Look to Spreadsheets to Foretell CRM's Future

Even more than it has in the back office, the spreadsheet has been a workhorse for the front office. In fact, one of the hallmarks of CRM has been the gradual movement of spreadsheets from all sorts of front-office business processes to modern database systems. The result has been an expanding universe of applications associated with CRM.

Sales and marketing were once no more than lists of prospects and activities kept in spreadsheets, as everyone knows. But beyond sales, spreadsheets also kept tabs on almost any process you could think of and, remarkably, the results were pretty much the same. A spreadsheet could form a good approximation of an application but would inevitably crumble under the weight of all the data a "real" application needed to do its job. I've often said that if you want to know what the next hot application will be, you just need to see what people are doing now with spreadsheets.

For instance, in many departments, managers still routinely use spreadsheets to manage employee objectives. It's supposed to work like this: At the beginning of a quarter, the manager and employee get together to agree on direction and objectives, with the employee then putting those objectives into action. The reality is quite different, because it can take days or even weeks for the manager to get everything right in the spreadsheet and to the employee for signoff.

Worse, once that's done, there's no mechanism for tracking accomplishment for the manager and attainment for the employee. When the next quarter's review comes along, both parties stare at the original spreadsheet as if it were written in a foreign language.

All that's left is compensation, but how do you do that? What percentage of the original goals did the employee achieve, and how do you determine that? In many cases, there's a reasonable, but not great, fit between the objectives and the results, but sometimes the results are fantastic, in which case the employee can max out the compensation plan. Thomas Piketty, author of Capital in the Twenty-First Century, calls this pay for luck. He has a point.

There's no substitute for having a system that does more than compare beginning and end states, because the path to the end state is as important as the state itself. Let's take a ridiculous example. Suppose your goal as a manager is to raise customer satisfaction scores. There are two ways to do this, though we typically only think of one.

The preferred way is to institute auditable programs requiring employees to do better by setting specific objectives (and rewards) and monitoring results throughout the quarter. The other approach is to alienate your already less satisfied customers. Both approaches will increase customer satisfaction scores, but the latter does it at the expense of the customer base. Unfortunately, if you're using a spreadsheet-based management approach, you might miss the decline, and maybe that will be the beginning of a very unpleasant time as you try to figure out why your business is going south.

That's why I am a fan of approaches such as Objectives from Xactly, an application that enables managers and employees to escape spreadsheet hell to support the management-by-objectives (MBO) process with a modern application that can track both quarterly accomplishments (or their lack) and incremental attainment along the way. With a system and not a spreadsheet, you can support a business process, even one as difficult to handle as MBOs. With a spreadsheet, all you really manage are transactions, in this case, how to pay for luck.

Another way to look at it: Spreadsheets represent a numerical era in which we've captured data about—but not the meaning of—everything. In the scientific era just ahead, we'll need meaning to make decisions and run the business. RIP spreadsheets.

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Denis Pombriant is the founder and managing principal of Beagle Research Group and the Bullpen Group. He is a widely published CRM analyst in the U.S. and Europe, and his latest research spans all areas of social CRM, cloud, and mobile computing. His latest book, The Subscription Economy, is available on Amazon.com.

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