Since its release three decades ago, Microsoft Excel has become ubiquitous with data management and financial forecasting. Today, with its presence on almost every PC, Excel has taken a critical role in key business decision-making, providing complex statistical analysis and estimation tools, all wrapped up in a seemingly friendly front end.
Whilst it remains a robust program, the spreadsheets it creates are fragile. Excel’s biggest strength is also its biggest weakness – anyone can create a spreadsheet. However, it relies inherently on the accuracy and diligence of the person entering the data, and all too often this is where errors begin to creep in. Such programs currently have no audit trails, no way of tracing where the data comes from and there is no simple way of error checking them. When this is combined with a lack of knowledge of how to analyse data or a reluctance to be the one to question convincingly presented numbers, these errors can turn into catastrophes.
Manual data errors have been linked to the 2012 West Coast Main Line row and the 2012 JP Morgan Chase trading loss, not to mention the Enron crisis. Such issues may well have been mitigated had the corporations involved automated such processes, rather than relying on a “jack of all trades” spreadsheet platform easily manipulated in order to justify unwise spend.
A recent report conducted by YouGov highlighted how alarming the use of Excel actually is. It found that the UK manufacturing sector uses spreadsheets to make pricing decisions worth over £150bn and that companies use them across different sectors in the preparation of accounts worth up to £1.9tn. With billions of pounds dependant on such programs, is it any wonder that experts are left looking around for a better alternative that can ensure a strong level of accuracy?
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Not only does Excel allow room for financial errors, it is also one of the most time consuming admin processes. Businesses need to find ways to work smarter and more efficiently in order to free up staff from manual processes and improve productivity and compliance.
So why haven’t businesses embraced a solution? A key issue is there is often a misconception within corporations that investing in back office automated processes will incur large financial costs to set up – the reality is that it is an initial investment with long-term returns. More and more bosses are investing with the new horizon of the “Back Office Revolution” allowing them to stay competitive and stay on top of their processes, however this shift is yet to be seen across the board.
Most businesses have come to accept that errors in spreadsheets are the norm and have made no move to safeguard our data or improve upon what is effectively a monopoly on process. We should be looking at automating processes, where possible, to reduce the risk of human error entering the equation, save time and ultimately save money.
Such gains should not be the purview of enterprise either. It is vital that such standardisation and due practise are also within reach of smaller businesses. What is an embarrassment for corporations may be deadly for a startup.
Andy Humphries is CTO of PhixFlow.
Today, everything is driven by data. Whether it’s analysing quarterly sales figures or using a fitness tracking app, reviewing inventory information or scrolling through recommended music on iTunes – data permeates both work and play, our jobs and our personal lives.
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