The Dangers of Managing Data Using Digital Spreadsheets

I’m a big fan of digital spreadsheets. I remember diving into them when I was first introduced to Lotus 1-2-3 as a grade-schooler. One of the first things I did was to create stats aggregations using baseball cards of my favorite players. Through the digital spreadsheet, I was able to build my dream baseball team. Though imaginary, it was magical.

Throughout my university life and later my career, Excel and their spreadsheets and workbooks took over the world. They became a game-changer in business operations beyond bookkeeping and accounting. It allowed us to enter the world of graphs and data visualizations; get introduced to the power of data cubes through the gateway we now call pivot tables; and of course, it allowed us an intimate way to modify data. In my opinion, digital spreadsheets made data available and less intimidating for those who are outside the seemingly exclusive world of the database elites.

As digital spreadsheets became a common and daily arsenal of the business world, they inevitably found their way into the realms of data management. It’s not a bad thing. Majority of data practitioners I know use Excel on a day-to-day basis. Include me in this pool of users. I use it almost daily. However, it becomes a problem when we over-rely on these digital spreadsheets. Yes, it’s a wonderful tool but using it to manage your company’s customer, vendor, and financial master data might do you more harm than you’d expect. The perils of compounded errors from manual and unsanctioned modifications, unmanaged multiple versions of your data, and data management scalability limitations are the first that come to mind.

Before we dig into these hidden dangers. Let’s understand why organizations tend to over-rely on digital spreadsheets to manage their data. Here are 4 reasons:

1. It’s affordable and everywhere – Typically if your organization already subscribes to Microsoft Excel or you can immediately access other versions like Google Sheets. Digital spreadsheets are ubiquitous today and have carved a place in our daily lives.
2. It’s straightforward to learn – It takes a very short time to learn the fundamentals of digital spreadsheets. A 10-minute online instruction video can help you get in your way and be dangerous.
3. Fields and rows – The spreadsheet construction display similar basic elements to a database table.
4. Expandable – Digital spreadsheets can be collated, connected, and related to a workbook. In some cases, other software applications allow connectivity to these spreadsheets quite easily.

With these characteristics, Excel and other versions of digital spreadsheets can become an attractive solution to administer data. Yes, it can do the job, and that’s the biggest problem. It can help you perform data management tasks, but it has its limits. Think of it as traveling around the world using nothing more than the power of the wind. Yes, for centuries mankind has proven this is possible.

Eventually, it will get you where you need to go with grit and effort. However, you will be more susceptible to weather changes and not to mention the time and effort it will take you to get there. Using an airplane is faster, more efficient, and reliable. There’s a wide spectrum of transportation choices between a sailboat and a jumbo jet. In that spectrum is the best choice, just like in choosing what to use in managing data.

Here are hidden dangers (and costs) of over-relying on digital spreadsheets to manage your data that could render implosive effects to your business:

1. Scope creep and scalability – According to a survey conducted by the Project Management Institute (PMI) in 2018, 52% of completed projects have some form of scope creep. This was an alarming jump of 9% from the 43% they recorded in 2013. Working on data and digital spreadsheets is no different. Without policy guidance and compliance requirements, digital spreadsheets can easily give birth to a “Franken-process” of cobbled short-term solutions as time progresses. What seemingly started as a mundane record-keeping of booking data could very well become an unwieldy master list of your company’s customer master that only one person has access to and knowhow on its nuances. This now presents a scalability issue. Does it sound familiar? Of course, this happens more commonly than you’d think. With the statistics provided above, over-reliance on digital spreadsheets to master your data can give way to multiple scalability issues.
2. Integrity and Errors – In standing research by PWC, they note that more than 90% of spreadsheets contain material errors. This doesn’t mean that data in databases are error-free. What we would need to pay attention to is why? With digital spreadsheets, there are little to no rules and policy-based processes to protect data integrity. Its ease of use, for example of adding and removing columns and rows, can exponentially impact its integrity due to mistakes. Without version protection or user tracing, it might be a challenge to undo or restore a prior version. Data can be easily changed without verification. Databases can be outfitted with rules to ensure the desired measure of data integrity to reduce data errors. As an example, it was reported a few years ago that JP Morgan Chase endured a trading loss of around $6.5 billion due to a copy-paste error by a user.
3. Time-consuming - The process of tracking customer deals could be excessively time-consuming in digital spreadsheets. Since there is little to no audit trail, it can be challenging if not impossible to track how the final sale numbers are and if anybody made edits or changes. This can be compounded by its ease of modifying and changing numbers. You are providing the business process vulnerability for false reconciliation to occur. As digital spreadsheets can provide massive time savings benefits when used appropriately, it can also provide certain levels of discomfort due to improper use. According to RTInsights.com, the excessive over-reliance on a digital spreadsheet can contribute to a $60 Billion productivity burden in the U.S. alone.

Digital Spreadsheets Are Double-Edged Swords

They are arguably one of the best business productivity tools created after the invention of the modern personal computer. There is a big “if” in this. If you know when to use the tool and for their purpose. Yes, there is room for Excel to elevate itself into a data management tool but there are currently many choices for that. Examples of these are SQL Server or Microsoft Access to start. You too can get started with these tools via a 10-minute “how-to” video you can find on the internet. Explore the limits of tools like digital spreadsheets but understand that these are just tools. The decision to migrate to a capable one rests on you, the data practitioner. Use the items above to help you decide when it’s time to elevate your data management game.