Do you use spreadsheets?

Spreadsheets are one of the main tools of most people in business, and a lot who are not. I have used them for many years whenever I have had a lot of data to manage.  Therefore, I was surprised to receive a report from Ventana Research saying they have serious limitations. Spreadsheets, that is, not Ventana. This organisation offers various other software for managing data. I had never heard of them before and am in no position to either endorse their products and services or to criticise them. Decide for yourself. See www.ventanaresearch.com

What’s wrong with spreadsheets?

The report identifies three types of error:

  1. Data errors
  2. Formula errors
  3. Errors of compatibility

When you think of the nature of spreadsheets, it is hard to imagine any other kind of error apart from computer malfunction or malware. However, it is worth thinking about how they occur and where the fault lies.

How do these errors occur?

Data errors occur when someone inputs the wrong data or they input the right data wrongly. I learnt that data capture is an important aspect of data management, when I fist encountered computers, a very long time ago. I learnt the term GIGO – garbage in, garbage out. What more need I say?

Formula errors occur when a wrong formula is input, usually when someone has failed to think through the relationships between the different rows and columns. I was lucky enough to do a lot of algebra at school. It may have gone out of fashion or perhaps some people didn’t pay attention.

Errors of compatibility occur when someone tries to combine two or more spreadsheets without ensuring the rows and columns are compatible. Perhaps they were always trying to compare eggs with oranges, but more  usually this occurs when one of the sheets does not contain a particular row or column, possibly because it would have been empty. Perhaps that division had zero absenteeism in the period, for example, or did not deal in a certain product. Not everyone bothers to input a row of zeros.

Are spreadsheet errors really human errors?

Mostly they are. Other criticisms include the claim that hackers find it easier to access spreadsheets than other types of software and that they are time-consuming to maintain. The report advocates continuous accounting, a concept which appeals to me, as long as the system includes sufficient safeguards and that people fully understand how it operates.

Do spreadsheets contribute to human errors?

The danger is that people place undue confidence in any automated or semi-automated system. They assume a figure on a screen is correct. If you ask a person a question, you might react to the reply with, “How sure are you?” or “Who told you that?” whereas you might take a computer to be infallible. It is easy to forget the human risks I have mentioned of data capture, formula input and incompatibilty.

Will I continue to use spreadsheets?

Yes! Whether you do so, or use other types of software, please remember GIGO and the other risks.

Acartoon man with a magnifying glass inspects a computer screen. Checking spreadsheets?

For more about managing risk see my book Load The Dice

Load The Dice: A Simple Guide To Managing Risks In Small Businesses

This book is about Risk not spreadsheets, but it might help you.