Excel is easily the most popular spreadsheet software in the world. And while the simplicity of use makes it beloved among hundreds of millions of end-users, the rise of Big Data illustrates the deficiencies that have been present in Excel all along. The most savvy organizations have already begun to move away from Excel in order to adopt a dedicated reporting software that facilitates the more advanced needs of organizations today.
Excel is not a Database
Microsoft and Forrester have estimated that up to 80% of an organization’s critical reporting is still being done in Excel. In some cases, Excel even houses the majority of a company’s critical data. Years ago, Excel was adopted as the foremost office productivity tool because of the user-friendly format that allowed people with less technical skills to create reports and make calculations rapidly. In spite of the development of technology, people still cling to their Excel spreadsheets with unwavering devotion.
Consider this example. As James Kwak reports, JP Morgan created a value-at-risk (VaR) model that “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.” The internal Model Review Group identified this as a problem but approved it nonetheless. After the London Whale trade blew up, the same group discovered a couple spectacular errors, among which was the loss of several billion dollars due to an incorrect equation. To recap, JP Morgan lost several billion dollars because they were copying and pasting between Excel spreadsheets.
Let that sink in.
It is indisputable that change is hard. So the reluctance of people to loosen their grip on their Excel sheets is understandable, but misguided. Not only is Excel an overly complicated and inefficient way of doing business, but spreadsheet reporting can be rife with inaccuracies. If you can relate to any of the following issues, it is time to consider an upgrade.
- Excel Requires Manual Updates—The accuracy of an Excel sheet is dependent upon the skill of the user, and said users’ ability to manually identify and correct mistakes. For this reason, many companies hire data wizards, but as shown in the above example, Excel users are human and prone to error.
- Overly Complicated Usage Requires a Data Wizard—Many organizations rely upon a singular person (so-called Data Wizards) to work their magic in Excel, but relying on one data wizard has a number of hazards. What happens if that person leaves, gets sick or is otherwise occupied? Unilateralism also means there are no checks and balances on the end result.
- Excel Spawns a Disjointed Workflow—Excel files are traditionally stored locally on an individual’s computer. In order to facilitate collaboration, the files must be shared via email. While sharing documents via email isn’t problematic, it does cause problems when every person maintains a varying version of the original file. Managing Excel reports with multiple people using multiple versions increases the possibility of inaccuracies.
- Data Growth is Dangerous for Excel—Exponential growth of information can be deadly for excel sheets. One mistake can cause any number of disastrous results. For example, copying existing equations to new locations can change the cell references, while accidently inserting a number into a cell that already contains an equation turns the content of the cell into a constant.
- Data Makes Excel Slow—Excel wasn’t meant to hold as much data as people want to put into it. The size impacts the time that documents take to load as well as the ease with which it can be edited. In the era of big data, almost any organization can exceed the intended capacity of Excel.
- Excel Lacks Collaboration Tools.—Excel users have developed workarounds to compensate for the fact that the application includes no communication and collaboration functionality. While many don’t find it difficult to augment Excel work with texts or emails, it is no question that the longer it takes to inspire collaboration, the less likely it is that it will happen at all.
Excel has its many uses, but it isn’t a database, and in today’s world where data is collected on everything, Excel is no longer sufficient. If you identified with any of the above problems, it is certainly time to consider switching to a more robust software solution.
Can you identify with any of these issues? Is your organization still using Excel to manage its data?