It’s Official! Spreadsheets Are Killing Your Business
It’s time to pull the plug on Excel as you hear the grim reaper knocking on your door.
The evidence is mounting that your trusty spreadsheet loaded with sales figures, employee schedules and fancy macros may be costing you dearly, both in terms of revenue and lost productivity.
This dollar hemorrhaging is not idle speculation. Several companies have reported massive blunders related directly to incorrect formulas or other employee typos. Some studies suggest that 88% of all spreadsheets contain errors costing time and money for companies. Even more sinister, it can lead to damaged reputations and lost careers.
Even larger companies, loaded with actuaries and CPAs, are not immune. Fidelity Magellan Fund lost nearly $3 billion several years ago due to ONE missing minus sign. A Sheriff’s department in Washington recently messed up a basic spreadsheet, ultimately costing them over $500,000. Kodak, the photo giant, mistakenly put too many zeros on the end of an severance check, netting the bewildered employee $11 million. The problem was traced to a clumsy spreadsheet.
If big corporations suffer from spreadsheet hell, imagine the implications for small business owners who use scattered spreadsheets, whiteboards and paper processes to run their business operations.
It’s no understatement to say that many, if not most, business owners would rather be dragged kicking and screaming away from Excel, than stoically adopt new software that may change the fortunes of their company.
This is of course understandable.
Spreadsheets are the #1 business analytics platform used by small companies today and this has been the case since 1985. The legendary Microsoft tool has served millions of managers valiantly, allowing them to track expenses, inventory and calculate sales figures, taxes and commissions.
In fact, the use cases for spreadsheets are staggering leading many devotees to see this program as a database through which any business function can be expressed in rows of cells.
However, just in the same way that Outlook or Gmail are poor locations to store attachments and files for company processes, Excel disguises its risks and limitations leading many businesses to lay faulty software foundations that spell ruin over the long term.
By stitching together spreadsheets, paper scheduling systems and separate accounting applications, a business owner can never take full advantage of cloud and mobile apps which may dramatically reshape their bottom line and boost staff morale.
Since most owners and their staff are drowning in daily operational issues related to running a business, they struggle to visualize the true benefits of a centralized database or web application which could positively redefine the way their processes work.
However, once the time, cost and productivity gains are expressed in tangible numbers their eyes light up as new vistas of opportunities dawn upon them.
For instance, recent research indicates that inefficient processes, including Excel, may cost managers up to 28 days per year in lost productivity.
Why?
Because they spend this time fixing broken spreadsheets, searching for misfiled (or mislabeled) papers and acting upon the wrong data contained in Excel.
This in turn leads to longer delays in responding back to clients, partners and associates which further impacts customer satisfaction and company revenues. Human error in business, experts say, is 30% more menacing than than software viruses which contribute to data loss.
A Case Study
Consider for a moment a successful concrete and masonry materials supplier who has over the years built up an operation servicing over 4,000 customers with a merchandise list exceeding several hundred entries. Over 250 active contractors call in over 100 orders each day which are delivered by large fleets of delivery trucks. One can immediately grasp the complex tracking, ordering and scheduling requirements for products of all sizes including loaders, cement trucks, dump trucks, and concrete.
Incredibly, this thriving and overwhelmed family-run operation was using, you guessed it, several spreadsheets to track customers, contractors, inventory, orders, and fleet. This in itself was a mammoth accomplishment considering the software limitations inherent in spreadsheets.
The owner, however, could feel the weight of complexity pulling his company down and he knew scaling operations further would require moving beyond basic spreadsheet tabs and formulas.
“The more items you have, the more orders you have, the more trucks and drivers you have, the more difficult it is to organize, communicate, and maintain operations,” said Mr. Mark Carroll, the owner of Carroll Building Materials.
The Power of Custom Apps
He was referred to a Software Development Company, PK Solutions and their team of custom app programmers, who were tasked with giving the company the flexibility and organization needed to efficiently and effortlessly schedule and dispatch trucks at high volume across the state and nationally.
Specifically it meant moving away from spreadsheets and automating their processes from order intake to purchase fulfillment using custom software. The owner recognized it was becoming impossible for staff to manually process all the various daily tasks using a potpourri of spreadsheets, emails, phone calls, paper notes, and PDF files.
While projects such as this are often viewed skeptically by readers since it usually means uncomfortable and lengthy implementation times, this is actually not the case. New software development frameworks allow programmers to quickly plan, execute and extend business processes using mobile apps and related cloud footprints.
The 90 Day Rule
In the case of Carroll’s Building Materials, it took less than 90 days to roll out a new field management service platform that worked off the cloud. The custom software app achieved the following.
- Allowed contractors to order products online
- Ability to call for customized quotes via website
- Accept automatic payments online without manual intervention by team using invoicing and receipts),
- Enabled Inventory management updates
- Organize shipments by deadline and location
- Keep track of truck stops per driver
- Anticipate/calculate delays and backup needed
- Allow drivers to remotely update orders and notifications in real-time
In short, the concrete supplier had evolved from a clumsy spreadsheet platform to a powerful new system that integrated inventory, contact management, scheduling and accounting while connecting field personnel — including truck drivers — to the cloud in real time.
“Previously our team expended tons of mental effort, manpower, communication, and importantly time in error-laden spreadsheets and paper processes,” said Mr. Carroll.
“Now things are much different: This database scales effortlessly and efficiently — almost automatically — allowing my onsite and offsite staff to act quickly without frustration. This has positively impacted the bottom line and breathed new life into our organization.”
Mounting Evidence
PK Solutions case studies and additional research, estimate that at least 82% of users who build a custom app see a huge reduction in inefficient tasks related to legacy processes, including spreadsheets.
Of additional interest to small business owners is the finding that many of these custom software projects were up and running in less than 4 weeks. Further, by solving specific software requirements that fall between the cracks of off-the-shelf products and legacy paper processes, custom apps may return as much as a 289% ROI within 24 months of implementation.
In fact, this final point is worth exploring further since many CEOs may turn towards custom apps after finding that pre-packaged software wasn’t flexible enough for their particular needs. When Mr. Carroll approached PK Solutions to evaluate (and build) software to solve challenges in business processes, he cited flexibility as a key ingredient. Indeed, studies show that at least 81% of small businesses cite “flexibility” as a key driver for their decision to adopt custom mobile and desktop apps.
A further 41% confirm increased productivity from custom apps plus the added benefit of saving their employees between 7.5 to 10 hours per week, on average, by pursuing a custom software project.
In fact, we recently referenced the remarkable business transformation of Coastal Care Nursing who hired PK Solutions to build out a new healthcare software platform that has given it a leadership position in the caregiver sector.
Coastal Care reports saving upwards of 10 hours in wasted (individual) employee productivity per week by switching to a custom app. It’s now on the cusp of leveraging additional market growth by exploring artificial intelligence to extract insights from the data it’s accumulating. This will allow it to quickly develop new systems, products and revenue models for its network of caregivers.
Closing Arguments
In conclusion, the preceding discussion highlights the excessive risks involved in relying upon spreadsheets to run your daily operations, both in terms of lost productivity and revenue generation. Excel, while being a remarkable piece of software is NOT a relational database and definitely not designed with collaboration in mind. It’s highly error prone and difficult to manage once several or more employees (and partners) are involved in your business operations. There are also issues around data management and backup making spreadsheets the ultimate “scratchpad” but also the most dangerous form of business intelligence software on the planet.
“Excel is not, and has never been, designed to be a financial reporting and planning application. It lacks the ability to audit trail changes or document reasons for changes,” said Jami Morshed, global vice president for higher education, Unit4, in University Business.
Conversely, custom software applications offer built-in project management, budgeting, financial reporting, inventory, workflow and collaboration features, allowing small businesses to scale rapidly using the revolution in mobile and cloud computing.
As Naveen Jain, former CEO of Inspospace, eloquently put it, “Spreadsheets spit out results from your inexact assumptions and give you a false sense of security.”
In reality, the dangers of spreadsheet hell are much worse than this:
They slowly and silently choke your business operations to death. The cure for this malady lies in turning towards custom software apps that help CEOs manage scattered data, processes and remote employees in the field using the power of relational databases, cloud computing and mobile applications.
