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Risky Business – The Use of Spreadsheets Beyond Intent

Spreadsheets are a great tool for accounting and financial tasks. But they have limitations that make them inappropriate and sometimes destructive for other business functions.

Those who are experts in efficiency will tell you that when choosing a tool to complete a task, the better choice is always to use the tool that is most dedicated for the task. If you had to drive a nail into a board, having only a pipe wrench at your disposal, you could pound the nail with it. But it’s clumsy operation tells you that a hammer would get the job done more effectively, efficiently and safely. The same theory holds true for software. You can force spreadsheet software into roles it was never intended to perform, but chances are there is software that has been purpose-built for accomplishing the task at hand more efficiently and with better results.

However, more people in more functional areas are using spreadsheets for their specific needs without realizing the risks involved. Even experts using spreadsheets for their intended purpose of accounting, finance and economic modeling are impacted by spreadsheet problems. Just this year, the Financial Times revealed that French economist and author of the controversial, but best-selling, Capital in the Twenty-First Century, Thomas Piketty had transcription errors and incorrect formulas in the spreadsheets that served as the basis of his book. One year earlier, Harvard University economists Carmen Reinhart and Kenneth Rogoff acknowledged making a spreadsheet mistake in their popularly-referenced 2010 research paper, Growth in a Time of Debt. Imagine what could happen to a person who is less of a spreadsheet expert using them for functions beyond what they were created for.

Here is a look at a few ways people with roles in various functional areas use spreadsheets in risky ways.

Human Resources Record Keeping

Human Resource professionals have many purpose-built software tools to choose from but many in smaller organizations use spreadsheets as their default record keeping tool. The common theory being that specialized, enterprise-grade HR software is overkill if there aren’t thousands of people to track. One study found that around 29 percent of people use spreadsheets for maintaining employee information and records (name and addresses).

Agreeably it certainly is easy and seemingly flexible enough to to enter name, address, contact, leave, payroll and advancement information into a spreadsheet. But what would happen if fields became confused or formulas corrupted? Paychecks could be direct deposited to incorrect accounts, vacation records could be obliterated and sensitive information could be sent to the wrong individual.

Marketing and Sales Project Tracking

Spreadsheet use among marketing and sales functions can be problematic. Marketing and sales operations involve budgets, forecasts, and other finance-related areas of focus that are truly legitimate uses for spreadsheets. A recent study revealed that 54 percent of marketing professionals use spreadsheets to determine trends and project sales while roughly the same percentage of uses spreadsheets to track sales and budgets. Unfortunately, the use of spreadsheets in the marketing and sales functions does not stop there.

Spreadsheets are commonly employed as a means of tracking marketing plans, managing projects and tracking the sourcing marketing materials. These and other non-standard uses of spreadsheets by those in marketing functions may seem natural given their frequent, legitimate use. However, when time is money and lack of efficiency can cause the breakdown of an otherwise finely-tuned marketing and sales machine, choosing planning, project management and sourcing tools that are built for marketing’s unique environment can pay huge dividends.

Research and Development

Numbers and statistics are a natural part of many areas of research. It makes sense that researchers would be drawn to spreadsheets. Small-scale researchers with a smaller sample size and a less complex data structure may get the desired outcome through the use of spreadsheets. However, in more complex data environments or where results are critical, specialized statistical tools can be more reliable and streamlined than the statistical capabilities of spreadsheets. Interestingly enough, this is one area where the significance of using the right tool for the job is realized. One study of spreadsheet users found the number of individuals claiming to have never used statistical capabilities of spreadsheets to be 90 percent.

The next time you have some numbers to crunch, by all means, reach for the spreadsheet icon on your computer. But when the task you’re facing is predominantly accounting or finance based, instead of asking yourself “is this something I can do in a spreadsheet,” ask “is there purpose-built software for this.” When the results are better, the headaches are fewer and the errors non-existent, you’ll be glad you did.