spreadsheet information systems are essential for business
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Submitted by
Ridhima Bhatt (09609037)
Akhil Laroiya (09609107)
Riki Jain (09609149)
Spreadsheet information systems are
essential for business
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Introductiony Bring spreadsheets to the attention of Information systems researchers as an area
with rich opportunities for research that is relevant to business, large diversity andtheir deep integration with business processes and work systems
y Classification of essential spreadsheets
Application software-creates a spreadsheet for the benefit of end users.
Financial risk management-used for financial purposes with a concomitant risk of
financial loss. Executive information systems-enables executives to understand their business &
make important decisions
Business process infrastructure-integral part of an essential business processes
Complex analysis- for advance scientific or engineering analysis
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Spreadsheets used for application software
y To create application programs. For eg- precodedapplication software progs available commercially for sale,
application software created by a company for use by
employee worldwide.
y
SmallSoft sells software application package for compilinga business case.
y AnalyCo is a large consulting firm that provides services
like studying the attitudes and behaviors of clients
customers. Traditionally huge piles of data was collected
now with spreadsheet an application software has come up
called proprietary calculator
decision support system-there is a spreadsheet DSS tomanage prices ,inventories .
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Spreadsheet using financial risk
management
y Huge help in financial service industry but problem in
spreadsheets can create huge losses
y Foreign exchange hedgeing- BigSoft is a publicly traded
international software company dealing with millions of foreign
currency revenue they routinely hedge their foreign exchange
exposure.spreadsheet helps in taking data from multiple sources
and perform a complex series of calculations to determine the
proper hedging values.
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SPREADSHEETS USEDFOREXECUTIVE
INFORMATIONSYSTEMS
y Spreadsheets provide information to executives.
y Executive Information System is a computer-based system
intended to facilitate and support the information and
decision making needs of senior executives by providing easyaccess to both internal and external information relevant to
meeting the strategic goals of the organization.
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Examples of spreadsheet executive information
systems
1.Spreadsheet outputs used by top executives in managing billions of
dollars of capital investment.
2. Executives use spreadsheet outputs to evaluate investment strategy
performance.
3. Executives use spreadsheet outputs to understand consumer
perception of their products, and use the results to guide many
important decisions.
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y The analyst who owns the LTG spreadsheet uses it for several
different purposes, most notably to generate a report that
plays a vital role in the annual capital planning cycle.
y This information plays an important role in investment
decisions, and a large error in the spreadsheet would alter the
capital spending pattern and approval of capital projects.Some of the information from LTG is shared with Wall Street
analysts who influence the price of shares in the company.
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Evaluating investment strategy
y AssetFund is a large Wall Street financial firm.
y One division of the firm manages several portfolios of bonds and
related financial instruments for major institutional clients.
y To remain competitive, AssetFund must devise new ways to
produce superior returns for its clients.
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y Therefore, the firm employs a research team to develop and test
new investment strategies, which they refer to as bets.
y AssetFund has accounting systems that are used to execute and
track transactions, and to provide timely information on portfolio
assets and performance.
y However, the executive team, the head of institutional research,
and the portfolio managers were unable to connect their decisions
and investment strategies to the resulting contributions in each
portfolio.This lack of visibility limited their ability to evaluate theperformance of different investment strategies.
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Understanding customer perceptionsy ShrinkSoft is an S&P 500 corporation that sells shrink-wrapped
software products and professional services through multiple
channels. Shrinksoft is the market leader.
y They have a very large customer base and a strong record of
profitability and growth.
y To provide senior management with the necessary understanding ofcustomer perceptions and loyalty, the divisions Chief Operating
Officer directed an internal consultant to develop a tool that can be
used to quantify and track customer attitudes.He used Excel to
develop the Net Promoter Correlation Analysis (NPCA) spreadsheet.
y An analyst downloads survey data and uses NPCA to analyze it daily.Senior managers review NPCA reports weekly.
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Spreadsheets used for
business process infrastructure
y Spreadsheets frequently play a vital role in key
business processes. Without them, businesses would
have difficulty functioning in todays fast-paced and
highly competitive business environment.
y MARKETING BUSINESSPROCESSES- which have to do
with persuading customers and potential customers to
purchase products and services.
y OPERATIONAL
BUSINESS
PRO
CESSES
- which have todo with the creation and delivery of products and services.
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Spreadsheets used for complex analytics
y Some researchers and analysts choose to perform complex
analytical calculations using a spreadsheet rather than a scientific
programming language.
y Examples-
high-tech algorithm development
pricing of long-term electric power contracts with stochastic
demand.
forecasting and pricing for a large hotel.
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1. Spreadsheets are essential in businessy Each spreadsheet is indispensable to an important aspect of the
organizations activities.
y Without their respective spreadsheets, the people interviewed
would struggle to do their jobs and in some cases would be unableto sustain their companies.
y Research Question:
y How prevalent are essential spreadsheets?
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2. Spreadsheets function as information
systemsy Information Systems are the systems by which data and information flow from one
person or department to another.
y In this research, all spreadsheet examples are systems by which data and information
flow from one person or department to another. For example: SmallSoft executes an
important planning process within a spreadsheet by accepting and integrating diverse
information inputs from across the organization.
y Research Questions:
y
What are the reasons for which people choose spreadsheets rather than otherlanguages to develop information systems?
y Under what circumstances would people be well-advised to choose spreadsheets?
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3.Spreadsheets are essential for heterogeneous
purposes, organization and people
y Heterogeneity ofPurpose:
y evaluating investment strategies
y interpreting analytical results
y managing sales leads
y project planning and management
y Heterogeneity in Organizations and People:
y Organizations of many different sizes, ranging from less than twenty
employees (SmallSoft) to tens of thousands of employees (ShrinkSoft)
y
People in a broad range of organizational levels and functional areascreated essential spreadsheets
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4.Spreadsheets as an effective application
development platform
y Spreadsheets fall in the category of rapid-development languages thatoffer speedier implementation than do traditional third-generationlanguages. For example: SmallSoft developed a large spreadsheetapplication software package that they sell commercially; AnalyCodeveloped a spreadsheet application that is used by thousands of people
y Limitations of spreadsheets:
y Excel failure due to size
y A combination of concern over limited client willingness to pay a sixfigure price for a spreadsheet, plus performance issues.
y Research Questions:
y How common is the use of spreadsheets for application software?
y Under what circumstances are spreadsheets appropriate forapplication development?
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5.Inherited spreadsheets are important
y
When a spreadsheet is inherited, it serves as anorganizational artifact. Inherited spreadsheets represent
important work system knowledge that may not
otherwise be recorded.
y The DevCo spreadsheet was provided to project
managers as a starting point, then extensively
customized.
y Research Questions:
y Inherited spreadsheets present a host of questions
around quality control, risk, documentation, andmanagement.
y The prevalence and role of this inheritance on work
systems knowledge is an open question
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6. Spreadsheet development practices are diversey Formal Development Approaches:
y AnalyCo used an approach that corresponds to the staged deliverylifecycle model. As per users requirements, the programmers built a prototype based on the specifications, sought feedback from users onquality, workflow, and enhancements. They revised the prototype, performed formal testing, and created detailed documentation beforedeployment to users
y Informal Development Approaches:y Sixteen of the spreadsheets were created using people who gave little
thought to the process by which they were creating them
y The process of developing the spreadsheet taught them about what theywanted to do and this lesson took place as they were doing it
y Research Question:
y Spreadsheet engineering design requires extensive researchy Architecture
y Data modeling
y User interface design
y Performance evaluation and optimization
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7. Spreadsheet development resources &
important/ complexity are misaligned
y Common sense suggests that spreadsheets with higher importance
and higher complexity would receive more careful (and
expensive) development
y The spreadsheets created by SmallSoft and AnalyCo are of high
importance and complexity, and both were created with great
rigor and expense
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Research questions
y
The appropriate level of resources to devote to thedevelopment and quality control of an essential spreadsheet
is fundamentally a managerial decision.
y For the spreadsheets that had inadequate resources, there
was no evidence of managerial interest in these
spreadsheets. Is it because managers are making wiserisk tradeoffs by choosing not to invest in careful
development?
y Or are these managers making mistakes, due perhaps to
ignorance, or a false belief that their developers willrequest appropriate resources?
y How do the answers change when the manager is also the
spreadsheet developer?
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8. Spreadsheets play a central role in
evolution of work system
y Example: Job of the analyst at I-Bank was to get the
spreadsheet together to support the deals. There is very
close identification between work activities and the
spreadsheet that enables those activities.
y Spreadsheets serve as the technology that links together
business processes, people, and information to meet the
demands of their (internal or external) customers.
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Research Questions
y What are best practices for managing spreadsheets that are
developed organically within a Work System to address an unmet
need?
y How can organizations create conditions to foster successful co-
evolution of spreadsheets to and business processes?
y How can this co-evolution be connected to managerial decisions
regarding development resources and risk of errors?
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Conclusion
y Spreadsheet information systems are essential to business
y The state of research knowledge regarding spreadsheets stands in
marked contrast to research knowledge regarding traditional
procedural languages and object oriented programming
environments
y We believe that the way that people create and use spreadsheets
merits broad, sustained research attention. This research has thepotential to significantly impact the practice of millions of
spreadsheet developers
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