The spreadsheet is our ubiquitous tool for work and personal organization, having broadened extensively from its original purpose for financial tracking and calculations to now supporting everything from project plans, personal address books, and exports from database systems.
Today with its exceptional ease of use and instant, “free” availability, the spreadsheet – in particular Excel – therefore has become the go-to application when collection, structural organization, and calculation of data are needed. Those in sourcing and procurement roles acknowledge that a number RFIs (requests for information) and RFPs (requests for proposal) are still based in Excel. But to what extent is this desktop-based practice maintained, particularly given the availability and advancement of software offerings in the eRFP and e-sourcing area?
A May 2011 study conducted by CombineNet of sourcing, procurement, and supply chain professionals revealed some surprising findings on how widespread Excel usage is in their jobs – and why. (Note: None of those surveyed were CombineNet customers.) When asked which tools are used frequently to create RFPs for collecting supplier’s bid information, the responses remain heavy in Excel’s favor at more than 60 percent with eSourcing/Procurement Suite at just under 50 percent followed by Microsoft Word (about 45 percent) and home-grown solutions (20 percent).
The study also uncovered how other factors increase or decrease Excel reliance, including RFP/event size and complexity, sourcing team organizational structure, and data volumes requiring analysis. For example, larger RFPs having more than 1,000 items for bid are supported 70 percent of the time in a spreadsheet versus a general sourcing or procurement tool.
The popularity of Excel amidst a landscape of well-established sourcing and procurement software providers warrants closer examination – particularly as businesses continue to seek greater ways to maximize savings opportunities, streamline operations, and drive innovation.
Over the past 20 years, eSourcing and Procurement software applications have grown and matured in capability, and today various flavors can be found in ERP packages, in general procurement and supply chain suites, or through best-of-breed providers. Analysts have recently estimated that eSourcing and Procurement software represents over $2 billion in worldwide revenue and have predicted continued strong growth for the next several years.
Despite the growth and availability of those software offerings, survey respondents indicate a number of reasons they continue to turn to Excel, including: improved reporting and dashboards (62 percent); support for more complex requirements and configuration (41 percent); speed and simplification of RFP creation (41 percent); and speed and simplification of bid analysis (38 percent). As one respondent commented, “it’s simply the case of not having the right tool to handle all the RFPs we see, so Excel is the fall-back for many.”
But the use of desktop tools comes with significant drawbacks when it comes to strategic, effective sourcing strategies. Lack of automation, centralization, optimization, standardization, security and auditing compliance, knowledge and best practices sharing and transfer, and re-usability are among key issues with the use of Excel for supporting RFPs and sourcing.
Best-in-class e-sourcing technologies do exist in the market, designed to address many of the shortcomings found in the more general-purpose e-procurement and e-sourcing suites that hold larger market share. By productizing advanced sourcing best practices and optimization capabilities, these technologies should be strongly considered to integrate with existing systems to break the Excel habit and tap new areas of savings and innovation opportunity.
If Excel is used as a work-around for many RFPs, the organization should seek to understand the root causes for this behavior. The following checklist will help when evaluating a new e-sourcing solution that can reduce the Excel habit: