A rising number of real estate companies that suffer from “spreadsheet overload” are installing souped-up software to shore up data security and flexibility.

Scott Metro, a partner in the Real Estate Systems and Process Assurance unit at professional services firm PricewaterhouseCoopers, predicts “spreadsheet replacement” software will gain popularity in 2008 and 2009 among real estate developers, investors, advisers and other industry players as they seek competitive advantages in a softening market.

This software allows companies to track changes in a spreadsheet and prevent some people from altering any of the data at all, such as budget numbers, rental rates and income forecasts. The software also consolidates scattered bits of information and gives companies the ability to dig deeper into data to analyze, for instance, the construction expenses for a mixed-use project.

Real estate companies use spreadsheets to tackle such tasks as forecasts for property performance and models for acquisition financing. Furthermore, spreadsheets serve as warehouses for an array of information. “In fact, it is not uncommon to find that Microsoft Excel is used to maintain a quick reference list of properties and their key attributes,” Metro writes in a PricewaterhouseCoopers report on technology trends for 2008.

However, the capabilities of Excel — the granddaddy of spreadsheet software — are limited. Experts say many software users don’t venture beyond easy-to-use Excel simply because the Microsoft Corp. product is so familiar and pervasive. Executives at Microsoft decline to comment.

“When spreadsheets came along, people thought it was the coolest tool they’d ever seen,” says Christina McKeon, director of product marketing for performance management at software developer Infor Global Solutions Inc. “We understand there are some people who would need to go to rehab if you ever took Excel away from them.”

Infor’s PM Business Process Applications software and SAP AG’s Business Planning and Consolidation software are among the tools that look and act like spreadsheets, Metro says, but offer tighter controls and audit trails than Excel. The software builds on Excel to assemble what you might call spreadsheet systems on steroids.

“The first time you see these and see what they can do, there is a ‘wow’ factor,” Metro says.

Executives at Bonita Bay Group Inc., a Florida-based developer of high-rise luxury condos, golf courses and master-planned communities, have been wowed by their spreadsheet replacement software from Infor. As the real estate company expanded, budgeting and forecasting with disconnected spreadsheets became overwhelming, executives say. Completion of quarterly budgets was delayed, financial information was outdated and flaws took weeks to detect.

“Spreadsheets are inherently not all that well-controlled,” Metro says.

Installing the Infor software enabled Bonita Bay Group to consolidate data, create timely budgets and produce long-range forecasts. With the technology, company executives can crank out reports on internal rates of return whenever they want, rather than just a few times a year. Infor’s McKeon says the software eliminates what she dubs “spreadsheet chaos.”

Ranga Bodla, director of marketing for enterprise performance management at SAP, says it takes only one “fat-fingered user” — somebody not well versed in spreadsheets — to trigger an error in a spreadsheet that could accidentally bump up the cost of a project from $10 million to $100 million. That incorrect information then can be passed along to everyone else with access to that spreadsheet. With spreadsheet replacement software, users see “a single version of the truth,” McKeon says, because everyone is viewing the same edition of a spreadsheet.

“If there are multiple places that the data come from,” Bodla says, “it’s easy to say, ‘Is the data I’m looking at correct?’”

Spreadsheet blunders are well documented. Back in late 2005, data in a spreadsheet were incorrectly sorted for about 1,900 abandoned lots that were scheduled to be auctioned in North Port, Fla. The mistake caused the minimum asking prices for the lots to soar overnight, and forced a red-faced auction company to post a correction and apology online.

Products from companies like SAP and Infor are delivering real estate companies from that sort of “spreadsheet hell,” as Bodla refers to it. While the industry has largely “stayed on the sidelines” when new technology has emerged, Metro says, real estate companies now are in the early stages of large-scale adoption of spreadsheet replacement systems.

“These are getting a lot of airplay lately in the real estate industry,” Metro says. “We’re certainly at the leading edge right now.”