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Do you deny how much your team uses Excel?

24th Apr 2012
CEO needaspreadsheet.com
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Denying Excel useFrom the Not Just Numbers blog:

“A prudent question is one-half of wisdom.”    Francis Bacon

In too many years of experience helping organisations to make better use of Excel, one truth has become evident:

The higher you move up an organisation, the less they think the organisation uses Excel.

I am currently talking to many accountancy practices and this seems even more true in that industry.

Causes of Excel Blindness
There are a number of reasons why this should be true but it can be incredibly damaging for reasons I will go into later in this post.

I believe that the main causes are as follows:

  1. The day-to-day experience of those involved - The higher you go in any organisation, the more your role involves relationships and meetings, rather than hands on number-crunching. Naturally those producing the numbers and analysing them use Excel far more than those discussing them;
  2. Belief in computer systems - Having invested in accounting and/or ERP packages (or in the case of accountancy practices, accounts preparation software), and been sold the omnipotent nature of these packages by the software companies, it can be difficult to believe (or face) that there are still large amounts of work done on spreadsheets.
  3. Over-simplification of what processes involve - A manager, for example, may understand that a member of the team is emailed a particular piece of information from a customer,a supplier, another branch or another department, and that they enter this into the system. The member of the team involved will know that they receive this information as an Excel file and they apply numerous sorts and filters, delete columns and rows, calculate totals, etc. before they enter it (or even import it) into the system. All of this work is done in Excel – and the manager is completely unaware.
Why does it matter?

It matters because it can be incredibly damaging to an organisation in terms of both financial risk and inefficiency:

Financial Risk

Not understanding the systems that your business relies upon can lead to errors in systems management don’t even realise are being used. The controls in the ERP system or accounting software may be perfectly adequate, but if the information entered is coming from a spreadsheet with an inbuilt error, they won’t be of much use.

Inefficiency

In most organisations, this is by far the greater cost. Many staff are using Excel for a great deal of their time and have very little training or understanding of how best to use it. Many hours can be cut from most employees’ working weeks, with a little bit of focus on this area.

Let is use the situation described earlier to demonstrate both the efficiency and financial risk elements:

“The member of the team involved will know that they receive this information as an Excel file and they apply numerous sorts and filters, delete columns and rows, calculate totals, etc. before they enter it (or even import it) into the system.”

This whole process could be automated in Excel so that a couple of hours of messing about, could be reduced to a couple of clicks. This not only saves those couple of hours every month, week, or even day, but ensures that the same conversion is applied to this spreadsheet each time, significantly reducing the risk of error.

What can be done?

The first step is to acknowledge how much your organisation uses Excel. No matter how sophisticated your systems are, there are many jobs around the edges of the system for which Excel is not only the best tool, it is often the only tool capable of the flexibility required. Acknowledging this can lead to some very quick improvements to efficiency.

Ensure that you have access to someone (either inside the organisation or from outside) who can look at this Excel use and suggest and/or implement improvements and train staff. I offer this type of service to UK accountancy practices via my Excellent Accountancy business, but please feel free to email me if you wish to discuss how to go about it for any other type of organisation.

Excel is not just Word for numbers, it does form parts of your key processes – whether you like it or not.

Imagine if you took the same lax approach to any other key processes in your business.

A little time and/or money invested in improving how you use Excel will go a long way, as it is such an untapped area in most businesses.

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Replies (5)

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By Alonicus
11th May 2012 15:24

Potential Risk

Excel is a fabulous tool, but not always the best one.  It is essential that the amount of validation and checking of the output should bear some relation to the values being worked on.

Just ask Mouchels - a decimal point error by an over-worked junior employee wasn't spotted by management (who obviously didn't apply a bit of basic sense-checking).  It forced a re-statement of profits downward by several million pounds, with a significant impact on the share price and financial well-being of the company.

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Replying to pacta:
Glen Feechan
By Glen Feechan
11th May 2012 16:04

Risk and Denial

Alonicus

I think often this risk can be part of the driver for the denial of Excel's use. If senior management blindly assume that all important data is handled within the ERP or accounting system, then they don't need to grasp this thorny issue!

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By eric748
14th May 2012 04:11

Excel Denial and System Integration

Alonicus,

Excel is also often used as a system interface tool of the last resort. For example if system A cannot adequately communicate with system B due to file format differences etc; excel can be used to transfer data from one system to the next.

The manipulation of the data from the first system might involve the functions; concatenate, vlookup, sumif etc; any manual error in the function referencing can result in import errors or input errors to system B.

One example would be exporting data from a travel booking system via export to excel and then importing from excel after manual manipulation into the accounts payable system.

 

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By Alonicus
14th May 2012 13:59

gfeechan & Eric,

gfeechan & Eric,

I completely agree with your points. I regularly have to use Excel-generated csv's to move data between systems, and know how frustrating it can be, and (in the past) have produced key reports and dashboards for a management team who clearly had no idea or interest in where it came from.  It was quite amusing to me that they took so much on trust !

The issue as I see it isn't that using Excel is wrong, it's that an appropriate level of management oversight and checking is required to make sure that unforseen consequences don't arise as a result of errors that are relatively minor, but have a way of snowballing up as layer upon layer of formulae and macro's get to work on them.

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Replying to cheekychappy:
Glen Feechan
By Glen Feechan
16th May 2012 12:52

Education!

Alonicus

I agree. Using Excel is certainly not wrong, but people need to be shown how to use it and use it responsibly.

Any sophisticated tool can cause havoc in the wrong hands, or even in the right hands without adequate training!

 

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