The Business Case for Information Management

8/8/2019 The Business Case for Information Management

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SPREADSHEET INFORMATION SYSTEMS ARE

ESSENTIAL TO BUSINESS

Submitted by:

ANKUSH BHATNAGAR(O9609185)

NISHANT GOYAL (09609046)

RICHA GARG (09609033)


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INTRODUCTION

y The business world and the academic world have different

perceptions of spreadsheets.

y Since the invention of VisiCalc (the first computerized

spreadsheet) in 1979, spreadsheets have become ubiquitousin the business world, and are widely acknowledged to be

the oldest killer-app of them all

y Perception that spreadsheets are somehow different than

other programming tools, and that spreadsheets are suitablefor personal use but not for important tasks.

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Research literature on spreadsheets

y Fairly small

y Spreadsheets are conspicuous by their absence

from journals and conferences in informationsystems and computer science.

y Spreadsheets are almost invisible in the

information systems and computer science

research communities.



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Contributions

The contributions of this paper are to demonstrate how:

I. spreadsheets are essential to business

II. spreadsheets function as information systemsIII. spreadsheets are essential for heterogeneous purposes,

organizations, and people

IV. spreadsheets are an effective application software developmentplatform.

V. inherited spreadsheets are importantVI. spreadsheet development practices are diverse and puzzling

VII. spreadsheet development resources andimportance/complexity are misaligned

VIII. spreadsheets play a central role in the evolution of work systems9/28/20104 Spreadsheet information systems are essential to business


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METHODOLOGY

y Use of snowball sample

y Asking contacts in industry about their use of spreadsheets

y Or people they knew who used spreadsheets.y Most interviews were conducted on the phone, with a few

conducted in the subjects place of work.

y No difficulty identifying research subjects.

y Subjects were generally eager to speak.

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CLASSIFICATION OF ESSENTIAL

SPREADSHEETS

Application software,

Financial risk management

Executive information systems

Business process infrastructure,

Complex analytics



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SPREADSHEETS USED FOR

APPLICATION SOFTWARE

Application software is programs written for a specific application to

perform functions specified by end users

Despite a widespread perception that application

software is usually created using proceduralprogramming languages or object-oriented

development environments, we found that some

developers choose to create application software

in spreadsheets.

Example :Any application software package,

which is a set ofprewritten, precoded

application softwareprograms that are

commercially availablefor saleorlease.



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y Huge help in financial service industry but problem in

spreadsheets can create huge losses

y Foreign exchange hedging- 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 theproper hedging values.

SPREADSHEET USING FINANCIAL

RISKMANAGEMENT



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y Spreadsheets provide information to executives.

y Executive Information System is a computer-based systemintended to facilitate and support the information and

decision making needs of senior executives by providing easy

access to both internal and external information relevant to

meeting the strategic goals of the organization.

SPREADSHEETS USED FOR

EXECUTIVE INFORMATION SYSTEMS



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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 consumerperception of their products, and use the results to guide

many important decisions.

EXAMPLES OF SPREADSHEET

EXECUTIVE INFORMATION SYSTEMS



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y The analyst who owns the LTG spreadsheet uses it for severaldifferent purposes, most notably to generate a report thatplays a vital role in the annual capital planning cycle.

y This information plays an important role in investmentdecisions, 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 Streetanalysts who influence the price of shares in the company.

CONTINUED



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y MajorCorp - Fortune 50 company in a capital-intensive industrywith operations around the world.

y For their annual investment planning cycle, MajorCorps topexecutives require detailed information on the geographicaldistribution over time of earnings, cash flow, capital expenditureand capital investment.

y A planning analyst uses the Long Term Geographic Distribution ofEarnings, Production and Capital (LTG) spreadsheet to conductthe analysis needed to support this requirement.

CAPITAL INVESTMENT PERFORMANCE

AND DECISION MAKING



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y Asset Fund is a large Wall Street financial firm.

y One division of the firm manages several portfolios of bondsand related financial instruments for major institutional

clients.

y To remain competitive, Asset Fund must devise new ways toproduce superior returns for its clients.

EVALUATING INVESTMENT

STRATEGY



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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 eachportfolio. This lack of visibility limited their ability to evaluate the

performance of different investment strategies.

CONTINUED



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y ShrinkSoft is an S&P 500 corporation that sells shrink-wrappedsoftware products and professional services through multiplechannels. Shrinksoft is the market leader.

y They have a very large customer base and a strong record ofprofitability and growth.

y To provide senior management with the necessary understandingof customer perceptions and loyalty, the divisions Chief OperatingOfficer directed an internal consultant to develop a tool that canbe 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 itdaily. Senior managers review NPCA reports weekly.

UNDERSTANDING CUSTOMER

PERCEPTIONS



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y Spreadsheets frequently play a vital role in key businessprocesses. Without them, businesses would have difficultyfunctioning in todays fast-paced and highly competitive

business environment.

y MARKETING BUSINESS PROCESSES- which have to do withpersuading customers and potential customers to purchaseproducts and services.

y OPERATIONAL BUSINESS PROCESSES- which have to dowith the creation and delivery of products and services.

SPREADSHEETS USED FOR BUSINESS

PROCESS INFRASTRUCTURE



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y Some researchers and analysts choose to performcomplex analytical calculations using a spreadsheetrather than a scientific programming language.

y Examples-

high-tech algorithm development

pricing of long-term electric power contracts withstochastic demand.

forecasting and pricing for a large hotel.

SPREADSHEETS USED FOR COMPLEX

ANALYTICS



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y Each spreadsheet is indispensable to an important aspectof the organizations activities.

y Without their respective spreadsheets, the peopleinterviewed would struggle to do their jobs and in somecases would be unable to sustain their companies.

yResearch Question:

yHow prevalent are essential spreadsheets?

1. SPREADSHEETS AREESSENTIAL IN

BUSINESS



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y Information Systems are the systems by which data and information flow from oneperson 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 animportant 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?

2. SPREADSHEETS FUNCTION AS

INFORMATION SYSTEMS



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y Heterogeneity of Purpose:

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 areas created essentialspreadsheets

y Research Question:y Can there be a one size fits all recommendation for the creation, maintenance, and

use of spreadsheet information systems

3.SPREADSHEETS AREESSENTIAL FOR HETEROGENEOUS

PURPOSES, ORGANIZATION AND PEOPLE



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y Spreadsheets fall in the category of rapid-development languages that offer speedier implementation than do traditional third-generationlanguages. For example: SmallSoft developed a large spreadsheet application software package that they sellcommercially; AnalyCo developed 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 six figure price for a spreadsheet, plusperformance issues.


y How common is the use of spreadsheets for application software?

y

Under what circumstances are spreadsheets appropriate for application development?

4.SPREADSHEETS AS AN EFFECTIVE

APPLICATION DEVELOPMENT PLATFORM



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y When a spreadsheet is inherited, it serves as an organizational artifact.Inherited spreadsheets represent important work system knowledge that maynot 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, and management.

y The prevalence and role of this inheritance on work systems knowledge is anopen question

5.INHERITED SPREADSHEETS ARE

IMPORTANT



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y Formal Development Approaches:

y AnalyCo used an approach that corresponds to the staged delivery lifecycle model. As perusers requirements, the programmers built a prototype based on the specifications, soughtfeedback from users on quality, workflow, and enhancements. They revised the prototype,performed formal testing, and created detailed documentation before deployment to users

y

Informal Development Approaches:

y Sixteen of the spreadsheets were created using people who gave little thought to the process bywhich they were creating them

y The process of developing the spreadsheet taught them about what they wanted to do and thislesson took place as they were doing it

y Research Question:y Spreadsheet engineering design requires extensive research

y Architecture

y Data modeling

y User interface design

y Performance evaluation and optimization

6. SPREADSHEET DEVELOPMENT

PRACTICES AREDIVERSE



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y The appropriate level of resources to devote to the development andquality control of an essential spreadsheet is fundamentally a managerialdecision.

y For the spreadsheets that had inadequate resources, there was no evidence ofmanagerial interest in these spreadsheets. Is it because managers are makingwise risk 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 will request appropriate resources?

y How do the answers change when the manager is also the spreadsheetdeveloper?

RESEARCH QUESTIONS

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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 thedemands of their (internal or external) customers.

8. SPREADSHEETS PLAY A CENTRAL

ROLE IN EVOLUTION OF WORK SYSTEM



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y What are best practices for managing spreadsheets that aredeveloped organically within a Work System to address anunmet need?

y How can organizations create conditions to foster successfulco-evolution of spreadsheets to and business processes?

y How can this co-evolution be connected to managerialdecisions regarding development resources and risk of errors?

RESEARCH QUESTIONS



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y Spreadsheet information systems are essential to business

y The state of research knowledge regarding spreadsheets stands in

marked contrast to research knowledge regarding traditionalprocedural languages and object oriented programmingenvironments

y

We believe that the way that people create and use spreadsheetsmerits broad, sustained research attention. This research has thepotential to significantly impact the practice of millions of spreadsheet developers

CONCLUSION


Documents

The Business Case for Information Management