Lies, Damned Lies and Spreadsheets
I don’t think anyone in business today hasn’t at some time or another, used a spreadsheet.
The pervasive use of spreadsheets in business today can often mean any shortcomings they have are either overlooked for expediency sake or worse, not recognised.
Although modern spreadsheet programs can provide powerful mathematical formulae, algorithms and graphing capabilities that were not available in years gone by, spreadsheets at their core are ways to store and organise data and information in table form.
According to research cited by the European Spreadsheet Risks Interest Group (EuSpRiG) (yes, there is such a group!), more than 90% of all spreadsheets contain errors and these errors tend to persist because spreadsheets rarely get tested. Interestingly though, they also found that 50% of spreadsheet models in large businesses contained material defects.
However, this, believe it or not, is not a new phenomenon!
A bit of History
For those reading this who are perhaps of a “certain” age, you may remember using Log Tables at school. If one goes even further back to 1800 BCE, the Babylonians inscribed clay tablets with mathematical tables. An example of one of these clay tablets is known as the Plimpton 322 tablet (Wikipedia).
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Once deciphered and analysed, most scholars agreed that the tablet contained six errors. It is unknown how significant these errors, nor what risk was posed to those using the tablet.
More Recently
If, however, one fast forwards to the 21st century, there have been several high profile errors or faux pas arising from spreadsheet errors. The EuSpRiG have catalogued over 70 examples under “horror stories”, some of which you may recall.
‘Some errors are mathematical in nature, others not. Some errors are unintentional, others are not!
Examples:
- Blackpool Teaching Hospitals were fined £185,000 in 2016 for sharing a spreadsheet online in which hidden pivot tables held sensitive personal data about every employee. This mistake went unnoticed for ten months.
- On 15th July 2016, Marks and Spencer issued a quarterly trading statement at 7:00 am reporting they had experienced sales growth of 1.3%. That had to be retracted later that day, and at 1:31 pm re-stated that their sales had fallen by 0.4%. The problem had been a spreadsheet “summing error”.
- In 2011 it was suggested the fraudulent use of spreadsheets by a UBS trader to hide the use of a “slush account”, had cost the Swiss bank over $2.3bn.
Versions of the truth
Errors to one side, the flexibility and ease of use of spreadsheets are both its strength and its Achilles heel.
As small manufacturing, distribution and service organisations grow and adapt to new challenges, often they will have both formal and informal business systems and processes to control the business. How many companies run a standalone “financial” system only to have to manually re-key data that someone else has created elsewhere in another system…. or spreadsheet?
When business systems fail to deliver capabilities that a growing business needs, spreadsheets often spring up to fill the gaps. They’re easy to create. Easy to share. Easy to import into and easy to export from. Moreover, as the Babylonians showed in their tablets, it also makes it easy to make mistakes.
Without a single database or system in which to store, process and analyse data, it is easy for pockets of knowledge to exist within an organisation in which there are different versions of the truth. Which version is correct? Are they all right? Are they all wrong? Who knows? Who has the wherewithal and insight to sort fact from fiction, truth from lies?
A Yorkshireman’s Insight
In the early 2000s, the operations director of a large and diverse service organisation based in Yorkshire wanted a single system and source of truth for his entire operations. He was fed up with his managers coming to monthly operations meetings with their versions of the truth in their spreadsheets. In his gruff and broad Yorkshire accent, he referred to this practice as ‘spreadsh*te management’. For those familiar with a Yorkshire accent, it ought to be easy to imagine the delivery of the syllables and intonation of the ‘asterisked’ and missing vowel in the epithet! For those not familiar with a Yorkshire accent, I’m sure you’ve got the sentiment if not the colloquialism!
Excel Hell?
If your business is suffering from ‘spreadsh*te’ management but not sure how you’d go about removing them or understanding the potential benefits of doing so, Gradient Consulting can help you. We have 22 years’ experience of working with small and large organisations to help transform their processes and remove manual and non-value-adding processes through identifying, selecting and implementing a single source of the truth in an ERP system.
If you would like to find out more about how we can help contact us today on +44 (0) 1282 463710. You can also request a call back by filling in a form.
