3 Reasons to Abandon Your Data Analysis Using Spreadsheets

While spreadsheet technology has improved over the years, serious problems persist, especially for those who rely primarily on spreadsheets for planning and analysis.

According to a 2020 study by the Business Application Resource Center (BARC), 92% of Excel users experience problems using spreadsheets for planning. Many businesses that use spreadsheets have exposed themselves to serious risks of spreadsheet error. And though in some cases large companies can absorb these risks, small and medium businesses usually cannot. Notably, during the first UK national lockdown, Track and trace and repeated government data errors have caused many to question the reliability of data and be more cautious about giving over their personal data. Sad to say, the list of newsworthy episodes continues to grow.

Aside from specific problems related to errors, spreadsheets present other limitations and drawbacks when organisations try to use them in performance management processes. Here are three of the most serious issues with using the spreadsheet as a planning tool.


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Failure of accuracy

Data integrity and transparency
Disconnected spreadsheets offer little in the way of data security or an audit trail to identify when, where or why changes were made, all of which lead to multiple versions of the truth. Consequently, confidence in the numbers is undermined. Poor version control can result in a consolidated plan based upon inaccurate or incomplete data or—owing to a mismatch of model structures—an inability to consolidate at all.

Successful business planning depends to a large extent on high levels of collaboration across teams. The greater the cross-departmental input, the greater the accuracy delivered in the plan. Due to error frequency and deployment difficulties, spreadsheet-based planning engenders a constrained, siloed process that represents only a small part of the organisation.

Failure of agility

Spreadsheets, by design, are ad-hoc and individual. Email substitutes for systematic workflow. And without a guided, standard process, time is often wasted in “reinventing the wheel” and waiting for others to contribute and review. It is a laborious task for managers to check on the status of individual contributions and ensure they are submitted promptly. The result is a process that is limited by the pace of the slowest participant.

The business world is moving faster all the time. And to drive fast decision-making in this competitive environment you need to access and analyse large volumes of data and get answers quickly. A spreadsheet-based planning and analysis process does not allow organisations to alter plans, forecast, or modify budgets in real-time. Making changes in a large, complex spreadsheet requires both an inordinate amount of time and great care. The effort required to consolidate hundreds of spreadsheets can inhibit quick reaction to changes in markets or the actions of competitors.

Aggregation and application maintenance
Even if individual spreadsheets are error-free, the process of aggregating inputs from multiple users is a major undertaking. A single person or task group has to collect the numerous spreadsheets and consolidate them into a single version, trying to maintain files that may be linked together. If submitted models are not identical, the data will not consolidate correctly.

Failure of scale

When a spreadsheet’s single data file is too large, it can make the program run very slowly. Spreadsheets are simply poor at dealing with large data volumes and merging multiple files. Users spend more time on data collection and verification than they do on analysis.

Spreadsheets have a limited number of cells, which prevents users from including all the granular data they need. If you cannot look at data at a precise enough level (i.e. you can only see product type, but not SKU), you will not be able accurately to analyse the data and plan appropriately.

Once you hit a certain threshold, spreadsheets can no longer handle the amount of data and will crash. How many times have you lost your work or had your entire system freeze because of a spreadsheet with too many complex formulas?

To be resilient, your business needs to make fast, accurate, data-driven decisions. Relying on spreadsheets alone can have devastating effects. If you want to evolve from planning on spreadsheets, Jedox is a great solution that can enable collaborative and secure planning. This solution enables finance professionals, business analysts, line-of-business managers and users on the front lines to create more accurate and reliable budgets and plans. Learn more about Jedox here.

If you are interested in improving planning within your finance team, Start a free trial of Jedox today. Sign up here.