Why Do Businesses Use It?
The main reason a businesses still rely on Excel is familiarity with the program and the extremely low cost. When it was first released it had a huge impact on the way businesses operated, as it greatly reduced the time it took to maintain financial records
Today; however, the situation is very different. The business world has changed, but many businesses continue to use it for a multitude of different purposes for which it was not intended, and at which it is not very good.
Can It Be Bad for Your Business?
Close to 90% of Excel spreadsheet contain errors. Ray Panko, professor of IT management at University of Hawaii wrote in his article What We Know About Spreadsheet Errors that “spreadsheets, even after careful development, contain errors in 1% or more of all formula cells… in large spreadsheets with thousands of formulas, there will be dozens of undetected errors”.
The reason why errors occurs with Excel is because every file is created by a person, and people make mistakes. Additionally, the opportunity for mistakes grows as the files get bigger and more employees are involved in editing the file.
There are multiple examples of Excel blunders that have caused businesses billions of dollars due to errors in Excel. Business Insider reported in April that almost one in five large businesses have suffered financial loss due to excel errors. JP Morgan, for example, lost $6.6 billion due to alleged manual copying and pasting of incorrect data with multiple Excel spreadsheets.
How Can You Avoid Errors?
Ask yourself the folllowing questions regarding your company’s use of Excel:
- Will the spreadsheet be used by more than 2 people?
- Is the information contained in the spreadsheet critical to my business?
- Do I rely on this information to make my company or department operate effectively?
- Do I need multiple copies of the data for concurrent access or for data security concerns?
If you answered “yes” to any or all of the questions above, the good news is that you can replace Excel with other cost-effective alternatives. Cloud-based and SaaS licensed products have lowered the cost and commitment of replacing Excel to a point that most organizations will be able to find a solution suitable.
Download our free guide to Why Financial Planning Belongs in the Cloud below.