Why Excel Can’t Handle IT Cost Transparency

Why Excel Can’t Handle IT
Cost Transparency

Originally, we envisioned ClearCost to be used as a forecasting tool to balance our supply and demand.

We soon discovered that ClearCost could do far more than this and ClearCost is now our source of truth for all our costing/pricing information.

— Tony Grant
Chief Information Officer
Information and Technology Partners

Does your IT business share the pain of managing ITFM processes in Spreadsheets?

Building an IT Financial Management System in a spreadsheet is like building a General Ledger system in a spreadsheet. Yes, you could do it given enough time and resources, though why would you?

Spreadsheets are effectively a ‘single user’ solution that are typically:

too complex for other ‘users’ of the information to work with
too difficult to do meaningful reporting from
not accessible to business management
high risk if the "expert" who developed it, leaves!
too difficult to calculate consumption based costing

Benefits of replacing spreadsheets according to Gartner¹

“Spreadsheets are great for many things, however, when it comes to running the business of technology, they’re inadequate and unreliable. CIOs and other tech management leaders must replace them with purpose-fit solutions.”

¹ Gartner: ‘Start Here: Know “Why” Before You Buy an ITFM Tool’, by Robert Naegle, Jim McGittigan, 2014.

If you already have complex spreadsheets or other bespoke systems with unique customisation (not always a good thing), they are typically totally dependent on the author/creator. These can be massively complex systems, and to be able to generate costing data from them is a testimony to the skills and many months (or years) of development and “tweaking” time that they typically require.

Excel can’t handle IT Cost Transparency

Spreadsheets are typically a ‘single-user’ tool that are too complex for other ‘users’ of the information to work with, too difficult to do meaningful reporting from, not accessible to business management, and high-risk if the ‘expert’ who developed it leaves. If a spreadsheet formula is wrong, this could result in incorrect costings which impacts data integrity.

The limitations related to spreadsheets include poor scalability, automation and agility as financial and operational data inputs change over time and increase in volume. Lack of control or governance around spreadsheet versions leads to errors.

Spreadsheets do not provide the service view that IT needs to manage spend in a way that is meaningful to the business. CIOs need operational data about IT assets, applications, labour, projects, vendors, etc. merged with corporate financial data to demonstrate true cost of ownership².

Spreadsheets quickly fail to keep pace, when reporting frequency shifts from annually or semi-annually to quarterly, monthly or even weekly. Similarly, as the number of data sources expands and ETL requirements increase, purpose-built tools will again provide significant advantages. Over time, cost models that have been built quickly will need to be adjusted. Models will need to be expanded, complexities addressed and/ or allocation methods changed dynamically. These adjustments are needed in order to resolve stakeholder concerns about the accuracy³.

Avoid costly mistakes made in Spreadsheets

The fundamental concept of running a critical part of your business on a spreadsheet must however be questioned. As good as a spreadsheet is, the old adage of “horses for courses” applies.

There are numerous benefits to adopting ClearCost as your IT Management solution:

Attributes	Clear Cost
50+ years of development effort
Architected program design
Enhanced reporting with different views to look at costs
Key person dependency risk
Designed for multi-user access
Extensive data modelling and analytics
Audit trail of changes
Security control over access to data & functions
No complex formulae or linkages to design
Fully documented
Professional support
On-going commitment to enhancements
Integrated Contract Register
Integrated Capacity Costing system
Integrated to General Ledger transaction data
Integrated to CMDB asset data

2‘IT Financial Management, Maximising IT Value for Your Organisation’, by Michael MacNicholas, Alice Pearce, Deloitte, 2018.
3‘CIO’s Must Master Four Views of Spend to Manage IT Finances’, Jim McGittigan, Robert Naegle. Published by Gartner, 23 April 2019.

Spreadsheets lead to diminished credibility

Too complex for other ‘users’ of the information to work with
Lengthy timeframes required and complex spreadsheet models would need to be developed to run the monthly process, reports generation and analysis, and still do not provide IT Service Insights essential to the IT Service organisation.
Manual process that are time consuming and error prone would not meet needs for rapid deployment of an ITFM capability and are unlikely to generate the value-added insights to cost management or reliable defendable calculations for show back.

Manual methods and models will have less flexibility to cope with change in the organisation.
High risk of manual processes creating a cottage industry to produce the same output that a fit for purpose system can deliver with the push of a button.
Ability to achieve defendable, reliable cost transparency and show back is compromised.
Loss of staff and demotivation as valuable resources are bogged down in manual tasks.
Allocations on the budget without understanding consumption on a regularly updated basis.
To implement demand management, cost information must be current and total costs well defined in a contextual manner.
Inability to manage the transition to variable, consumption-based IT costs (As a Service).
Higher risk that little benefit is achieved, and existing limited ITFM capability continues at a very low level of maturity.
Risks poor decisions being made without appropriate supporting data.
Inability for IT leaders to justify spending.

Improve the Value of IT

“Before we implemented ClearCost, the majority of our cost tracking was done through Excel spreadsheets, which lacked the analytics and audit capabilities we desperately needed.

With ClearCost, we’ve gained granular visibility into service costs vs actual charges, allowing us to identify the profitable and non-profitable services in order to justify departmental restructuring and changes.”

Ross Burton

Chief Financial Officer
Department of Shared Services
ACT Government

Never rely on spreadsheets again

Each moment that passes
represents missed opportunity and
increased exposure.

Accurate data extraction via an intuitive, multi-user experience through ClearCost, it’s not only necessary, it is imperative.
Automated, meaningful reporting eliminates manual report creation and preparation, which can often by repetitive, tedious, and incredibly time-consuming, especially if you didn’t build the spreadsheet and do not understand its complexities.

Accessible to business management with data & analytics available in real-time, which means information is available immediately and no time is wasted.
Eliminate risk by no longer depending on the one person who created the spreadsheet, or if that person shares the file with unauthorised users therefore posing a security risk. Increase business scalability & agility by eradicating inaccuracies, security issues, and limited usability.
ClearCost is a comprehensive Financial Management solution eliminating the fragile ecosystems of spreadsheets that are too complicated, full of errors, and lack credibility.

Solution Brief