Bad data can lead to seriously bad outcomes. Lift the lid and the odds are you’ll spot a guilty-looking spreadsheet scurrying for cover.

Spreadsheet

Running a business today without Microsoft Excel might sound as far-fetched as navigating a strange city without Google Maps, but it wasn’t always so, of course. Those of us with careers stretching back to the early ‘80s or beyond would remember that ‘spreadsheets’ were once just that - large sheets of paper spread out map-like on a desk, with hand-written numbers representing many hours of laborious manual calculations.

I remember my initial job, in the IT department of a financial institution, almost 40 years ago. I proudly delivered the first of our computer-generated reports to the office of the chief accountant. After perusing the printouts with obvious suspicion, he sharpened his pencil and carefully transcribed the key figures into his hand-written ledger. Only then did the numbers become ‘real’ to him.

From Gee Whiz to GFC

Few of us would wish to roll back the clock to those days, but while we can all admire (or more likely take for granted) the benefits of modern spreadsheets in terms of speed, computing power and convenience, it’s interesting to reflect on the flip side.

Freelance writer Janet Burns did just that in her article How The Invention Of Spreadsheet Software Unleashed Wall Street On The World. To quote one of her interviewees:

I liken spreadsheets to a computer game for executives.

Her premise is that the emergence of spreadsheets enabled the creation of ever more complex financial products, dependent upon convoluted calculations that would previously have been unimaginable. These evolved to the point where those spruiking them, much less those buying them, had no hope of truly understanding just what they were dealing with.

Few people had the skills needed to look under the hood and search for errors of logic that might eventually cause the house of cards to collapse. While the profits kept rolling in, fewer still had the inclination to do so.

What could possibly go wrong? The answer came with the Global Financial Crisis of 2007-08.

Burns mentions another example where the UK government, in the years following the GFC, used a controversial economics paper to justify the introduction of austerity measures that would have far-reaching real-world consequences. Some years later it was discovered that the conclusions of that paper had been way off the mark. The cause? A few critical rows of data had been inadvertently omitted from a spreadsheet calculation.

Therese Tucker, Founder and CEO of Blackline, takes a different angle with her recent article The money drain. Her focus is narrower, at a corporate rather than economy-wide level, but the conclusion is similar:

Human errors, compounded by ‘clunky spreadsheets’, account for the bulk of material errors in company financial reports.

She goes on to highlight the potential consequences of such accounting errors. They can lead to reputational damage and a loss of investor confidence. This, in turn, can result in problems raising capital, and an inability to take advantage of emerging opportunities for growth.

Info-Explorer to the rescue?

Has your business ever made a poor decision due to incorrect data? If so, lift the lid on the problem data and the odds are you’ll spot a guilty-looking spreadsheet scurrying for cover.

We won’t claim that Info-Explorer - Orchid’s affordable Business Intelligence tool - will prevent the next GFC…but by insulating you from some common spreadsheet-related risks it might help save you from a self-inflicted financial crisis.

Benefits of Info-Explorer include:

  • Pull data directly from Sage 300 (or other databases), rather than relying on error-prone personal extracts and spreadsheets.
  • Explore many views from within a single cube, avoiding the need for multiple reports or spreadsheets.
  • Improve decision making by analysing real-time production data, with drill-through to Sage 300 screens, rather than out-of-date reports.
  • Multiple layers of security, reducing the risk of errors creeping in when data is manipulated.
  • All this while still retaining the familiarity of a spreadsheet-like layout.

 

About the Author:

David Lacey is Communications Manager at Orchid Systems. He began his working life in 1980 and spent the next 14 years developing software for retail banks, corporate treasury departments, and national stock exchanges. You can find out more about David and other Orchid staff members at the bottom of our About Us page.

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