ERP... MRP... CRM: Surprisingly, Most Companies Still Use Spreadsheets!
There are a myriad of software solutions that have been available for decades to assist companies in managing their business. I'll provide a brief and summary review of the 3 major categories as I see them:
• CRM (Customer Relationship Management): Marketing, sales force automation, customer service, field service, partner channel management, eCommerce, customer analytics, and customer data management
• MRP (Management Resource Planning): Plan optimal inventory levels, purchases, production schedules and more
• ERP (Enterprise Resource Program): ERP is often used for internal financial reporting, real time data on existing products, and accounting. Sales and orders are typically entered into an ERP, and different ERP modules are used to run analysis and reports.
How do we know that these solutions are failing?
They aren't being used by business. Despite the widespread availability of these options, most companies still rely on spreadsheets for collaboration. In a recent study, it was found that although spreadsheets still predominate (used by 7 out of 10 of the midsize and large companies surveyed), 48 percent of respondents at companies that use them say spreadsheets make it harder to manage the planning process.
Why is this an issue?
• Spreadsheets are prone to huge errors. Studies have shown that almost 9 in 10 spreadsheets have significant errors. In 2012, the British Government made a significant error in assessing bids for the West Coast Rail Line based on a faulty spreadsheet that cost the British $76.6 million. In 2013, J.P. Morgan sued thousands of its credit card customers only to find out that almost 10percent of the cases were in error. Further, J.P. Morgan admitted that some of the $6 billion losses from "the Whale" were a result of spreadsheet errors. These high profile examples illustrate a point that real businesses face everyday – spreadsheet errors cost money and time.
• Spreadsheets are not built for collaboration and we live in a team oriented world. Working together in a spreadsheet is close to impossible. On top of that, collaboration usually leads to multiple versions of the same spreadsheet that are difficult to track and manage.
• Updating spreadsheets requires manual inputs and constant maintenance. Even if your spreadsheet turns out to be right, what happens when the data changes every day or every week? As a young analyst, I remember spending countless hours "updating" spreadsheets. Almost 17 years later, the same complaints ring true.
• Excel is packed with tons of useless features that are complicated and confusing. Even with spreadsheets, my guess is (like me) most users depend on a spreadsheet for simple calculations. Witness the rise of Google Docs - a clear demonstration of the uselessness of most of Excel's fancy features.
• Spreadsheets are awful to look at. I mean seriously - who loves staring at a bunch of white boxes for 10 hours a day?
Is there a solution?
I believe it is time to say goodbye to 1980s technology. Software needs to be built for the enterprises that use it. Companies and users are increasingly turning to SaaS, which is the ideal platform to solve these issues. However, the idea that a generalized “tool” can work for any industry is, in my view, wrong. Each industry faces specific problems that need to be overcome, and I have found that these “one size fits all solutions” don’t end up fitting anyone that well. The usefulness of software truly depends on its ability to solve industry specific business issues. For example, in the specialty chemical industry, rapid product development and tracking tens or hundreds of projects in real time is essential. Generalized tools require huge amounts of customization to meet these needs, which defeats many of the benefits of SaaS.
We are at the beginning of a new era of industry specific software that is easy to use, incorporates error prevention, is built as a collaboration platform, and that looks great. Look for these new companies that are targeted at industry verticals and solve problems that “generalized” software simply cannot. And say goodbye to your old spreadsheets - I promise life is better on the other side.