Recently someone sent me a funny video about Death by PowerPoint. It was a few years old, but it is still relevant.
“Death by PowerPoint” refers to the excessive and poor use of presentations. It is really death by boredom. But a recent news item reminded me that the bigger risk is “Death by Excel”.
An embarrassing mistake
Early in June, Austria’s Social Democrats announced their new party leader. Two days later they admitted that his opponent had actually won. They had announced the wrong winner due to an error in a spreadsheet.
I’m sure a few people wanted to die of embarrassment. But many Excel errors have serious consequences. Here are a few examples:
- In 2020, the UK failed to add 16,000 confirmed cases of coronavirus to its national track and trace system. The reason: a spreadsheet error.
- In 2019, a state fund set up to support jobs in Ireland lost €750,000 on an investment. The reason: a spreadsheet error.
- In 2019, Canada’s largest pot grower, Canopy Growth, posted incorrect quarterly earnings. The mistake was due to a formula error. After posting the correct results, its stock fell by 3.78%.
- In 2017, a Boeing employee accidentally leaked employees’ personal data. He emailed a company spreadsheet to his spouse, and the data was in a hidden column.
How bad is it?
Microsoft Office celebrated its 25th birthday in 2021. Today about a billion people around the world use Excel.
There are estimates that up to 90% of spreadsheets have errors. And that half the spreadsheet models used in big companies have “material defects”.
I couldn’t find any actual studies. But I have audited spreadsheets for a corporate client, and I can believe those figures. Even if the estimates are inflated, this is still a real problem. One researcher called spreadsheets “the dark matter of corporate IT”.
How serious is it?
The European Spreadsheet Risks Interest Group (EuSpRIG) focuses on this issue. It’s the only organisation of its nature that I found, although I hope there are others.
EuSpRIG lists some of the risks of uncontrolled and untested spreadsheet models:
- Financial consequences, such as lost revenue.
- Bad decisions.
- Fraud due to malicious tampering.
- Failure to comply with fiduciary and regulatory requirements.
EuSpRIG also publishes horror stories about spreadsheet errors on their website. It’s good nightmare material for managers.
Why is there a problem?
Based on my own experience, I’ve identified some reasons for the problem:
- People use Excel for tasks it is not suited for. As Lewis often says: “If you can only use a hammer, everything looks like a nail.” I’m glad to see that some of our clients now send financial staff on our SQL Fundamentals course.
- People don’t get proper Excel training. I’ve also noticed that some "Advanced Excel" courses don’t cover advanced topics at all.
- Most spreadsheets are not audited and definitely not tested. People think that, because the formula produces a result, it must be the right result. Developers (I hope) know better.
- Companies have coding standards (I hope), but no standards or guidelines for spreadsheets. Yet more people use Excel than write code.
The problem applies to all spreadsheet applications, not only Excel. I just haven’t come across big SA companies that use anything else.
What is your experience with spreadsheet errors? Has your company taken steps to address this risk? I’d love to hear about it. Please share your comments.