People love Excel, IT departments loathe them. HR, marketing, sales, and operations all have the freedom to play with data and manipulate it in Excel; without having to rely on their IT department or deal with databases and applications that they don’t understand. IT departments don’t like Excel because they know the problems associated with moving data to individuals and their devices.
The fact that people love Excel and there are 750 million Excel users worldwide tells you one thing: Excel is going to be a tool that most organizations, small to enterprise, will regularly utilize.
This article looks at the problems that can arise when using Excel. To help you plan for all possibilities and be aware of the pitfalls of Excel so you can avoid them.
This brings us to the inherent problems with Excel:
Excel is prone to human error
More mundane but equally damaging is Excel’s extreme susceptibility to trivial human errors. Missed negative signs and misaligned rows may appear innocuous, but when they damage user confidence or result in a significant loss of opportunity costing millions of dollars, these become make or break errors. A spreadsheet will typically contain one error for every 20 data-filled cells and spotting those errors in a huge database is a real challenge.
Regulatory Compliance Challenges
Using spreadsheets makes it difficult to ensure regulatory compliance as the data can be susceptible to fraud and errors.
Which regulations apply to the different spreadsheets is hard to determine. We have seen a spike in worldwide regulation during the previous two decades, including:
- Solvency III
- Dodd-Frank, Basel III
- Sarbanes-Oxley (SOX)
- FAS 157
Data integrity, security and confidentiality have become paramount in today’s day and age. Without appropriate access control and access history, it’s also impossible to really know who has had access to the organization’s spreadsheets.
Excel is not designed for collaborative work
Teams often work from a shared worksheet, be it for business planning, sales forecasting, product lists, and countless other uses. Teams may also be spread across different regions. There are two ways collaboration works: working from a shared master spreadsheet with a solution like Dropbox or SharePoint, or by exchanging spreadsheet data via email.
Both methods of collaboration present issues that make collaboration ineffective and prone to errors. When an employee receives 13 emails containing different versions of the same spreadsheet, it’s easy to pick the wrong one. When syncing using a file sharing tool, conflicts are not flagged, data is lost, and mistakes happen. What happens when something breaks too? How does an individual see what’s changed between versions? It’s difficult and time consuming to compare workbooks.
Excel is unsuitable for agile business practices
We are now living in a time when significant changes are shaping and reshaping the business landscape. Mergers and acquisitions, management buyouts, uprisings, climate change, technological shifts, and so on are all examples. If a company isn’t adaptable enough to such changes, it could easily fall behind or even go out of business.
Spreadsheets are frequently created by people with little or no IT background. Spreadsheet files will eventually evolve into highly customized user-created applications. As a result, any benefits gained from an evolved user-created application takes time and is not available organization wide as the tool is bespoke to that particular use case. Also consider when the time comes for a new person to take over as part of a business or personnel change, the newcomer may have to start all over again. This causes significant inefficiencies in productivity and exposes the data to errors if a new worker is left guessing on what to do.
Excel is hard to consolidate
When it comes to creating reports, the use of Excel spreadsheets means a lengthy consolidation process. In most cases, end users must collect data from various files, summarize it, and send it to their department heads via email, portable storage media, or copying to a commonly shared network folder. This procedure must be repeated until all relevant information reaches the organization’s top decision-makers.
Excel is incapable of facilitating quick decision making
Extracting data from various departments, consolidating that data, and summarizing the information to help a company’s management make the best decisions can be time-consuming in a spreadsheet-based environment.
To maintain the integrity of the data, everyone involved in the information processing process must be extra vigilant – double/triple checking is frequently required. When the final version reaches the MD’s desk, he or she may not have much time to work with the data.
Data in spreadsheet systems are rarely kept in a single location; instead, it is frequently in the hands of non-IT personnel who are unfamiliar with storage and backup best practices. If a major disaster strikes, full data recovery can be extremely difficult, if not impossible, making it unsuitable for business continuity.
Excel is Vulnerable to Fraud/Corruption
Several million dollars have already been lost as a result of fraudulent changes in company Excel files. The main cause of this spreadsheet vulnerability is the lack of control, which makes it very easy to change formulas, values, or dependencies without being detected.
Access to spreadsheets on shared network drives can also be unregulated meaning an organization has no idea who has had access to files which is a security nightmare.
What happens if the ‘Macro Go-To’ leaves the organization?
In a lot of medium-sized businesses, one person is in charge of collecting data and updating spreadsheets: the macro go-to.
This in itself raises a significant knowledge management issue. When this employee does not come to work or is absent for any reason, it is common for no one else to enter the data correctly or keep the system “active” as before.
The management gap can result in the loss of important historical data. Because the ‘macro go-to’ isn’t present and no one has updated the spreadsheet (or formulas), there could be a significant loss of valuable information for past and future production analyses.
In conclusion, the first step to overcome these challenges is to accept that Excel plays an important role in your company, but other solutions have emerged to complement and improve corporate data management. This is where integrating Excel with a proper Version Control system, such as VersionXL, comes in handy as it gives you the best of both worlds – the ability to get on with your work while maintaining control as well as facilitate collaboration & regulatory compliance.