the problem areas, establishing the facts needed to make informed decisions. It requires employees across the department to buy into a self-improvement ethos, providing as much detail as possible about their day-to-day process so that the organisation can identify its weaknesses effectively.

This is an ongoing process because, in a dynamic organisation, change happens regularly, with new processes coming to life and others in need of adjustment or retirement. It’s also often a cultural adjustment, demanding an honest assessment of the relative weaknesses of the business and the measures needed to address them.

A risk-assessed catalogue of the technology components used to support your workflows, where legacy tools and spreadsheets are included, will inform the second step.

  1. Act quickly

It’s easy to assume that you need to wait for an overhaul of department processes before solving the problem. Spreadsheets are, as discussed, a convenience. They act as a stopgap to supposedly solve the limitations of the current system, until a ‘real’ solution is deployed.

Unfortunately, waiting allows the problem to fester. An extensive audit of the department, and implementation of the results, can literally take years. Financial organisations can’t let little fires burn for all that time – and, besides, new little fires could spring up elsewhere at the end of the process.

Moving quickly here means addressing the problem today. Platforms and organisations exist that are able to conjure appropriate stop-gap systems in days, not years. The most forward-thinking banks will move as quickly as possible to deploy a proper solution to the problems that spreadsheets attempt to address.

  1. Adapt

Organisations evolve, and solutions must evolve with them. Once the first version is in place, an accountable delivery team must be at hand to adapt it to support the necessary incremental change.

This is going to be different for every organisation; evolution is a unique process. In some cases, it will be driven by a periodic restructuring of upstream or downstream processes. In others, the establishment of a ‘fireproof’ process will also create opportunities to create further efficiencies – or highlight the need to replace other potential financial fire risks.

Ultimately, this step embodies the need to remain diligent, versatile and reactive when it comes to the fireproofing process – in the same way a safety officer would.

Extinguishing the risk of spreadsheet-based processes

The rationale behind the spreadsheet – that you need to bridge a little gap right now – is a pragmatic one. It just needs to be done properly.

As a real-life example, consider a recent global financial institution who used the above three-step approach: a twenty-thousand-person organisation needing to move away from spreadsheets for their Headcount Forecasting processes.

First, preparations were made to enable the transfer of existing workflows with minimal disruption (Anticipate). Second, the LiveDataset platform was tailored to mirror those existing workflows and integrate real-time service rates data — all of this was achieved in weeks rather than months (Act quickly).

After the platform had been optimally configured, the organisation merged with another group and the headcount population grew to fifty thousand. Due to the scalable nature of the platform, the solution was easily upgraded accordingly — something that simply wouldn’t have been possible if it was still running on spreadsheets or an adjustable system (Adapt).

Financial organisations need flexibility but do not have the leeway to rely on fragmented, unintelligent spreadsheets when it comes to properly curating and sharing their internal processes.

By embracing a “Fire prevention” mindset, we can work through these problems. The trailblazers that are genuinely invested in building a cohesive, long-term, data-driven infrastructure will be looking for technology partners that help them address the little fires smouldering across their organisations whilst supporting fast-paced change.

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