To better serve their customers, increase profits and continue to grow, companies must quickly unlock the useful information contained in the vast amounts of disparate data flowing into the business from all directions every day.
Ever since spreadsheets were made popular by Lotus 1-2-3 in 1983, finance departments across the world have been utilizing them to manage that information and data. You might say they’ve become addicted to spreadsheets.
“As such, it is unusual to find a spreadsheet that has been designed, developed and tested using the rigorous methods in use by professional software engineers,” Epner says, noting that many firms are addicted to spreadsheets. And this addiction is costing you because spreadsheets aren’t very good platforms for data management and complex analyses.
In fact, 90% of spreadsheets used in business contain errors, according to a report from Evention LLC, a provider of automated cash and gratuity management software.
Over the years major organizations have found serious errors in their spreadsheets and suffered the consequences.
- Fannie Mae discovered a $1.136 billion error in total shareholder equity that it said happened because there “were honest mistakes made in a spreadsheet used in the implementation of a new accounting standard.”
- Kodak had to restate its income and add $9 million to its loss because of a severance error traced to a faulty spreadsheet.
- Utah officials discovered that spreadsheet miscalculation by the State Office of Education caused the costs of running a university to be under calculated by $25 million. Officials blamed a “faulty reference” in a formula that read in the wrong numbers.
- Mouchel Group, a support services group in the UK, overreported its profits by £8.6 million ($12.5 million) because of a spreadsheet error that resulted in a pension fund miscalculation. The company’s share prices dropped and its CEO lost his job.
Here are some specific ways your spreadsheet addiction is negatively affecting your business:
- You can’t make decisions because spreadsheets don’t offer analytics and advanced reporting capabilities.
- There aren’t any audit trails in spreadsheets.
- You lack an overarching view of the data
- You’re wasting a lot of time. Manual reentry across multiple spreadsheets is extremely time-consuming.
- It is very challenging to trace back your data when performing complex analyses in spreadsheets and you cannot get quick answers to new questions
What they need is a solution that helps them make better decisions by delivering a step-by-step flow of data analysis to identify the original data source and the manipulations that were performed. This is absolutely necessary for complex problems – not just beneficial.
Alternatives to Excel, do this by providing:
- Out-of-the-box functionality that makes it easy for users to perform mission-critical analysis with template-driven data flows that are simple to follow and trace back to original data sources.
- The ability for users to profile, inspect, and transform data any way necessary with agile analytics.
- Visual models that expose analytic logic and create audit trails, building trust with managers/peers.
- Governance capabilities to ensure that data is not only accessible, but also has the necessary controls in place.
- A full set of APIs that allow integration into most BI stacks and sales automation solutions such as Salesforce.com.
Excel isn’t going away but for the vast majority of complex analytics questions that the business wants answered, technologies exist that can better validate understanding of the analysis. The spreadsheet addiction is never going away, it’s not good for you if you have to much but it’s okay in small doses.