Spreadsheets in Your office – More Widespread than You may Think
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At E-ISG Asset Intelligence, every day we hear stories about how businesses and organizations suffer from using spreadsheets to manage physical and IT assets — multiple spreadsheets but none with the most updated truth. We even published a white paper called “Spreadsheets or ERP –Why They are Inadequate for Managing Government Property System?”, which is one of our most downloaded white papers this year.
But I am still a bit surprised when I read this research about the horror of spreadsheets. I am surprised at how deeply and widely “the spreadsheet problem” has affected our businesses and organizations. Because of the nature of our business, we mainly talk to IT department or facility departments. We empathize with their lack of attention from the leadership team to invest in a tool allowing them to stop using spreadsheets. This research focuses on how big businesses are using spreadsheets for budgeting and forecasting, making financial and investment decisions. The stunning statistics from this research indicate that “the spreadsheet problem” not only affects the IT and facility departments, but also the core financial functions.
This research (You can download it here.), came out late last year. Dr Felienne Hermans of Delft University of Technology, had the opportunity to analyze almost 16,000 spreadsheets from within one massive failed business, the infamous Enron. The research has studied the Enron Email Archive, containing over 15,000 spreadsheets used within the Enron Corporation. In addition to the spreadsheets, the research also presents an analysis of the associated emails, where they look into spreadsheet specific email behavior. The analysis shows:
- 24% of Enron spreadsheets with at least one formula contain an Excel error.
- There is little diversity in the functions used in spreadsheets: 76% of spreadsheets only use the same 15 functions.
- In the emails, spreadsheets are a frequent topic of email conversation with 10% of emails either sending or referring spreadsheets and the emails are frequently discussing errors in and updates to spreadsheets
Most businesses and organizations have ERP systems to manage financial decisions, including budgeting and forecasting. Typically the ERP system is a priority investment. That’s why we, at E-ISG Asset Intelligence, empathize with our customers in the IT and facility departments for their lack of organizational attention. But why do large organizations with sophisticated ERP systems still rely on spreadsheets? Because ERP systems are often complex to understand and most of the actual work still happens in spreadsheets.
It’s a sad reality that the use of spreadsheets are widespread, in all functions. But spreadsheets are ineffective for managing physical assets or financial assets. Enron is an example of massive failure in financial management. We can cite many other statistics about failure in managing physical assets using spreadsheets.
If you want to learn more about why spreadsheets are not adequate for managing physical assets, you can click here to download our white paper: “Spreadsheets or ERP –Why They are Inadequate for Managing Government Property System?”.