Copy + Paste = Disaster! Spreadsheets Could be Ruining Your Company Right Now
Do you remember the first time you used a spreadsheet? It was probably in college. Maybe even in high school, if you were ambitious enough to need a budget development tool for your part-time job. You probably realized even then that a spreadsheet was a super-calculator, nothing more. Those big corporations you hoped to join one day were bound to use complex software systems for their huge needs. Once you joined them (surprise, suprise!) you saw they used spreadsheets too. And they are still using them, happily copying and pasting numbers into the little boxes.
It is always a temporary measure, of course. New regulations make the company's accounting application obsolete, forcing it to adopt the interim solution: a spreadsheet. The assumption is made that the spreadsheet in question will be on its way out once the new application is created. Years go by. Eventually, the new application is made, but the spreadsheet has become so rooted in the company that its replacement would be like heart surgery. It is easier and even cheaper to keep it. It has become a core tool.
The fatal seduction of flexibility
This process might be inevitable. Things change, and the more complex the IT system, the harder it can keep up with the new needs of a big company. What happens most frequently in big corporations is that several systems are used, with spreadsheets linking them like rope bridges. It is very easy to catch a messenger on a rope bridge and replace his message with a fake one. Internal audits and state regulations have been focusing more and more on spreadsheets, as they are the links that are the most vulnerable to manipulation.
When we move from big companies to small entrepreneurs, the spreadsheets become ubiquitous. They are not just links between IT systems, because there are no IT systems. There is just Microsoft Excel, which is used for everything from salary calculations to customer data. Small firms love spreadsheets because of their flexibility. As the company grows, however, they become a curse because they either stump efficiency or cost millions of dollars because of errors that go unnoticed.
Somebody once said that the biggest fault of television is that we expect too much from it. The same can be said for spreadsheets. They were not designed as the be all and end all of accounting. They are wonderful for personal, short-term calculations and testing, but they become increasingly cumbersome and error-prone as the number of users rises. When they are used for long-term tasks that involve the entire company, they are both a burden and a liability. And the employees spend inordinate amounts of time maintaining and modifying them. In other words, the scalability of spreadsheets is very poor.
Conflicting spreadsheets are a nightmare. Small companies may avoid this. In large corporations, it is rather a rule than an exception. Various departments make changes to the same spreadsheet to fit their own needs. When these different versions start to circulate, it is a big problem, especially
when it is hard to determine the source and properties of the data. And these things happen all the time. Even if it doesn't lead to errors, the waste of time needed to reconcile the versions is spectacular.
Compliance with regulations can be achieved only if your spreadsheets have integrity. But several things can go wrong. The spreadsheets can become arcane, with only a fraction of the company understanding their data and use. This in turn makes it harder to interpret the results when they are unexpected. Finally, all their intricacies are just begging for errors or, worse yet, fraud. Such a huge liability has its watchdogs. For fifteen years, the European Spreadsheet Risks Interest Group (EuSpRIG) has been providing information (including “horror stories”) on spreadsheet risk management.
Ever since 2002, in the long shadow of Sarbanes-Oxley, executives have found it harder and harder to accept the risks carried by spreadsheets. But auditors confronting a spreadsheet system have a daunting task. There are multiple instances where the integrity of a spreadsheet can be compromised, from the programmer misunderstanding the required process, to the users inputting data that is just plain wrong or entered in the wrong order. There are just too many possible errors. And if they pass the audit, it can lead to disaster.
What can you do to protect yourself?
If you need to keep large spreadsheets because you just can't find an alternative, at least there are solutions for better control. You can use specialized tools that go through spreadsheets looking for various kinds of errors in cells, links and formulas. It is all automatic and it could save you many headaches and wasted hours.
The better solution would be to dump Excel spreadsheets altogether in any bigger or more complex system, and to use specialized software that has better data flow, data integrity and protection. The good news is that software developers are aware that most people are dependent on Excel. It means that even complex accounting applications and IT systems will usually have some sort of Excel-like interface. On the other hand, such modular systems take care to avoid everything that makes spreadsheets unreliable. All the concrete instances of data are automatically changed when the source formula is changed or updated. More automatic links to data sources mean less copying and pasting and more integrity.
We might never get rid of spreadsheets. And why should we? They are an excellent and indispensable tool for any smaller task or calculation. But when the risk of errors and abuse starts growing, it is time to turn to more structured systems with stronger checks. You don't want your spreadsheets to mutate into clumsy behemoths.