Betting your business on a spreadsheet?

A surprisingly large number of organizations are still using spreadsheets as the backbone of core business processes like POS data analysis, category management, and vendor collaboration.  There are many reasons for this, and even for a business intelligence professional like myself, I cannot simply dismiss their use altogether.  Although, it would be good for business ;-)  Spreadsheets are an incredibly useful tool in many situations.  However, they are also terribly overextended and misapplied.

I cannot tell you how many times in the past month I've heard some form of this statement; "Our spreadsheets work just fine, I don't see any reason for us to change."

I am going to take a few deep breaths and be as diplomatic as possible in answering that statement.  So here are a few reasons not to use spreadsheets for POS data analysis, category management, or vendor collaboration. 

Spreadsheets are inefficient for most complex data analysis.  Spreadsheets were designed to be a presentation layer for data and allow a user to perform some limited high level math.  Unfortunately, in many offices, spreadsheets have become complex programming environments where power users spend hour after hour manipulating data.   Because they are on the very edge of what a spreadsheet was designed to do, they spend 80% of their time fetching and manipulating data and only 20% performing analysis.

No single version of the truth.  Each spreadsheet has its own business logic, calculations, and definitions, so each user must spend time simply familiarizing themselves with the information.  In some cases they will have a different definition, so then the spreadsheet must be recreated to suit their needs.  One client of mine comes to each meeting, distributes his spreadsheet, and then leaves to refill his coffee cup and use the restroom while all the other attendees just figure out his math. 15 minutes on the front of every meeting multiplied times a dozen senior managers!

Lack of data quality and consistency.  Any time data is manually inserted into a spreadsheet, an opportunity exists to make a mistake.  The mistake could be inserting the wrong set of data or not applying the correct unit of measure.

Spreadsheets create a single point of failure.  Almost every office I have ever visited has a power user with an Access database and an Excel spreadsheet.  The rest of the office lives in fear of the day this power user might choke on a chicken bone at lunch, or decide they would rather live in Tahiti.

No auditability or verification.  In the post-SOX business world, this is a key concern for any public company or large private company with ambitions of an IPO.