"Microsoft Excel is one of the greatest, most powerful, most important software applications of all time," says financial writer James Kwak on his blog The Baseline Scenario.
British journalist Alex Hern asked the question, "Is Excel the most dangerous piece of software in the world?" on the New Statesman website.
So which is it? Is Microsoft Excel the application that can single-handedly power a manned-mission to Mars, solve world issues or get the Browns to the Super Bowl? Or is Excel the program that played a part in J P Morgan's infamous London Whale scandal of 2012 when a "copy & paste" error contributed to the bank's $6.2 billion trading loss that year?
The answer, of course, is yes to both questions. (Sorry…I don't like trick questions either.) Excel--and its venerable predecessors Lotus 1-2-3 and VisiCalc--can be either robust or dangerous depending on the expertise of the person who is staring back at it from the other side of the computer screen.
As the owner of a professional services business, you have spent years and thousands of dollars developing an expertise in accounting, architecture, practicing law or other such services. Do you also have the expertise to use Excel for something more than basic calculations?
Here are three items to consider when deciding if you should rely on Excel or instead be looking for different options to handle your software needs.
1. Maintaining compliance can be tedious and expensive
In software companies, there is some version of a designer-programmer-tester assembly line. Multiple people build and work with the program to ensure that bugs are worked out by the time it gets to the end user.
At your firm, the designer-programmer-tester assembly line for an Excel spreadsheet is most likely one person. Do you have a policy of checking the validity of the spreadsheet created every so often? The American Institute of Certified Public Accountants, for example, recommends such validation take place every two years at a minimum - and that's assuming the underlying template of the spreadsheet hasn't changed.
It is possible to create an audit trail in Excel. The question is whether it's worth the time and effort (and, ultimately, money) for you and your business to undertake that responsibility.
2. Easy to make a mistake
While Kwak sings the praises of Excel, he does offer a measure of caution. "While Excel the program is reasonably robust, the spreadsheets that people create with Excel are incredibly fragile… The biggest problem is that anyone can create Excel spreadsheets—badly."
The aforementioned "copy & paste" mistake at J P Morgan caused the spreadsheet in question to divide the total of a group of numbers instead of taking the average of that same group of numbers. This example demonstrates how equations can be changed, numbers can get written over, and other information lost in a spreadsheet labyrinth without the user knowing what happened.
"Because it’s so easy to use," explains Kwak, "the creation of even important spreadsheets is not restricted to people who understand programming and do it in a methodical, well-documented way."
Excel is a powerful program - when it's in the hands of a capable craftsperson. Business owners should consider other software alternatives if their programming expertise hasn't graduated beyond "if-then" statements.
3. Useful reports more readily available with automated software
Many employees and business owners grew up using Excel. It's inexpensive, easy to learn for basic calculations and can be quickly manipulated. Excel can be a wise choice for these basic calculations and reports. There comes a tipping point, however, when it can go from being useful to being a hindrance with regards to the reports it can generate.
As a business grows, so does the complexity of the reports that an owner needs for making important business decisions. Automated software can gather information from multiple departments, putting all your business's "key performance indicators" at your fingertips without the need to update a spreadsheet's data or equations.
Automated software and other Excel alternatives allow you to spend more time making business decisions and less time proofreading spreadsheet equations and manual data entry.
Don't bite off more than you can chew
Excel can be fun to play around with and use in certain situations in your business. However, you must understand its limitations and then look for alternative software solutions.
Using Excel properly for generating complicated business reports can involve significant costs and a large time commitment from either you or your employees. Would you rather spend that time and money developing a spreadsheet or trying to generate more money?
Read the article “8 Reasons Why You Need an Excel Intervention” for more reasons why you should reconsider using Excel.