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3 Reasons Why Spreadsheets Are Bad for Business Intelligence

Tom Hoblitzell | | August 9, 2018

Despite recent advances in business intelligence software, far too many organizations continue to make heavy use of spreadsheet applications like Microsoft Excel. According to a survey of finance executives, 70 percent of organizations remain heavily reliant on spreadsheets and manual processes for their financial workflows.

Excel is a powerful tool in the right hands and for the right purposes, and you might think that using it for a quick crunch of the numbers would be harmless. The more you lean on it, however, the harder you’ll find it to shake your Excel addiction. Below, we’ll go into three of the most important reasons why spreadsheets aren’t the right solution for your business intelligence needs.

1. They’re Inaccurate

Of course, the Excel software itself isn’t inaccurate – but the people who use it often are. One study by the University of Hawaii found that 88 percent of non-trivial spreadsheets contain errors, due in large part to the manual effort that goes into creating them.

This susceptibility to mistakes has led to some major problems for businesses that continue to use Excel. Due to a data entry error in a spreadsheet, for example, the 2012 London Olympics oversold 10,000 tickets to a synchronized swimming event. In another massive spreadsheet mistake, the Canadian power company TransAlta lost $24 million by purchasing contracts at higher prices than it should have.

2. They’re Not Standardized

Each file in Excel is an entity unto itself, which has both advantages and disadvantages. The most obvious drawback is that it’s very difficult to enforce standards and consistency across multiple spreadsheets.

Anyone with access to the file can add or delete templates or cells as they see fit, altering the very structure of the document. As a result, automated data reporting processes that depend on this predictable structure can grind to a halt. In addition, because there can be multiple versions of the same file, there’s no single source of truth or guarantee that you’re looking at the most recent data.

3. It’s Not BI Software

No matter how many features Excel adds, the fact remains that the software was designed to create and edit spreadsheets, not to do business intelligence. According to Forrester Research analyst Paul Hammerman, “Excel just wasn’t designed to do some of the heavy lifting that companies need to do in finance.”

For example, older versions of Excel lack real-time collaboration features that can be highly useful in large organizations. Excel has a hard limit on how much information can be stored in a single document, making it hard to use for the purposes of big data. In addition, Excel doesn’t perform data validation by default, so it may not recognize multiple entries with different formats or spellings that refer to the same entity.

Final Thoughts

In order to avoid the issues above, you need to move outside the Excel bubble and work with a business intelligence solution built specifically for enterprise data analysis and reporting.

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