Eight Signs Your Business Has Outgrown Spreadsheets
Companies often use Excel for budgeting, planning, forecasting and many other critical business processes. As growth occurs, and the number of people interacting in a business process increases, manual errors, manual consolidation and a lack of the truth start to become major issues. At the organizational level, business processes performed in spreadsheets become inefficient, cause frustration and lead to decisions based on inaccurate data.
Below are several indications your business may be outgrowing spreadsheets, along with their consequences.
- Large workbook size Large workbooks can clog up email systems and shared drives. Calculations and complex operations become lengthy, reducing productivity and leading to user frustration.
- User security Controlling workbooks stored in a shared location is extremely difficult. Password protecting your spreadsheet is an option but security at this level is not usually applied. This makes it easy for data to be changed, resulting in little confidence that the data is correct.
- Large number of linked files It is common for spreadsheets to make use of external links. For users this is a fast way to build complex solutions integrating data from many different sources, however it can lead to broken links when source files are no longer available. Broken links make it impossible to verify the data is correct and can lead to a complicated situation.
- Complex, interrelated formulas It is common for business critical applications to end up with thousands of cells of complex interrelated formulas that are hard to understand and maintain. When people cannot understand these formulas and their inter-dependencies they tend to accept them as correct. This may well be the case at the time of creation but formulas often get overlooked when changes are made and hence are difficult to maintain. This ‘black box’ mentality can cause people to accept the status quo and forget to challenge assumptions as markets change.
- Limited change control and management Who actually owns the master copy of the workbook? Who is managing changes and monitoring when formulas and macros are modified? Rarely is all functionality sufficiently documented and understood, especially in cases where the workbook was designed by someone who has since left the organization.
- No single version of the truth Versioning is also a major headache when workbooks are spread and duplicated throughout the organization and multiple people are making changes. This becomes extremely difficult to merge changes correctly. Huge duplication and massive proliferation of very similar spreadsheets results in a significant management problem.
- No confidence in the numbers A lack of control leads to users having different figures for the same metrics as changes were not replicated or a broken link means that a rollup did not occur correctly. This leads to users having their own data repositories and repeating common tasks, as they only trust their own numbers, wasting valuable man hours.
- Lack of data analysis A consequence of the complexity of these Excel business applications is that people who were ultimately hired to analyze data become slaves to data input and the most basic of functions. There is simply not enough time to turn the data into information and gain some insight into the underlying meaning.
As spreadsheet challenges continue to escalate without sufficient management and structure, companies eventually start to feel enough pain and look to professionally structured applications. The costs of wasted staff time, delays, errors and frustration finally exceed the tipping point of bringing in a new solution. The surprising factor is these solutions are quite affordable, given the man hours they end up saving the organization and the weight of accuracy they bring to the table.
Are you ready to make the transition from spreadsheets to a performance management solution?
Download our Roadmap to Process Optimization and learn how you can easily transition from spreadsheets to full process optimization.