Top 10 Disadvantages of Spreadsheets

Fraudulent manipulations in company Excel files have already resulted in Billion-Dollar losses. The main underlying reason behind this spreadsheet vulnerability is the inherent lack of controls, which makes it so easy to alter either formulas, values, or dependencies without being detected.


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1. Vulnerable to Fraud

Of all the spreadsheet disadvantages listed here, this is perhaps the most damaging. Fraudulent manipulations in company Excel files have already resulted in Billion-Dollar losses. The main underlying reason behind this spreadsheet vulnerability is the inherent lack of controls, which makes it so easy to alter either formulas, values, or dependencies without being detected.

2. Susceptible to trivial human errors

While fraud will always be a threat to spreadsheet systems, there is a more significant threat that should make you seriously consider getting rid of these outdated systems. And that is its extreme susceptibility to even trivial human errors. Missed negative signs and misaligned rows may sound harmless.

But when they damage investor confidence or cause a considerable loss of opportunity amounting to millions of dollars (Are we serious? Google up ?spreadsheet horror stories? to find out), you should understand that it?s time to move on to better alternatives.

3. Difficult to troubleshoot or test

So how about testing spreadsheets to mitigate the risks of items 1 and 2? Good luck. Spreadsheets just aren?t built for that. It?s not uncommon to have interrelated spreadsheet data scattered across different folders, workstations, offices, or even geographical locations.

Worse, even if you are able pinpoint the locations of every related file, tracing the logic of formulas from one related cell to another can take ages. It?s pretty obvious now how you?ll also encounter a similar problem when troubleshooting questionable data.

4. Obstructive to regulatory compliance

Combine items 1, 2, and 3, and what do you get? A big headache impacting regulatory compliance. There are number of regulations that have a serious impact on the use of spreadsheets.

Some of the many regulations that impact spreadsheet systems include:

And to think it looks like regulatory bodies are just getting warmed up. Over the last two decades, we’ve seen a surge in regulations that directly affect spreadsheet-based systems. Now, you tell me that you haven?t wished there was a better way to beat regulatory compliance deadlines. Well, if you?re still using spreadsheets, then there certainly is a better way.

5. Unfit for agile business practices

We’re now in an age when major changes are shaping and reshaping the business landscape. Mergers and Acquisitions, Management Buyouts, earthquakes, tsunamis, hurricanes, uprisings, climate change, new technologies, and so on. If your business is not agile enough to adapt to such changes, it could easily be left behind or even face extinction.

Spreadsheets are normally created by individuals who have not the slightest know-how regarding software documentation. In the end, spreadsheet files become highly personalised user developed applications. So when it?s time for a new person to take over as part of a large scale business change, the newcomer may have to start from scratch.

Read further about Implementing Large-Scale Business Change

 

6. Not designed for collaborative work

Planning, forecasting, budgeting, and reporting are all collaborative activities. In other words, plans, forecasts, budgets, and reports typically require information from different individuals belonging to different departments. In addition, the final documents are a result of multiple exchanges of data, ideas, and files.

Now, if your company?s offices are scattered throughout the country or if certain team members are separated by large distances, the only way to exchange data stored in spreadsheets is through email.

Experience will tell you that such a method of exchange is susceptible to duplicate and even erroneous data. Team members will tend to find it hard to keep track of similar files going back and forth, and sometimes even end up sending the wrong version.

7. Hard to consolidate

When it comes to simple data entry and quick ad hoc data analysis tasks, spreadsheets are highly favoured by end users. This has made them one of the most ubiquitous office tools on the planet. But as a consequence, data in spreadsheet-based systems are distributed throughout the organisation.

So when it’s time to generate reports, you’ll really have to go through a slow consolidation process. In most cases, end users would have to collect data from different files, summarise them, and submit the same to their department heads through emails, portable storage media (e.g. CDs or USB flash-drives), or by copying to a commonly shared network folder.

Department heads would have to undergo a similar process before submitting them to their own superiors. This has to go on until all the information reaches their organisation’s top decision makers. Throughout the entire consolidation process, data is subjected to numerous error-prone activities such as copy-pasting, cell entry, and range specification.

8. Incapable of supporting quick decision making

In a spreadsheet-based environment, extracting data from different departments, consolidating them, and summarising the information so that it could aid the company’s top brass in making sound decisions can be very time consuming.

And because we know how susceptible spreadsheets are to errors, everyone involved in the information processing has to be ultra careful to keep the integrity of the data intact. Hence it would be prudent to enforce double-checking as much as possible.

This extra but necessary exercise can further delay the process. So, when the final information arrives at the hands of the top executive, he may not have much time to work with. (Read about Business Intelligence)

9. Unsuited for business continuity

As mentioned earlier, data in spreadsheet systems are never kept in a single place. In fact, it’s the exact opposite. The worse thing about it is that they’re always in the hands of non-IT personnel, who are understandably not familiar with storage and backup best practices.

Thus, if a major disaster strikes, full data recovery can be very difficult if not impossible. As a consequence, even if the company has financial reserves, the absence of data (e.g. accounts receivable records, customer records, and inventory) to work on can prevent the company from making a quick restart.

10. Scales poorly

As an organisation grows, data in spreadsheet-based systems get more distributed; subsequently compounding the issues outlined above. It is absolutely not advisable for a large organisation to keep using spreadsheets.

 

More Spreadsheet Blogs

Spreadsheet Risks in Banks

Top 10 Disadvantages of Spreadsheets

Disadvantages of Spreadsheets – obstacles to compliance in the Healthcare Industry

How Internal Auditors can win the War against Spreadsheet Fraud

Spreadsheet Reporting – No Room in your company in an age of Business Intelligence

Still looking for a Way to Consolidate Excel Spreadsheets?

Disadvantages of Spreadsheets

Spreadsheet woes – ill equipped for an Agile Business Environment

Spreadsheet Fraud

Spreadsheet Woes – Limited features for easy adoption of a control framework

Spreadsheet woes – Burden in SOX Compliance and other Regulations

Spreadsheet Risk Issues

Server Application Solutions – Don’t let Spreadsheets hold your Business back

Why Spreadsheets can send the pillars of Solvency II crashing down

 

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Understanding Carbon Emissions

Carbon emission is one of the hottest issues in the world of energy and environment today. While it is supposedly an essential component of the ecosystem, it has already become a large contributing factor to climate change. Carbon emission might be good but abuse of this natural process has made it harmful to people across the globe.

This series of articles aims to help people understand the intricacies of carbon emission and what society can do to efficiently manage this natural occurrence.

Natural Carbon Cycle

Two important elements in the carbon cycle are carbon, which is present in every living thing all over the world; and oxygen, which is found in the air that people breathe. When these two bond together, they create a colourless and odourless greenhouse gas known as carbon dioxide, which is then crucial to trapping infrared radiation heat in the atmosphere and also for weathering rocks.

Carbon is not only found in the atmosphere of the earth. It is also an element found in oceans, plants, coal deposits, oil and natural gas from deep down the earth?s core. Through the carbon cycle, carbon moves naturally from one portion of the earth to another. Looking at this scenario, one can see that the natural carbon cycle is a healthy way to release carbon dioxide into the air in order to be absorbed again by trees and plants.

Altered Carbon Cycle

The natural circulation of carbon among the atmosphere is vital to humankind. However, studies show that humans misuse this natural cycle and abuse it instead. Whenever people burn fossil fuels such as coal, oil and natural gas, they produce carbon dioxide ? which is an excess addition to the natural flow of carbon in the environment. The problem is that the release of carbon dioxide is much more than what plants and trees can re-absorb. People are not only adding CO2 to the atmosphere, they are also influencing the ability of natural sinks, such as forests, to remove it from the atmosphere. Humans alter the carbon cycle by contributing doubled or tripled greenhouse gas to the atmosphere, faster than nature can ever eliminate. Worst, nature?s balance is destroyed.

The Result

Greenhouse gases include carbon dioxide, methane, nitrous oxide, fluorinated gas and other gases. Although these gasses contribute to climate change, carbon dioxide is the largest greenhouse gas that humans emit. The reason why people talk about carbon emissions most, is because we produce more carbon dioxide than any other greenhouse gas.

The increasing amount of carbon emissions cause global warming to become more evident. All the extra carbon dioxide causes the earth?s overall temperature to rise as well. As the temperature increases, climate also changes unpredictably. Flood, droughts, heat waves and hurricanes are now widely experienced even in places where these phenomenon never used to happen.

To be able to reduce the risk of more severe weather conditions means burning less fossil fuels and shifting more to renewable sources. This is never easy. But, definitely, it’s worth a try.

When Carrefour Pushed the Right Buttons

Retail giant Carrefour based in Boulogne Billancourt, France is big business in anybody?s numbers. Europe?s #1 retailer opened its first store in 1958 near a crossroads (Carrefour means ?crossroad? in French) and has largely not looked back since then. The slogan for the hypermarket chain with more than 1,500 outlets and close to a half million employees is ?choice and quality for everyone?. Our story begins when Carrefour decided these things belong at home too.

The company implemented a worldwide universal responsibility program firmly anchored on a tripod of goals for environmental, economic and social progress. Its first step was to appoint a five-person project team tasked with liaising with program delegates in all thirty countries in which it operates, and who had responsibility for driving these goals.

The team?s job was to make sure that policies, standards, procedures and key performance areas were common visions throughout Carrefour. By contrast, the local managers? were tasked with aligning these specifics to local conditions in terms of environmental, political and social issues. The project team checked the fit quarterly via video conferences.

The Triple Bottom Line Goals were woven through with Carrefour?s Seven Core Values, namely Freedom, Responsibility, Sharing, Respect, Integrity, Solidarity and Progress. Constant contact was maintained with staff and other stakeholders through ?awareness training? seminars and other dialogues. As the program took hold and flourished, it became evident that the retail giant needed help with managing the constant stream of metrics flowing in.

After reviewing options, Carrefour appointed a software provider to monitor progress against its primary focuses on energy, water, waste, refrigeration, paper, disposable checkout bags, hygiene & quality, management gender parity, disabled people and logistics. This enabled it to track progress online against past performance, and produce meaningful reports.

The Environmental Manager in the Corporate Sustainability Department waxed lyrical when he said, ?We believe that our sustainability strategy and software solution have powerfully improved collaboration, innovation, and overall performance?. He went on to describe how it was helping drive cost down and profitability up, while simultaneously growing brand.

Non-conformance costs can be high and run counter to the imperative to make a profit – while simultaneously ensuring a better world for our children?s children. In Carrefour?s case, having a consultant to measure progress was the key that unblocked the administrative bottleneck. Irish company Ecovaro does this for companies around the world. Click here. Discover what we will do for you.

Field Service Organisations should use Digital Forms

For many Organisations, making use of paper based forms, is a common practice and method for collecting data and recording transactions. Whether it be for producing Quotations, Invoices or even getting sign off on completed jobs.

Paper based forms and documents have been the main stay of office communication and productivity for over 200 years. Paper-based forms are used to create anything from Invoices, Receipts, Purchase Orders, Contracts to the humble internal memo!

Paper-based forms radically improved productivity, efficiency and compliance by enabling people to create paper based instructions and enabling others to add additional information as required.

Over the past 3 decades or so, modern business environments have gradually been evolving towards the concept of the Paperless Office, resulting in the humble Paper based document migrating to a Digital Counterpart. The ease of availability of various Word Processing and Spreadsheet software products and cheap and easy data storage capacity have resulted in the Proliferation of thousands if not millions of files and documents being stored somewhere on the Company’s IT infrastructure.

People often create Digital Templates of forms that may be printed off and supplied to staff to complete using Pen and Paper or electronically. The data collation and reporting is often process

Often when conducting Operational Reviews, it is commonly found that the processing and analysing paper based forms is the least productive, efficient and profitable areas of business, although it is often vitally important.

Benefits of using digital forms for data collection

The ability to collect and analyse data effectively is increasingly important to businesses. Companies gather, examine, process and build reports on large volumes of data. Traditionally, they have deployed mail surveys, telephone interviews, door-to-door interviews as methods to collect information. With the ongoing digitisation, these procedures have become old fashioned.The digital transformation is changing many business operations at a high speed and a great deal of processes that were executed manually are now accomplished using digital methods.

Technology has had a major impact on how to approach data research and has provided researchers new tools that have transformed and improved data collection and analysis. The pace of change requires companies to be able to react quickly and adapt themselves to changing demands from customers and market conditions.

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