First things first – spreadsheets are a great tool – and I’ve nothing against them personally – I use Microsoft Excel ALL THE TIME it’s a killer business application that I love! (in fact its probably my main tool). Its’ great for a whole bunch of stuff modelling, analysis, list building, scenario planning, complex calculations etc.

Spreadsheets have great features and benefits:

1/ They are simple to use – the days of computer literacy being a barrier is thankfully much less of a problem than say 10 – 15 years ago – and most college kids come equipped with a pretty good understanding of a basic office package – given that menu’s and toolbars are often ubiquitous which makes the learning experience fast and friendly.

2/ Most corporate desktop installations usually come with a basic office program – which (guess what) usually comes equipped with a spreadsheet application. This means that usually over 90% of the computer enabled workforce has access to a spreadsheet whereas they may not have access (or have controlled access) to their companies ERP. In comparison to an ERP seat or licence spreadsheets are also pretty cheap!

However, the really important thing to remember about spreadsheets, what they’re not, is they are not the companies ERP system. The company ERP/MRP system must always remain the company backbone, the main data repository, the source for management information and where business transactions and processes are recorded and tracked.

But what’s wrong with spreadsheets – I hear you ask? Well, the way most spreadsheets are configured means that they miss fundamental (and critically important) ingredients that most ERP’s are equipped with out of the box!

Improper use of spreadsheets often stems from a perceived lack of functionality within the ERP system or a work around where the ERP logic isn’t aligned to way the company wants to operate. Often the easiest, or the perceived easiest, method of fixing that is to “plug” a spreadsheet in to solve the problem. We’ve all seen these out in the field and their function can vary from a simple list (my ERP doesn’t record all the data I need) to acting as an EDI interface between a customer and supplier ERP system.

The key effect of improper use? – wasted effort (the data gets keyed and stored multiple times), bottlenecks (I’m waiting for the spreadsheet to become available so I can update my data), Incorrect decision making as a result of erroneous or incomplete data and in some cases complete business stop as a key spreadsheet used to manage the business becomes corrupt/unavailable or outdated.

So here’s the top ten list of reasons why spreadsheets should be used with caution!

1/ They are don’t follow business logic and don’t know about business processes – “what do you mean whenever we receive an order from Company ABC I have to record a reference number, check our stock and validate their account with the Finance dept? – My list doesn’t do that!”.

2/ They are not integrated – unless you come up with some whizzy code most spreadsheets are stand alone and focus specifically on the process they are setup to record ”what do you mean you want my list of deliveries from our goods receipt process that I have in my spreadsheet to go and update my purchase order file and tell finance they can pay the supplier invoice?????

3/ While Excel has some great validation tools – most spreadsheets (unless configured to do so) are not built with this enabled – for example want to enter your date as 1 January 200010 – fire away!

4/ MACRO’s – Macro’s require a level of expertise to build and maintain – they should always be documented to describe how they work – what inputs are required and what outputs are generated – For example – Joe Bloggs who wrote that fantastic macro to format and process the sales of super-widgets ABC has left the organization and nobody knows how it’s configured – and guess what…business rules have changed and we need to update the macro! Argh! Business process stops and we can’t get ship product – the spreadsheet dies and we have to do it manually.

5/ Its really really REALLY (get the point?) easy to delete or amend data (and in my experience excel files often have a slightly less robust disaster recovery plan than an ERP system.) While this might seem great at the outset – “look how easy my order intake file is to edit”. It can soon become a nightmare!

6/ They require man hours and effort to keep data aligned to the company ERP. And seriously once the two get out of synch (which they will!) your doomed!

7/ When used for management information they often give a completely different impression to reports generated from the company ERP.

8/ Most spreadsheets are not “shared” so one spreadsheet can only be used by one user at a time. Instant bottleneck.

9/ They become personalised and don’t follow standards – “I decided to invent my own numbering system for my x list – what do you mean I need the PO number to track back to the customer order?”. Let two people create two separate spreadsheets to do the same task and your guaranteed they’ll look completely different!

10/ They do not have the right security! ERP system usually come equipped with security features that allow you access to what your allowed to see and don’t grant access to what your not! – If you look at Excel it has some great security and protection features but they are not anywhere near as granular as to those found on an ERP. So you want someone to see your list of Purchase Orders but not the prices? Or you want them to see the prices but not the suppliers?..mmmm. Also spreadsheets are HIGHLY transportable!

At the end of the day – spreadsheets are not truly evil – like any business application it’s the management and policies that govern how they’re used that results in the problem. But as a cautionary suggestion – take a look at the spreadsheets used in your own organization – look at what they’re used for, who uses them and find out if you can you get your ERP system to manage it instead.

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