When spreadsheet technology was first introduced, many were mesmerised by what could be achieved using electronic formulae, data cells and worksheets, compared with manual methods. Since then Microsoft Excel has become synonymous with the word spreadsheet and knowledge of how to use the application is widespread, mostly because it is accessible, affordable, powerful, simple and intuitive to use.
Such is their popularity that according to figures from Microsoft more than 40 per cent of smaller organisations actually use Excel to prepare their accounts. Everything from monthly management reports through to annual budgets are often managed using a spreadsheet. However, as the demands and scale of businesses have altered the humble spreadsheet has struggled to keep up and there is evidence that its limitations are actually hindering the growth of organisations.
Certainly one of the biggest complaints surrounds their accuracy. A study by PricewaterhouseCoopers revealed that 90 per cent of all spreadsheets with more than 150 rows contained errors. Perhaps the reason why this is so commonplace is that its inherent structure often encourages sloppy habits. The internal formula structures written into spreadsheets are not ‘dynamic’ which means that if a formula is changed in one sheet it won’t automatically be changed in all the others. Also they are prone to human error so simply just missing out a field could have massive repercussions when it comes to calculating figures or, even worse, lost potential revenue!
There are other pitfalls to consider. Because it is simply a file, there is often insufficient security in terms of how and by whom it is accessed and there is also the danger of it being deleted. Duplicating information can also be a major headache because you are often cutting and pasting information from one system to another without taking into account that the data may well have already changed by the time it is put back into the system.
Spreadsheets really begin to creak though when you apply large amounts of data which is often the case if you are a growing business. There are large hidden costs associated with wasted valuable resources as a result of staff spending days of their time updating and re-entering data. On top of that, you could find that you are running your business with unreliable information so sales targets, forecasting and cash-flow management can all become meaningless.
Most would agree that there is still a place for spreadsheets and they still remain a valuable tool for developing new ideas or creating standalone specialised reports. But if you want to reduce errors and eliminate the extra work they can incur then there are ways of substituting them.
One of the main arguments for using Excel is how easy it is to import and then manipulate data from numerous sources. Until recently this has been a significant stumbling block because finance systems had minimal integration with other parts of the business where the information was stored. This has now changed with integrated accounting solutions, so that as soon as a figure is entered into the CRM package for example, it will also be automatically updated in the accounting system.
Organisations should ask themselves how much time, money and competitive advantage they may be losing through obsolete or defective information. If spreadsheets are at the heart of your day to day business operations it maybe time to look at the alternatives such as fully integrated accounting packages.
*Simon Kearsley is CEO at accounting software vendor bluQube, which he co-founded in 1996. Related articlesHow browser-based accounting can help your businessHow to tell if your accounting system should be replacedProjecting a rosier future