Top 4 disadvantages of Excel

The possible problems of Excel when working with big data.

“To be an accountant in the age of spreadsheet program is — well, almost sexy.”

— Steven Levy, in “A Spreadsheet Way of Knowledge”

Microsoft Excel is the most common software with several time-saving formulas, smart features, and an aptitude to yield multiple graphs and tables. In many companies, Excel is still the tool of choice to plan, analyze and report because of its reputation. But it has its disadvantages too–especially when it comes to managing big data.

Here are the top four disadvantages of Excel:

1. Excel is functional, but it’s not a database.

It’s common practice for businesses to store data within Excel. There’s no doubt that Excel makes it easy to collect data in nice and tidy rows and charts. It’s also very user-friendly. But when it comes to using it as data storage, Excel may not be the best choice for it.

Both Excel and a database share similarities in looks and the ability to contain large amounts of tabular data used for calculations. But here are the differences between them:

• You only get up to a million rows in Excel whereas a database can contain millions of rows and columns.
• Excel is easier to use and cheaper to set up. But a database is more extensive and allows you to dig deeper into your stored information.
• In Excel, data is stored in cells. In a database, data is stored in a table system of rows and columns.

2. Excel is error-prone.

Spreadsheets are incredibly error-prone. The human factor decouples the risk of errors because mistakes aren’t easy to spot.

If the study is right, and almost 90% of spreadsheets contain errors, that means there is at least one error in every 100 cells.

There are many formulas in Excel spreadsheets. When you change a single element, you need to go over the entire system to ensure nothing has broken.

Some historical facts:

• TransAlta lost $24 million because of its employee’s copy-and-paste mistake. Thus, causing a misalignment of the Excel spreadsheet rows.
• Another Excel-related human error happened to Kodak in 2005. “As a result of all of these adjustments, the company’s third-quarter loss increased by $9 million, to $1.038 billion, from the previously reported loss of $1.029 billion,” the company said.

Blunders made in Excel may seem small at first glance. But the consequences that follow may not always be affordable from a financial perspective.

3. It’s hard to share separate reports with different groups of people.

Planning, forecasting, budgeting, and reporting are all joint operations. It’s common for different teams in a startup company to fill in their part of the information in a shared spreadsheet so that everyone gains the same overview. However, it becomes almost impossible to separate the information into reports that are meant for different stakeholders.

For example, reporting to investors and board members. There is no need to send all 150 tabs of information to both groups. Your investors may need only a summary and not the rest of the information meant for board members, and vice versa.

Even if you go the extra step of creating different reports with relevant pieces of information for various stakeholders, it’s still a repetitive task that needs to be done on a monthly basis. That’s a lot of work to keep you busy!

4. Excel requires manual labor.

Many businesses favor Excel over automated tools because of its lower cost. Excel may seem affordable at first sight. But what if I tell you that it’s actually more expensive than it appears at the end of the day? Here’s why:

• Higher labor costs. It always needs a developer or a data analyst to manually feed data into Excel sheets, leading the companies to pay extra salary to the particular specialist.
• Not time-efficient. Manual work always takes more time to do. It’s not about working harder; it’s about working smarter.
• Error-prone. As mentioned, the mistakes caused by a human factor may lead to unaffordable consequences.

Don’t get me wrong. Excel is a beautiful tool and is great for gaining an overview of things. However, it does get complicated over time with a larger amount of data. As the saying goes, complexity is the enemy of execution.

Tools exist to make our lives easier. Make sure it’s one that meets your business needs instead of one that creates more work.

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