When is Excel not enough?

Ubiquitous and almost all-powerful, Excel is the Swiss Army knife of business tools. It has countless applications and a long list of advantages: it is incredibly flexible, powerful, fast for most uses, and self-contained, with no need to connect to other systems to work. Pushed to its limits, what can be achieved in it is remarkable. Some die-hard enthusiasts have even programmed entire games on the platform (Always wanted to play Monopoly in Excel? Check out the best Excel games in this Mashable article).

Drawbacks

But everything has its price, and Excel's flexibility comes with serious drawbacks. Every company that runs its operations on Excel has hit at least one of these problems:

• Errors in spreadsheets:
  new spreadsheets work correctly, but as they change hands, receive updates and new features, and land with people who did not build them and do not fully understand them, errors are very likely to creep into the cells. The research backs this up: in 2008 Raymond Panko of the University of Hawaii published a meta-analysis concluding that 88% of the spreadsheets used by organizations contained errors. ¹
• Weak security:
  cloud spreadsheets have spread Excel even further, but they have also introduced new problems: who has access to the spreadsheets? Often the link alone is enough, letting any intruder make whatever changes they like or steal confidential information. Excel simply lacks the features to grant users granular permissions according to their responsibilities. On top of that, conflicting edits can leave several parallel versions of the same spreadsheet in circulation: which one holds the truth?
• Poor scalability:
  a spreadsheet is not a database. Excel lacks many of the capabilities a growing business needs: cross-referencing large volumes of information, finding relevant data quickly, guaranteeing data integrity. And once organizations grow and spreadsheets have to pass through many hands (as is common in budgeting processes), they can become a bottleneck that slows down the entire process.
• Hard to connect with other applications:
  when information comes from several sources, it often has to be downloaded and copied by hand into Excel spreadsheets, then processed and exported to other applications. This creates duplicate work and more room for error. And because the data is entered manually, it is often not fully up to date.

Is there anything better? Where am I overusing Excel?

These problems with Excel are especially noticeable in organizations that use it in the following ways:

• As a database:
  great to get started, but as the volume of data grows, every problem described above shows up: errors, weak security, poor scalability and poor connectivity with other systems.
• As a CRM system:
  here the main problem is productivity. Sales agents will spend most of their time filling in spreadsheets by hand and will be less productive at the task that actually creates value: talking to customers.
• As a budgeting tool:
  Excel spreadsheets can drag processes out enormously, since a budget normally goes through sequential stages in which only one party has access to the spreadsheet at a time.
• For workflow tracking:
  Excel can make everything slower and less efficient. For example, if a process requires a supervisor's approval, the right tool can generate alerts automatically.

How do I know when it is time to look at other options?

With the sheer amount of software on offer today, it can be hard to know when it is time to take the leap and use more specialized tools. Many factors and trade-offs weigh on the decision, but here are a few questions to help you assess your situation:

• Do you have full-time staff whose only job is maintaining and processing spreadsheets?
  Consider that there are tasks that can be automated to free up staff and reassign them to activities that add value to the company directly. Custom software development may be the answer to automating those tasks and making your processes more productive.
• Could a calculation error in a spreadsheet cost many millions?
  In that case, more robust systems are an investment that can pay for itself in the medium term. A data warehouse can centralize all of your company's data to ensure decisions are made with correct, complete and up-to-date information.
• Do my operations or sales staff spend a large part of their time entering and extracting information from spreadsheets?
  Consider that every minute saved on spreadsheet work is a minute that can go to other activities. Software systems integration may be the solution to avoiding duplicate or manual tasks. And with a web application, your sales or operations staff can access the systems from any location or device.
• Have you suffered information theft, or do you suspect unauthorized access to your spreadsheets?
  In some industries it is a legal requirement that the information you handle be properly protected. IT security is an increasingly relevant issue and must be factored into decision-making.

Conclusion

Digital transformation means more than moving from paper to virtual spreadsheets. Spreadsheets proliferating regardless of whether they are the right tool can cost companies millions. It is worth considering whether your company needs to move on from Excel to specific, scalable and secure software.

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¹ http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htm

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