Spreadsheets: 21st Century Corporate Weeds

Budgeting, Planning & Forecasting

- 4 min read

Spreadsheets: 21st Century Corporate Weeds

As anyone who’s ever tried to cultivate an attractive garden discovers, weeds are inevitable. They crop up from seemingly nowhere, and if left unchecked, flourish like … well, like weeds. Over the four decades since Visicalc and Lotus 1-2-3 drove the first Modern Business Analytics wave, fueling early PC sales in the process, spreadsheets have become the ubiquitous weeds clogging business processes around the world.

For many discrete business purposes, of course, spreadsheets serve a valid need, but more and more research shows they are too often deployed to do more than they were designed for, often with costly results that erode profits and lead to poor decision-making.

In July 2016, Ventana Research issued its benchmark research project “Spreadsheets Use in the Today’s Enterprise,” and found increasing evidence of this trend. Robert Kugel, Sr. VP and Research Director for Ventana, reported that “Desktop spreadsheets are a fabulous tool but they have limits, and those who fail to respect those limits wind up paying a price.” Kugel went on to cite “spectacular failures costing companies billions” that included JP Morgan’s “London Whale” trading fiasco, but concluded that usually the negative results still go undetected, either through benign neglect or lack of oversight.

“Today, people routinely spend time exploring apps for their smartphones but rarely spend any time getting to know software that can increase their productivity by replacing desktop spreadsheets,” observed Kugel. Ventana’s research shows that errors are increasingly common in spreadsheets across data, formula and formats in a large number of organizations, and even more so in very large enterprises.

Spreadsheet-based processes are inherently full of errors

Their survey research found that 46% of respondents said they discovered errors in data frequently or occasionally in the most important processes where they use spreadsheets. Another 34% found errors in formulas in their most important processes. Multiple versions of the same spreadsheet can be an issue if the versions do not agree with one another.

In collaborative processes, data errors or conflicting information can result from the inappropriate use of only spreadsheets. A full one-third of Ventana Research respondents said that happens frequently or occasionally, and these issues stretch out the time to complete the process.

So how has this problem been allowed to continue for so long?

Ventana found that few of their study participants (even the most experienced and proficient users) said they apply rigorous checking to ensure data accuracy; half do checking only when something doesn’t look right, and when they do check they look only at selected cells. Ventana concluded that this is another reason why most people see no impact on their productivity from problems in spreadsheets: “They simply don’t spend a lot of time checking for errors. It also may explain why mistakes have a limited impact on businesses – even the selective ‘eyeballing’ method of checking for accuracy is likely to spot many of the blatant mistakes that would have a significant impact on business.

Lastly, 81% of Ventana’s participants and 88% of heavy users reported that they had to combine data from two or more spreadsheets (often from multiple contributors) to perform some business process. Regardless of their skill levels or number of years using spreadsheets, 56% said that combining spreadsheets is a time-consuming… meaning resource-wasting… chore.

Unified planning and analytics platforms are the solution to spreadsheet woes

Fortunately, today’s Corporate Performance Management and business analytics markets offer future-proof planning, forecasting and reporting software to fix this decades-old business problem. The best of these are enterprise-grade, secure and offer users the choice between Cloud-hosted, on-premise or hybrids of both. They allow knowledge workers to continue their data capture and crunching tasks in the familiar Excel environment but without the drawbacks that spreadsheets impose when they are used improperly.

Many applications developed on these platforms use a spreadsheet-like interface, providing a familiar look and feel while guarding against the inherent technological weaknesses of a traditional spreadsheet-based approach. This removes the risk of them infecting data repositories and business analytics results with undetected errors.

Think your organization could benefit from a similar solution? Contact us below to find out more.

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