Compensation planning and management at many companies has evolved surprisingly little since the dawn of the spreadsheet. Organizations have become mired in processes and systems once considered state-of-the-art, but that are now outdated, costly, and risky to use-especially if linked to today's digital communications networks. A 2004 study by CFO Research Services found 73 percent of the mid-size companies it surveyed rely primarily on spreadsheets and manual processes for planning, budgeting, and forecasting ("When Do Companies Outgrow Their Spreadsheets?" CFO.com, June 1, 2004). The same study found some large enterprises to be migrating from spreadsheet-based processes to advanced applications that facilitate sophisticated analyses, reporting, and process automation.

The administration, compilation and reconciliation of spreadsheets is a cumbersome, tricky, and risky process. According to CFO Magazine, "For some companies, consolidating spreadsheets is the corporate equivalent of a tooth-scraping" (CFO Magazine, "In the Fast Lane," December 7, 2004). Individual departments, the author says, often have their own sets of accounts and spreadsheet models, and they commonly alter spreadsheet templates. "It makes it impossible to maintain any data-standard consistencies," the author explains.

Another pitfall of spreadsheet dependency is their low level of security. For mid-size and larger organizations, spreadsheets used for compensation budgeting and planning can easily number in the hundreds, even thousands. And the ease of transmitting them via the Internet, email, and intranets has created a veritable world of flying spreadsheets-a thought which should give cause for concern in a time when computer hacking is an everyday occurrence.