In this 2-part series, we explore the issues companies face when relying on spreadsheets to manage their business.
Part 1 of 2: Are you possibly using spreadsheets too much?
We are all familiar with spreadsheets, such as Excel and other tables which can help you display and organize your company’s information. Spreadsheets are a great way to report information and to generate tables, graphs, and performance-related metrics for reporting purposes. However, if you are actively using your spreadsheets beyond reporting purposes, such as using them as a sort of “base of operations” for managing parts of your business, you run the high risk of relying too heavily on your spreadsheets without proper safeguards in place to avoid serious errors.
If you rely on complex spreadsheets to monitor and run your business, chances are you’re making critical decisions based on bad information. According to Ray Panko, a professor of IT management at the University of Hawaii and an authority on bad spreadsheet practices, “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.” His research showed that some 90% of all spreadsheets have errors.
When a single person in the company (such as a sales analyst) is responsible for maintaining a large spreadsheet which is your “single source of truth,” your company is taking huge risks by relying too heavily on one individual whose work cannot easily be checked or corrected. Even worse, we see organizations which ask several employees to “share” a common spreadsheet for keeping track of valuable data, which inevitably creates multiple versions of the same spreadsheet floating around. If this sounds familiar for any aspect of your business, you may be relying too heavily on spreadsheets and exposing your company to unnecessary risk.
Up next in Part 2 of 2:
When should you stop using spreadsheets?
(And how you can do it)