Summary: Described as “the most dangerous software on the planet,” spreadsheets regularly take the blame for data errors and financial losses. But, are spreadsheets really to blame? The fact is, businesses regularly use spreadsheets in ways they were never intended to be used. This misuse runs rampant in businesses across the globe–leading to costly mistakes on a daily basis. Is your business guilty of abusing spreadsheets in the 5 ways outlined in this article?
Spreadsheet programs (like Excel) are the most commonly misused/abused software programs in the business world. This misuse leads to data errors–with an estimated 88% of spreadsheets containing serious errors. These errors lead to billions of dollars in losses for businesses every year.
It’s no wonder that some call spreadsheets “the most dangerous software on the planet”.
Now, while the statistics paint a grim picture, let’s clarify one important fact: Spreadsheets are not the problem. They were designed to serve a specific role. They are single-user tools that help regular employees analyze data quickly. When used in this way, they pose little risk.
The problems arise when businesses use spreadsheets in ways they were never intended.
Unfortunately, this happens all too often. Businesses regularly turn spreadsheets into multi-user and multi-department tools. They use spreadsheets for tasks they were never designed to handle.
Today, let’s focus on these areas. In what ways do businesses commonly misuse/abuse spreadsheets?
The answer: In all sorts of ways. In fact, the list is so long, we can’t cover everything in one article. While we’ll cover more in a future article, today we’ll explore 5 common ways businesses abuse spreadsheets, and list a few problems associated with each one. Sound good? Okay, let’s dive in. Businesses abuse spreadsheets when they use them:
1. As a database
In today’s data-driven business world, your business is only as good as your data. Data quality and accessibility impacts all areas of your business, from sales, to inventory tracking, to reporting, and so much more.
The problem: Many businesses store their critical business data in spreadsheets rather than in a database.
“One of the biggest misuses of Excel I see all the time is that people refer to their spreadsheet as a ‘database’,” says Marc Weaver, Founder and CEO of Databasable, Inc. “I’ve spoken to many clients who want me to “take a look at their database” and after I ask a few questions it turns out that they are talking about a spreadsheet!”
“There are some similarities between databases and spreadsheets, obviously they both store data and a worksheet is effectively an export of a database table. However businesses (usually smaller businesses) store mission critical data in a spreadsheet rather than a specialized database platform. This means they run the risk of data loss, no recoverability, slow performance, lack of scalability and they are also missing out on the huge amount of additional features that a database offers.”
Why does this happen? In some cases, the businesses doesn’t think there’s enough data to justify a database. Others lack the technical resources to move their data to a database. Spreadsheets offer them a simple way to store their data. What happens? A year or two later, they’re still using the same spreadsheet–only it’s grown to thousands of rows and takes a few minutes to open.
2. As a CRM system
A customer relationship management system helps a business manage both prospects and customers. It tracks all interactions with the business, from emails, to phone calls, to appointments, and everything in between.
The problem: Many businesses make the mistake of trying to handle all of these tasks with spreadsheets. While this approach does let them store contacts, it lacks the features that make a CRM system truly useful.
“The most common misuse of any spreadsheet program is to utilize it as a client management system,” says Lee McCormick, media relations officer at Pre Settlement Funding, Inc. “Excel was not meant for managing leads or clients; it’s not practical, there’s no scheduling option nor does it sync with email (or any other app, for that matter). In short, utilizing spreadsheets to manage leads/clients is a horribly inefficient—yet surprisingly popular—misuse of the tool.”
3. As Project Management and Workflow Tools
As mentioned earlier, spreadsheets work just fine as single-user tools. When used to track your own projects or keep tabs on your to-do list, there’s no harm in using a spreadsheet.
However, as soon as you start branching out into multi-user project management, problems arise. With so many different users all relying on the same spreadsheet, data errors are likely. For instance, here’s a great example of what can happen when you use spreadsheets for project management.
“A client of ours uses spreadsheets to track the numerous “projects” they have going with their customers,” says Jody Jankovsky, Managing Member, Founder, Black Line Consulting. “There are three groups of people who need access to project information at various times through the process: Project Managers, Administrative support and Accounting. Project Managers identify tasks, adjust dates and generally assign tasks. The Administrative support team works on projects, documents results and completes the tasks. Accounting bills customers, updates billing status and notes billing issues for Project Managers. With so many people (15 or so) needing access to this information to review, adjust, and report, they experience numerous problems. Spreadsheets get corrupted easily, people make copies so they can get their part of the job done (while someone has one open) and then “combine” their work later. When so many people are playing games with the data, accuracy is lost and time is wasted as data has to be rebuilt when problems occur. We are called on to restore or fix spreadsheets a couple times per month. Basically, it’s an inefficient disaster.”
4. As an integration tool
Many businesses run on different systems. For instance, a single company might use one piece of software for their operations, another for their eCommerce site, and another warehouse management. Or, different departments within the same company might use different pieces of software.
The problem is, these systems don’t always communicate with each other. How do they tie all of their data together? For many, the answer is spreadsheets.
“Because data from different departments rarely fits together, Excel often becomes the cobbled collaboration tool,” says Seline Karakaya, Chief Operating Officer at The Kini Group. “This results in slow, heavy, and basically unusable documents chained together. The point is to connect the data and see how departmental decisions and strategies affect one another, but these spreadsheets often fail to achieve this goal, muddying and confusing the data instead. Even worse, departments end up with multiple versions of documents, because everyone’s trying to update their information at once. This adds another layer of complication by forcing companies to schedule out how they update their spreadsheets. In short, Excel is great for small, one-person reports, but it is not a tool for database application development.”
5. As a budgeting tool
Budgeting presents a challenge to many businesses. Why? For some, they just can’t find software that fits their unique budgeting process. For others, budget data resides across multiple systems that don’t communicate with each other.
What do they do? The go-to solution to these budgeting problems is often a spreadsheet program. They pull the data into a spreadsheet, and create their budgets from there.
As you can imagine, this is a time consuming process. I’ve seen companies where budgeting is a month-long process. I’ve seen employees who spend half of their time creating budgets on spreadsheets.
Now, these are just a few ways businesses misuse/abuse spreadsheets. Stay tuned for Part 2, where we’ll explore even more common practices. If you would like to add anything to this list, I’d love to hear it. Feel free to share in the comments.