Spreadsheet information systems are essential for business

8/8/2019 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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MICS-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 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 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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Spreadsheet information systems are essential for business