Why you should stop relying on spreadsheets and start getting real-time, accurate data.
Spreadsheets can be a useful tool for specific tasks. Simple to use and readily accessible, they can be used effectively for modelling, analysis, building lists, scenario planning and complex calculations. The issue arises when spreadsheets start to get used improperly in a business. In situations when more than a handful of people have to share data, data needs to be synchronized between users, or when people are expected to execute processes consistently and collaboratively, spreadsheets shouldn’t be used.
Spreadsheets just don’t have the functionality to follow through in these types of business processes. In these instances, it’s time to make the move to an integrated enterprise resource planning (ERP) system. Comparing spreadsheets to an ERP system is like comparing apples to oranges. Both spreadsheets and ERP systems are technically used for planning and budgeting, but at the same time have very different fundamentals.
To put this in perspective, consider the potential errors that can occur when using spreadsheets for the wrong function. Research recently conducted found that only one in every five spreadsheets are error-free and will give you correct results. The other 80 percent are uncontrolled and untested spreadsheets with errors that have the ability to pose significant risks to any business. Failure to keep records, backup information or test and control spreadsheets will inevitably lead to lost revenue, mispricing and overall poor decision making based on undetected errors.
An ERP system is considered a company’s backbone. It is designed to record business transactions and processes – basically like the main data depository. Before making the switch to an ERP system, a number of our current customers were trying to run on spreadsheet planning and manual processes, but soon discovered that spreadsheets simply aren’t designed to perform as a standalone. So like many other small to midsized businesses, if you are using spreadsheets to try and manage growth or track your company’s business processes, you should take a look at the list of all the things a spreadsheet can and can’t do and consider re-evaluating.
Here are the facts. Spreadsheets:
- Don’t understand business processes - you are responsible for recording everything and telling it what to do
- Aren’t integrated – so consistency is almost impossible
- Require a lot of labour and effort to keep data aligned
- Can’t be easily shared and accessed by different people across the organization
- Have inadequate security making it easy for users to delete data and alter formulas
- Have an insufficient disaster recovery plan
Realistically, it’s not fair to compare a spreadsheet to an ERP system. Spreadsheets basically lack the fundamentals that most ERP’s are fully equipped with from the very beginning. When used as a backbone or main source for management, they simply don’t perform. You waste money, you waste time and you get frustrated.
