Are you killing your business (and your team) with spreadsheets?

The spreadsheet. A ubiquitous tool used for calculating and managing data quickly and inexpensively, used by businesses of all shapes and sizes globally. Microsoft Excel alone still powers 750 million-plus users and 81% of companies use them regularly.

Such a widely used product isn't going anywhere anytime soon. Like I said above, it's inexpensive and relatively easy to use.

That's where the danger comes in.

Ease of use and availability has businesses using spreadsheets to manage critical data and processes. Spreadsheets simply are not the best fit for many of the uses demanded of them. The resulting negative impact brought to the business, staff, customers and profits - is something that deserves your attention.

Aside from exploring these negative impacts, I will also offer some suggestions for avoiding them and some alternatives to consider. Along the way, I hope to dispel the common misconception that these alternatives are either costly or complex to implement. In many cases, they are embraced with great excitement and pack a significant ROI. Last year, we "ditched the spreadsheet" and implemented a simple portal for The UPS Store that resulted in a 70% time savings in order processing.

Why spreadsheets are killing your business and your team

One of the first times I remember looking at a spreadsheet with contempt was when I worked in telecom. One of our vendors had an Excel workbook set up for orders with their dealers. When we had a new prospect, they would initiate an order by filling out certain fields (pricing, etc.) and then send a spreadsheet to us for completion by the sales rep working the deal. The rep would then have to fill in customer info, plan details, details for the contract, billing info, provisioning data and even populate tabs for contracts. After sending the document back and forth between the customer, our rep and the vendor, the order would finally be placed.

I can't even estimate the number of times we'd have to go back to a step because of an error, or the wrong version being sent to a customer. This was all before even considering things like overall sales data, deal averages, etc. I wasn't even considering the lack of business intelligence at this point.

The customer experience aspect was a sticking point as well - having our customers fill out a workbook (which contained far more information than they needed access to).

We ended up working with a partner later that year who had an online portal which cut our processing in half and allowed us to brand it for customer experience. Without even considering the time our vendor was spending on that same workbook, it ultimately cost them our business.

They weren't keeping up with customer expectations, and they weren't running their process efficiently.

That was nearly 7 years ago, but I still see cases like this far too often. In some cases, there is a level of awareness from key staff, the customers, or even management and ownership. In other cases, it's the "you don't know what you don't know" scenario. I bet you that vendor assumed it was pricing or their actual service that caused us to switch, when in fact their pricing was fair and their service was quite good.

We just couldn't afford to keep doing business their way.

While I could delve into countless other stories just like that one, instead I've compiled a list of seven key areas where spreadsheets are damaging your business.

#1 - Errors

While certainly not unique to spreadsheets, errors are hugely detrimental to business regardless of where they are occurring. From financial errors resulting in losses or tax issues, to order errors damaging customer experience and margins, we've all felt the sting of an error at one point or another.

When looking at spreadsheets specifically, a study done by the University of Hawaii found that 88% of spreadsheets contain errors. If you're looking at error reduction strategies, your spreadsheets are probably a good place to start.

There's sometimes this invincibility factor of thinking such errors won't plague your business, but no one is immune - and the larger the business, the heavier the hit. The same errors simply ring louder due to the size and scale of the specific business.

Some examples to illustrate my point?

• Trans Alta encountered a 24 million dollar loss in 2014, related to a contract purchase when a copy and paste error in Excel accidentally increased purchase prices;
• Barclays ended up purchasing 179 contracts they didn't want due to a document reformatting issue, when they acquired Lehman Brothers; and
• London Olympic synchronized swimming tickets were oversold by 10,000 units due to a simple typo.

These are large businesses and big (expensive) examples, and you would assume these would be taken as learning opportunities, right? Well, JP Morgan Chase lost 6.2 million dollars in 2012 when cells were added instead of averaged. Then only a year later, a flaw in Excel contributed to a staggering additional 6 billion dollar loss during their London Whale disaster.

Shifting gears for a bit, poor quality data is another factor in the same realm that costs organizations an average of 14.2 million dollars annually - and $914,000 average per loss or disruption. Again, specific to spreadsheets, 1 in 5 companies have suffered significant financial loss directly due to spreadsheet errors.

One small error can throw everything out of whack, and spreadsheets are not equipped with automated tests or simple solutions to verify and check data. With spreadsheet errors being such a rampant issue, it's not only an error consideration but also a time factor when considering sifting through multiple spreadsheets, sources, formulas and so on to find the issue - if you even can.

These errors can cause financial losses (as illustrated in the above examples), customer losses, loss of time and more.

The root issue is that spreadsheets are nearly 100% manual and we're all human.

The more interrelated spreadsheets, the more formulas, the more users, the more we ask of the spreadsheet - the greater the likelihood for errors and the heavier the impact they have.

Often, data (or full spreadsheets) are copied from one to another, merged, uploaded/downloaded to other systems, resulting in cross-contamination and additional points of introduction for new errors.

While some businesses are proactive about storing past versions or are using solutions like Google Docs that offer version control,  many are not. This can make “rolling back” to a file pre-error difficult, finding the error cumbersome and pinpointing the origin nearly impossible.

#2 - Time Loss

Back to my previous comment about spreadsheets being nearly 100% manual, we can hone in on the giant time-suck that is the spreadsheet.

On average, employees are spending 12 hours per month just consolidating and checking out the spreadsheets their teams are living in. We can look at the raw cost associated with this avoidable time spent, or we can expand that calculation to include the things that they could be doing instead to drive a bigger impact for the organization. 

I’ve personally witnessed cases where an individual's role was nearly entirely spreadsheet-driven, and in processes that could be completed automated with a cloud-based solution. In some cases, ditching the spreadsheet could be the difference between needing to hire a new teammate and not - and could mean focusing people on far more valuable (and interesting) tasks that will benefit the business and team members alike.

A Ventana survey additionally found that 54% of companies that were classified as “substantial spreadsheet users”, took at least a week longer to close their books monthly than their competitors who relied on more automated processes.

When we look at how the spreadsheet is applied, in many cases it’s a component of a process that involves it being sent to various individuals in order to complete a task - like an order. When pitting that spreadsheet against a software solution, we can consider the impact on turnaround time and overall processing time - which can be vastly reduced. 

The introduction of real-time systems saves the manual sending, review, data entry, and consolidation of files and instead introduces automated calculating, testing and dramatically accelerated turnaround times.

While there are other examples of time loss specific to each use case, the last I’ll explore is the time involved evolving and managing the file itself (ignoring the danger of not adequately doing so). Each time a change is made to a calculation, or a factor (for example, a price change, tax rate change, exchange rate, etc.), these changes often have to be executed in multiple areas and/or dependent files. If they were to apply to historical data, and if the organization is even retaining individual versioned files, the time involved in producing new reports or further file modification is a heavy burden.

#3 - Data & Business Intelligence

Businesses today are heavily data-driven and team members are increasingly demanding of access to data in order to gauge their performance and execute in their roles more accurately. Customers are seeking more and more access to statistics, trends and other information that can influence their purchases, their spend and how they interact with your brand. 

80% of employees want more business performance information, and 25% have either left their company or know someone that has as a result of not being able to access key data.

The topic of data and business intelligence is a broad one that could justify a series of articles, but in specifically looking at spreadsheets, this is one of the areas where the negative impact on your business is not as apparent as errors or turnaround time - and is definitely a case of often not knowing what you’re missing out on.

While spreadsheets enable you to analyze specific metrics (hopefully error-free), they don’t allow for data discovery. Comparisons, historical data and external data are either completely ignored, or minimized. Anything more requires pivot tables or manual views - cumbersome, time-intensive practices that still leave users wanting.

Being able to access instant, reliable and expandable data is not easily obtained via spreadsheets - and setting them up for integration with external systems is either limited, cumbersome or not possible. Ultimately decision-making is impacted, with 33% of large businesses reporting poor decision making due specifically to spreadsheet problems.

The opportunity to leverage automation, artificial intelligence, machine learning, or other methods of building value in data and business intelligence, is greatly restricted or rendered impossible when living in spreadsheets.

#4 - Collaboration

Probably one of the more common frustrations encountered when using spreadsheets is the sharing of them - in terms of access, sharing in real-time and avoiding overwrites and conflicts. It’s driven professionals to often do one of two things.

They either set up a shared drive on their local environment or something similar, like Dropbox, Drive, OneDrive - and pop the file there to enable broad access. 

Or, they move to online spreadsheet tools like Google Docs to allow multiple users to access the file in real-time.

Problem solved, right?

Not quite. While this enables easier sharing and reduces the risk of overwrites and conflicts - it still leaves a few big gaps and doesn’t completely eliminate those obstacles.

Tailored experiences & access control

With spreadsheets, you either get all or nothing. While you can restrict the file with a password, or control where you store it (folder permissions, etc.), you can’t get granular with specific sets of data - you grant access to the whole file. This can be an issue with security, privacy, focus and user experience.

As more and more regulations come into place, compliance becomes a consideration when sharing mass data with multiple users - especially when they likely only need something specific in the first place. Exposing unnecessary data to all users purely as a result of the inability to tailor the access is an unnecessary security, compliance and privacy risk.

As mentioned earlier, presenting all raw data at once also diminishes the user's ability to identify what’s important, what requires their attention and where they should be focused. 

Lastly, spreadsheets aren’t always user-friendly and become less and less easy to use as your file grows in size and complexity. These files become a great way to frustrate and annoy your team and to ostracize your customers.

True real-time communication

Pulling a file off a shared/online drive and then replacing it once done is not quite real-time collaboration. While online spreadsheet solutions definitely take it a step much closer allowing you to even view your team’s changes live, it’s an “in progress” mechanism - you’re not seeing the completed output, meaning you may be blocked from your activity, or using incomplete data, as you see partially completed “live data”. You, of course, also still run the risk that two people complete the same task at the same time as there is no automated auditing or auto-detect mechanisms in place.

Communication & triggers

While tools like Google Docs and Google Drive show a trail of user interactions, they are limited in depth and proactivity. Rule-based triggers to notify users on specific interactions are lacking or completely absent. Catering those notifications to different role-types is a shortcoming, and even within the spreadsheet the opportunity to call attention or drive action is limited or non-existent. Users are at the mercy of commenting functions or going to outside channels. 

Some integrations may extend functionality, and there are sometimes clever workarounds people find - but ultimately a true, multi-user collaboration environment is not what spreadsheets were designed for.

Project management solutions that enable activity feeds, role-based tasking, follow-up automation and other collaborative functions can save time, increase communication, accelerate the flow of data and help everyone work together on centralized data more efficiently and accurately.

Accountability & tracking

While some of the solutions I’ve mentioned do show basic information about who did what and when, it is, again, limited. Access of that information is available to all applicable users, and still the ability to sift through and identify errors as a file grows in size and complexity - and frequency of use becomes challenging. When looking at solutions outside of the browser-based ones, even this basic tracking information goes away.

Getting more granular in terms of view access, custody of the file, and any data/insight into the logic behind certain actions are all items that elude the spreadsheet world.

Errors aside, even trying to track how the document and its data are used is cumbersome and limited - and this is exacerbated by the lack of standards that can be applied. With limitless uses, there are no “best practices” to apply and hold users to.

With document management and automation solutions available (for example, PandaDoc), teams can get incredibly specific with who does what, how, how information flows, what was viewed, who accessed it - and even that can be further expanded upon with integrations into CRM tools, accounting software and more.

Iteration & evolution

Most team members are accessing spreadsheets in their day-to-day operations, purely because that’s all they’ve been given. An assumption is made as to everyone’s proficiency with these tools, and adoption is forced.

Whether it’s the lack of proficiency with a program like Excel or a general disdain for using these files - creativity is not fostered. Users aren’t thinking of how to reduce steps, or introduce new insights, or polish the user experience. They are dealing with a relatively rigid, siloed solution that isn’t built for team collaboration.

Many cloud-based solutions or custom utilities available today end up leveraging libraries. These repositories become spaces where team members can contribute often-used elements like content snippets, quick calculations, and other information so that other team members can accelerate their tasks - either within a given solution or in general repeatable business processes they encounter.

Again, spreadsheets are not conducive to this type of collaboration. Short of creating template files that users can use for quick-calculators or other simple, repeatable information - the evolution potential isn’t even comparable to progressive solutions available.

#5 - Stakeholders, Staff & Customer Experience

In the software world, a big focus of buyers and providers alike is adoption. Buyers want to ensure they are onboarding the right solutions, ones their teams will use and benefit from. Providers want to ensure their products are used and provide value in order to successfully bring on new clients, and retain them.

When it comes to CRM software specifically, the top challenge in adoption is manual data entry. Considering that CRM solutions involve far fewer manual steps than spreadsheets, you can imagine the “user experience” tied to spreadsheets is low.

The ability to “brand” and heavily customize your spreadsheets is also extremely limited, as is the ability to provide additional value in areas like visual representations, related information, external references and data, and more. This results in diminished customer impact, cumbersome utilization and missed opportunity when it comes to competitive differentiation.

Lastly, spreadsheets are limited by the individual who crafts it and what’s fed into it / asked of it, manually. Furthermore, the use and value of use are limited by the individual using it. Not all customers are Excel whizzes.

#6 - Security & Compliance

Cybersecurity is a huge focus for businesses big and small today, as it should be, and hand-in-hand with that comes all of the new policies and compliance types that organizations need to adhere to in storing, accessing and sharing data. 

When we look at the security and compliance aspects of spreadsheets in isolation, we can look at both the security of how they are stored and accessed (the software or the environment), and we can look at the user side (how they are accessed and shared). With so many different approaches and variants, and the importance of cybersecurity and compliance today - it warranted an article on its own, which I recently published here.

#7 - Automation & Optimization

Digital transformation is a hot topic across all industries and company sizes. The advancement of technology, the rise of SaaS solutions and the general access to, and availability of, solutions to help businesses run more efficiently has never been greater.

I would draw a comparison to the adoption of spreadsheets in the first place. Spreadsheets are certainly a step up from paper forms, but it's 2019 - tech has advanced much further. I would say that companies who have not yet moved to cloud-based solutions to replace spreadsheets in their key processes and workflows are the same as companies that continued paper forms after the widespread availability of spreadsheets.

Embracing spreadsheets for core business functions is essentially bypassing digital transformation entirely.

I somewhat blame the overuse of coined terms like digital transformation and the plethora of solutions flying around. Business leaders have a serious challenge in trying to sift through all of this information, to determine what applies to their business and to understand what’s available to them.

You don’t know what you don’t know, but when we look at the “grass on the other side”, the time and money savings potential in moving away from spreadsheets are tough to ignore. McKinsey & Company estimates that about half of all business processes — including yours — can be automated, and Forrester predicts that automating these processes can cut operating costs up to 90 percent.

Where do we go from here?

As we explored earlier, part of the reason that spreadsheets are problematic is that they’ve been applied in ways they weren’t designed for. Each business use can be completely different, which also means the damages or restrictions to your business are also highly variable and unique. While I’ve strived to cover some of the big ones (the ones that apply to the majority of use cases), there are countless others that could apply.

Whatever the aspect that resonates with you, I think we can agree - spreadsheets are no place for your critical information and processes. So, where do we go from here?

Evaluate

Take some time to inventory your spreadsheets. Where are they being used? Who is accessing them? How are they being used? Consider which applications may be better served by an alternative system (i.e. are being affected by the points in this article), and which ones may, in fact, be acceptable to continue.

Enhance

If you are leaving some information or processes in spreadsheets, take steps to reduce risks and challenges:

• Standardize your documents and communicate acceptable use;
• Invest in training so users can both properly access the document and contribute to it;
• Audit your data regularly;
• Secure your data and ensure it is backed up regularly;
• Lastly, consider moving to a cloud-based service, like Office 365 or G Suite, to gain some of their enhancements like easier sharing, upgraded security, offsite storage, and more.

Explore

As you identify critical information or key processes that must be brought out of spreadsheets, consider their intended use, how they will be used, who will access them, etc. It’s easy to run out and sign up for free trials - but your time is limited, adoption rates will be diminished and you run the risk of getting stuck where you are.

For specific functions, consider if there are solutions that address them bang on. For example, if you are using spreadsheets for project management, consider a project management solution. If you are using them to track orders, consider an order management system - you get the idea. Common tasks often have an off-the-shelf or SaaS (software-as-a-service) offering to address them. These come with the benefit of leveraging feedback from a community and sharing the costs accordingly but can come with some customization requirements, bloat, or reduced adoption due to distractions, lengthy processes and more.

Trying to cram a bunch of completely independent workflows into one “master workbook” may not translate cleanly into the adoption of new tools - so you may need to either consider using a suite of specialized platforms (and evaluate their integration potential) or to consider a cloud-native platform built specifically to your processes.

That could be a custom-built platform, or a portal used to pull together external solutions into a single experience and expand upon it.

It can be difficult to find solutions that meticulously match your specific workflows and “recipes” for doing things. A custom solution can dramatically increase your user adoption, enable smart multi-tenant use (control user views, access, accountability), digest data into logical formats, automate “checks and balances” and optimize your growth potential - among countless other benefits.

Ultimately, the right option will be highly specific to your specific requirements and your specific business. The important thing is to adequately consider where ditching the spreadsheet makes sense and to start the journey towards transforming such processes with smarter software.

3merge is an embedded partner committed to building impactful solutions for businesses like yours. We immerse ourselves in your business to identify key areas that could best be aided by technology. We assist with building a case and identifying return opportunities - and then build a plan of action for implementation, adoption and evolution. To discuss how we can help you break free of spreadsheets, start the conversation today.