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7 dangers of spreadsheet overuse (part 1)

EducationSummary: Described as “the most dangerous software on the planet,” spreadsheet overuse poses many risks to businesses. However, many companies aren’t aware of these risks, or that they’re even misusing spreadsheets in the first place. Learn how misuse occurs, and the dangers it creates.

Is Excel really the most dangerous software on the planet, as stated in this article?

For businesses, the answer might be “yes.”

photo credit: subflux via photopin cc
photo credit: subflux via photopin cc

It’s not that spreadsheets are unsafe. It’s that businesses use them in ways they were never intended. They turn spreadsheets into multi-user, or multi-department tools. They store crucial data on spreadsheets. They run their business off of spreadsheets.

“Spreadsheets are certainly a powerful tool, but my rule of thumb has always been that any given spreadsheet should not be used by more than a few people over a given period of time,” says Michael Talve, Founder and Managing Director of The Expert Institute. “What I’ve seen happen in SMB’s is that spreadsheets will be stretched beyond their useful capability because they are cheap and versatile, and it is easy for a spreadsheet to evolve from a purpose built tool into a bloated mess. If you have multiple people – especially from multiple departments – using the same spreadsheet over an indefinite amount of time, you run the risk of data inconsistency, access issues (only one user can edit a spreadsheet at a time), and other significant problems like file deletion.”

And that’s just the tip of the iceberg. When businesses overuse spreadsheets, they open themselves up to a world of problems. In fact, this topic is so broad, we’re splitting it up into two articles. While we’ll explore more problems in a future article, today let’s focus on just 7 dangers of spreadsheet overuse.

1. Spreadsheets make errors easy (but hard to catch)

Why are spreadsheets so widely adopted? Because they’re installed on most any computer and are easy to use–even for non-technical users.

But, this ease of use comes with a price: Making an error in a spreadsheet is also easy. Even worse: They’re hard to detect. Businesses can go weeks or months before recognizing an error. By then, the damage has been done.

“There have been many high profile stories of Excel errors playing a role in bad decision making including this one last year,” says Judi Otton, CEO and co-founder of GrowthCast. “It’s really easy to make an error in Excel. I know, I’ve done it. Even if we don¹t make errors big enough to get our names in the papers, we still harm our businesses by operating on invalid data. The trickiest thing about Excel errors is that you may not ever realize they are there.”

How common are spreadsheet errors? Studies estimate that anywhere from 80 – 90% of spreadsheets contain errors. I’ve seen websites (like this one) dedicated to sharing the problems caused by these errors.

With errors so common, and the risks so high, do you really want to rely on spreadsheets? I wouldn’t.

2. Spreadsheets are slow, and prone to crash

Spreadsheets cannot scale with your business. As they grow, performance suffers–especially on the more complex spreadsheets. The larger they grow, the slower and more unstable they become.

photo credit: PublicDomainPictures via pixabay cc
photo credit: PublicDomainPictures via pixabay cc

“Spreadsheets with a lot of data, especially when formulas are being used on that data, can be extremely slow and often crash,” says Alex Juel, Sr. Specialist at Inflow. “Once you have a spreadsheet that starts to crash, it’s hard to get that data out and in usable form.”

Why do they become so unstable as they grow? Because spreadsheets were never meant to handle large amounts of data. They’re not designed to serve as databases–yet many businesses treat them as such.

3. Spreadsheets cannot be controlled

As spreadsheets grow, they spread throughout a company. The more they spread, the harder they are to control.

After a while, you don’t know how many people have changed the spreadsheet. You don’t know how many places it’s stored. You don’t know how many versions exist, or which one is accurate. You don’t know if someone has made an error.

“Here’s how most people end up with spreadsheets: there is no package software that fits, or not enough budget to build a customized one,” says Berrin Sun, Product Marketer at Ragic, Inc. “But businesses usually outgrow their spreadsheets much faster than expected. Using spreadsheets gets frustrating after you have more than a handful of co-workers or dozens of interrelated spreadsheet files.

This means that you have no way of controlling access, or keeping track of who edited what, so when there is a mistake, you have no way of tracing it back. When you look at a piece of data, you cannot be 100% sure that it would be correct, and when someone asks for a piece of data, you know you couldn’t find it in time. These spreadsheets also tend to load very slow with their massive filesize even on good computers, and business people have a hard time figuring out why.”

4. Spreadsheets are easily corrupted

“Spreadsheets get corrupted,” says Juel. “I have clients that are many years old and I still use spreadsheets that were created for them 5+ years ago. I’ve had spreadsheets just randomly become corrupted and I can’t access the data. I use Dropbox and Google Drive now, which helps because I can usually back up from older versions.”

photo credit: Kasman via pixabay cc
photo credit: Kasman via pixabay cc

It’s happened to many an Excel user. Yesterday, the spreadsheet worked fine. Today, it’s corrupted. Why does this happen so often?

There’s no single reason, but it usually happens as the spreadsheet grows. As more changes occur and more data gets added, spreadsheets become unstable. The more unstable they become, the greater your chances are for data loss.

5. Spreadsheets (built by others) are hard to understand

When businesses use spreadsheets as multi-user tools, they run into another problem: There is no set design template. One user’s idea of a well-formatted spreadsheet may be confusing and unreadable to other employees.

“Spreadsheets can be hard to understand,” explains Juel. “Everyone seems to have their own method of formatting spreadsheets and they’re the only ones who understand what the spreadsheet is saying. I get spreadsheets all the time from clients who have formatted their spreadsheets with all sorts of colors and data branches and I have a hell of time trying to figure it out.”

These different designs can become more than just a minor nuisance. It can lead to confusion or even users misunderstanding data…which in turn can lead to costly mistakes.

6. Spreadsheets are a productivity drain

“Overuse of spreadsheets can also have a productivity cost for business,” says Shelly Collins, Professional Organizer at Clutter Contained. “Once a spreadsheet is created, it seems to take on a life of it’s own. It’s something that must be updated and maintained, even if the information it provides is not useful or if that information is being duplicated elsewhere. Businesses are spending time compiling data into spreadsheets, but far too often it goes unused after it has been collected.”

How much time do you (or other employees in your company) waste on spreadsheets? How much time do they spend creating, updating, and maintaining spreadsheets? The answer may surprise you.

I’ve seen companies where some employees spend half of their time on spreadsheets. Some budgeting and reporting processes require a few days of spreadsheet work every month. Spreadsheets are a productivity drain that exist in far too many businesses.

7. Spreadsheets make data analysis difficult

Multi line and bar comboWhen used across multiple departments, different spreadsheets might hold related data. For instance, different spreadsheets might hold different information about the same customer. One might hold sales data. Another might hold billing data. Another might hold completely different data on the same customer.

What happens when you need to analyze that data? What happens when you need to create a report across various data points? What happens if you need to link related data across different spreadsheets?

“There is no way to link data on spreadsheets,” says Graham Cleven, Spreadsheet Expert. “Spreadsheets simply report data, they do not show the link between data which is just as important as the data itself. For example in a consumer spreadsheet you will have a list of your customers and their personal information and perhaps an ID for each customer. Then in another spreadsheet that handles transactions you would have the transaction data with the customer ID on it. As two separate spreadsheets there is no logical way to link those two sets of data together.”

So, what do you think? Is there anything you would add to this list? If so, please share your thoughts in the comments.