Spreadsheets – the bane of an FD’s life or the fount of all knowledge in your business? Whether you love or loathe spreadsheets their demise has long been forecast. Here the experts share their views on spreadsheet strengths and weaknesses and whether they have any distance left to run.
Large excel spreadsheets are bad for your health. David Parmenter urges finance teams to replace large error-prone spreadsheets. Spreadsheets have no place in forecasting, budgeting and reporting routines. I believe it is unprofessional and career limiting to be overseeing a finance team that relies on large error-prone spreadsheets.
A spreadsheet is a great tool for creating static graphs for a report or designing and testing a reporting template. It is not, and should never be, a building block for your organisation’s reporting, forecasting or planning systems. The high level of errors in spreadsheets is the main reason why. A major accounting firm pointed out that there is a 90% chance of a logic error for every 150 rows in a workbook.
If you can build a forecasting, reporting or planning model in a spreadsheet application and keep it within 100 rows, you can do so without much risk. Pass this threshold and you expose yourself, your finance team and the organisation to unnecessary risks.
This is an extract from the Business & Management Magazine, Issue 260, December 2017.