Related Topics:
			Business Research: ERP, Finance Vendor Research: Acorn Systems Adaptive Planning Alight Applix Business Objects Clarity Systems Cognos FRx Software Intacct Oracle - Hyperion Infor – Extensity/Systems Union KCI Computing Lawson Longview Solutions Microsoft Business Solutions Oracle OutPerformance PrecisionPoint Software Quantrix SAP
			Printer friendly version Email this article Send feedback to editor

Summary
Ventana Research has conducted extensive benchmarking research on corporate use of spreadsheets. The research confirms that people use spreadsheets extensively in all parts of the enterprise and that they also confront numerous problems such as errors, obsolete data, conflicting versions of the same spreadsheet and the chore of combining multiple spreadsheets. One striking finding from the research is the degree to which spreadsheet users have become numb to the difficulties the software imposes on them and the extent to which using them hinders their efficiency. Participants in our research said most often that they prefer spreadsheets because they are easy to use and cost-free. But that is far from the whole story.

View
Our research, sponsored by Actuate and Compassoft and media partners BI Review, DM Review and Intelligent Enterprise, confirmed and quantified much of what longstanding users of spreadsheets know: Their almost infinite flexibility and the ease with which users (particularly experienced ones) can create and prototype make them an attractive tool for almost any business task involving numbers. Yet these same qualities produce many problems, particularly when people use spreadsheets in repetitive, collaborative business tasks. Errors are common: A vast body of research details the extent of this problem. Manual input makes it possible for users easily to create these errors, and one reason they persist through multiple iterations is that most people check their work only by exception. Nearly two-thirds (59 percent) of research participants said they inspect their spreadsheets only when they spot something that doesn’t look right, and 60 percent look only at selected cells when they do check their work. Most of the time this works well enough, but not always. The potential for disaster increases when dealing with densely populated spreadsheets, especially those that have links to other spreadsheets or desktop applications, or ones that employ macros and other programming.

The result of mistakes can be significant, to put it mildly. Fannie Mae had a $1.1 billion accounting mistake caused by a spreadsheet error. A publicly traded maker of air pollution control products overstated its income by $2 million (a material amount, in its case) because of a calculation error in the percentage of completion. Another public company that used spreadsheets to calculate its warrants and options mistakenly understated this number and consequently overstated its diluted income per share by 10 percent. A natural gas distributor made a mistake in its gas storage figure, and this shortfall caused a spike in prices. An energy company took a $24 million charge to income because of a cut-and-paste error.

Even checking one’s work for errors can present problems because it takes time to do a thorough job. Indeed, most of our research participants did not see errors as being as much of a problem as lack of timeliness. More than half (56 percent) said the spreadsheet reports they receive are not always timely. When used in collaborative processes, spreadsheet errors cause longer delays. Nearly half (47 percent) said that errors happen either occasionally or frequently and that finding and fixing them stretches out the time needed to complete the process.

There are other sorts of problems as well. Four in ten (42 percent) said that information in spreadsheets is out of date frequently or all the time. Duplicate spreadsheets are common: 54 percent said they crop up frequently or all the time. Combining (“rolling up”) multiple spreadsheets is something almost everyone does (nine out of 10 of our participants), and most (66 percent), regardless of their experience or skill with spreadsheets, find it always or usually time-consuming.

Despite this litany of problems cited by our sample, only 12 percent see spreadsheets as a drag on their productivity. That’s the paradox of spreadsheets. People are so familiar and comfortable with them – and in many cases so adept at using them – that they overlook or minimize problems. Spreadsheets are seductive because they are easy to design and set up. However, when used in collaborative, repetitive processes, they quickly bog down. When used in business processes with a potentially significant impact on profits or reputation, they pose significant risks. 

Assessment
Spreadsheets will remain a mainstay of the computing environment because on balance they can enhance people’s productivity. Yet solutions that address spreadsheet problems are available. Some of these – especially those for discovery, management and control – are relatively new. For example, many companies wrongly use spreadsheets to create periodic reports when they should be automating the process. Some processes (such as budgeting, sales and operations planning or compensation management) are best handled in a dedicated application, and such applications are more affordable and easier to maintain than ever before (some are available as software as a service, in which the supplier manages them for you). Ventana Research advises midsize companies (those with 100 to 1,000 employees) and large companies (with 1,000 or more employees) to increase the productive use of spreadsheets that are part of any repetitive collaborative process through better controls and greater automation, or to replace them in processes for which cost-effective applications exist.

Related Research Notes
The Better Spreadsheet
It’s possible to retain ease of use while increasing control and accuracy

A Shot of eXpresso for Spreadsheets
SaaS application is designed for collaboration

Scoping Out the Emerging Spreadsheet Management Market
Ventana Research forecasts rapid growth in demand through 2011

Midsize Companies Need Better and More Visible Information
Research shows considerable gap between what they have and what they need