Corporate addiction to MS Excel
View(s):It would be surprising if Microsoft Excel is not the most commonly used software application in the business world. Its’ use could be compared to an addiction. Due to the versatile nature of Excel, private corporations have become over reliant on it by using it in every aspect of their business without being conscious of its limitations and pitfalls. It is amazing to see corporations risking working with the limitations of Excel. This includes, for instance, storing massive volumes of data in Excel instead of specialised database software.
The functionality of Excel varies from the simplest tabulations and calculations to devising charts and graphs to the most complicated financial and statistical models. Due to its user-friendliness, cost efficiency and ease of transportability/transferability it is safe to assume that it’s one of the most important and powerful software applications of all time.
Nonetheless this is no reason why it should be used blindly in every situation without assessing its suitability.
Excel is a software application which is mainly used for analysis.
Organizations should realize that while Excel is versatile it is also volatile. Even though it is possible to store a million records in the latest version of Excel it is more susceptible to crashing or to becoming corrupt.
Even though Excel programming is reasonably robust it is not equipped to intelligently detect and prevent human error. For example typing an incorrect number or overtyping. Hence, Excel is considered incredibly fragile and auditing may be a virtual impossibility. A recent (2012) example – Bruno Iksil nicknamed ‘London Whale’ working in the JP Morgan London office accumulated losses in excess of $6 billion and was working predominantly on Excel-based models with numerous errors and had considerably underestimated the risk involved.
Allegedly his models also comprised manual tasks such as copying and pasting. This is one example which was reported because of the consequential loss. It is amazing to see the number of established companies around the world using Excel as accounting software rather than a complementary tool, so we can only envisage the impact of the unreported cases.
Excel is not a fully-fledged form of accounting software but a tool to analyse data extracted from those back-office systems which underpin the business. Furthermore, since it is so easy to create, users create multiple spread sheet files, interlinking them – later wondering where the data has come from, why it was created, etc.
Excel enthusiasts might disapprove. Organizations should do themselves a favour and look beyond Excel to minimize their risk by not relying entirely on one type of application software. They should reassess their dependency on Excel and invest in more specialised software to match their requirements. The reality is that all software crashes can make users unaware of the error at all. As Excel crashes more often, more importantly it churns out incorrect numbers.
At the end of the day, analysis should be done extracting data from back-end systems rather than using Excel as a one-software for all solution. Excel is everywhere you look in the business world and it is unlikely that it will change in the near future. If Excel ever goes, it will certainly cripple businesses around the world. The strategy should be to use Excel to complement other specialised integral systems.
(The writer is a Sri Lankan-origin analyst based in London)
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