Report: Corporate Decision Support Still Shaky

If you've ever gone into a presentation with a sneaking suspicion that the data you're relying on may not be exactly rock solid, you're apparently not alone. Many executives lack confidence in the effectiveness of their organization's analysis and planning processes and doubt the reliability of the data contained in presentations, according to a new benchmark research survey from Ventana Research.

Business Finance was a media sponsor of the study, which polled 166 business analysts, managers, and executives across operations, finance, and other lines of business. Only 36 percent of participants said that they are somewhat or very confident in their organization's analysis and planning processes. About 34 percent said they are not very confident or not at all confident in them.

Those results were no surprise to Robert D. Kugel, senior vice president and research director, financial performance management, with Ventana Research. "In some cases, particularly if the group is pretty close-knit, people have confidence in some areas of planning. In the overall budgeting process I think people -- depending on where they sit -- have some positive thoughts about it," he says. But in another Ventana study of sales forecasting, half of respondents reported that this process is heavily affected by gaming the numbers, so "it's not surprising at all that people can have low confidence in certain kinds of corporate planning."

More than three-quarters of the study's sample said that presentations of spreadsheet data were important or very important, but only 29 percent said they trust the information contained in them without qualification. And companies still rely on spreadsheets for decision support; the study found heavy use of these tools in 40 percent of organizations and moderate use in another 45 percent.

Companies cling to spreadsheets for many reasons, according to Kugel. They're cheap, adaptable, and easy to use. "If mistakes are made, they usually go undetected; unless something looks fishy, people don't really dig into it," he points out. "And when they do see something fishy they can fix it, no problem, and they think that's a good enough control. But they're kidding themselves." Ventana recommends replacing spreadsheets with a platform that can apply analytics to managing performance.

Another area where companies struggle to provide adequate decision support -- surprisingly, given the attention it's received in the last 10 years --is in creating metrics and key performance indicators. "Very often companies can't either come up with the right measures, or because they're afraid of missing something they come up with a whole bunch of measures, some of which are completely irrelevant and distract people from what their goals ought to be, and some of which may in fact be self-contradictory," Kugel says.

Over the next year companies are planning many performance improvement projects to enhance decision-making, such as scorecards, sales and operations planning, and pricing optimization initiatives, says Ventana. But for many execs it may be a while until that nagging feeling that the numbers aren't right goes away.

Click here for access to an executive summary of the Ventana Research report (requires free registration).