From Greg's Head

Note: Running most Fridays in FromGregsHead.com, this is a continuing series of budgeting tips brought to you by Ventana Research and PKF Texas. These run Saturday mornings during the BusinessMaker’s Radio Show on SuperTalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

The electronic spreadsheet was a breakthrough because it automated the most time consuming part of manual budgeting and eliminated errors caused by purely arithmetic processes. In theory, spreadsheets should allow organizations to collect detailed information from every individual with budget authority and roll it up into a consolidated view.

In reality, two decades of results has shown that numerous issues routinely occur making it difficult to achieve ideal results. Common problems include:

• Broken links or formulas
• Consolidation errors
• Using the wrong data
• Using the wrong/incorrect formula

By removing the spreadsheet barrier, expanding participation and focusing people’s efforts on thinking and analyzing on the right level of detail rather than spending time on the mechanics of communicating number back and forth, companies are to get more out of the process. Dedicated budget and planning software can do more than make the process strategic and accurate.

I think the problem is that we've tried to substitute spreadsheets for thinking. If the spreadsheet says 2 + 2 = 5, then by God 2 + 2 really is 5. How to use spreadsheets is a skill. It can be taught. Analytical thinking is something that some say can not be taught, it is innate in a person's makeup. I don't necessarily agree with that but I do admit it is a much harder skill to learn.

I'd rather hire someone who has strong analytical thinking characteristics than spreadsheet skill. I can always teach them to do spreadsheets. But by the time people are old enough to get a job it is nearly impossible to teach them analytical thinking.