The world runs on numbers. But, have you considered what would happen if the numbers being used by your business were wrong?
Would a professional graphic designer use paint?
Would a professional software developer use notepad?
Would a professional producer use movie maker?
Would a professional engineer use sketch-up?
The answer to the above questions are all a resounding NO. Professionals in these industries often resort to professional applications designed specifically for ease of use in their particular field. This leads to heightened productivity and ultimately greater performance & results.
Then why do finance professionals still use traditional spreadsheets?
Times are changing – Many finance professionals are starting to move beyond spreadsheets and instead use professional modeling tools such as Quantrix.
Whether you are responsible for making multi-billion-dollar investment decisions or simply trying to get your team to collaborate more effectively by reducing the number of rogue spreadsheet versions floating around your office, we’ve done the hard work for you and made a list of compelling reasons why you should ditch your spreadsheets and move to a beyond spreadsheets solution.
Here are the 6 top reasons why you should look to replace your current spreadsheet dependent processes:
1. Errors – Studies have shown that up to 90% of spreadsheets contain errors – and even small errors can mean big money as seen in the case of the Fidelity Magellan Fund, where the simple omission of a minus sign led to the over statement of capital gains to the value of USD 2.6 billion.
2. Scalability – The issue of scalability is frequently overlooked – what was suitable for day one, may not be suitable now. Many projects start as a small manageable spreadsheet but as time passes and the spreadsheet evolves, it ends up being impossible just to simply maintain it – let alone gain meaningful insight.
3. Flexibility – Data is intrinsically linked in traditional spreadsheets – you can think of it like this: There are three parts to every spreadsheet; Presentation, logic and structure. It is impossible to change any one of these elements without it having an effect on the others – this bottleneck means spreadsheets although seemingly flexible on first glance are really quite un-flexible and any manual intervention increases workload and risk.
4. Clarity – The calculations used in spreadsheets are often unclear and hard to audit. The inability of spreadsheets to display the formula and result for all cells at once mean competent modelers must constantly switch between formula auditing mode and regular mode in order to thoroughly audit a spreadsheet. This combined with the cryptic nature of the formula such as =SUM(G7:G8)/G16 which is nowhere near as clear as the natural language representation: Quick Ratio = (Current Assets-Inventory)/Current Liabilities.
5. Efficiency – Spreadsheets need a unique formula for each calculation – and this creates a host of problems. Replicating logic across years/products/regions etc. is wasteful and impacts calculation performance as models evolve, not to mention if you want to make a change, you need to make it in many places.
6. Collaboration – Teams regularly collaborate on projects – but this creates more versions and more confusion. In an increasingly global world, groups of collaborators often from many different departments and locations will need to contribute. The integrity of the spreadsheet is always in doubt, as a number of versions need to be compared, contrasted and edited to create a true master file – this is called the ‘single source of truth’ problem.
You can download the complete paper which examines each of these reasons in more detail.
By James Kipling
