According to a recent Wall Street Journal article, CFOs are cutting back on Excel Spreadsheets, because they have not kept up with the demands of contemporary corporate financial units. “The mood that prevails is that people are spending too much of their time importing and exporting and manipulating data. They want their employees to focus on what the data is telling us.”
Also, a recent blog by AIMMS, a prescriptive analytics software company, suggest that Supply Chain Chiefs have decided to retire spreadsheets in exchange for more robust and collaborative friendly solutions.
I argue that the business world can accommodate both. Spreadsheets are here to stay for many years in the future. They continue to be useful and can be used to collaborate with peers even if they are owned by different people or teams.
Why Spreadsheets Are Popular
Business analytics providers love crunching numbers in a spreadsheet because:
- It’s powerful
- It’s simple and easy to use, and people have decades of experience using it
- It’s flexible and great for ad-hoc analysis
- it’s economical
- And they have control of the data!
Moreover, most professionals know it like the back of their hand. They rely on it as their daily go-to business tool. It’s scary for them to think of dumping their only known way of acquiring business insights in favor of something they know little about.
The Case Against Spreadsheets
These are the negatives for using Spreadsheets:
- Spreadsheets practically never integrate with other systems
- They are not updated automatically
- The logic behind spreadsheets is often only clear to those who created them and dies when somebody leaves.
- The analysis can be slow given that the spreadsheet will only work with a certain amount of data
- And from an IT perspective, there is no version control.
Silo Analytics Versus Implementing Centralized Tools
The question is: should you replace spreadsheets with a central tool that potentially allows people to learn a huge amount about what’s going on about their company that they never knew, or are there benefits with silo analytics? Centralizing data and providing a way to access it can be a huge benefit to many companies, if and only if someone looks at the data. I argue, that when they do, they typically will export the data to a spreadsheet for more analysis. I believe spreadsheets survive because you have more control over the data format and analysis, especially when tied to visualization tools such as Tableau. People are more comfortable using spreadsheets than learning a new software system.
Collaboration Already Exists with Spreadsheets
Spreadsheets are the language of business all over the world. There is an unwritten expectation that If I send you a spreadsheet, I expect you to be able to open, read and understand the workbook. Hence I expect you to have MS Excel installed on your PC and you are competent to use it. If you send me an Excel workbook, you expect the same. Spreadsheets are the standard tool for business analytics.
The learning curve for any similar tool would likely be more challenging. Hence a significant investment in learning to use a new tool would be required for each new user. Migrating to a business analytics platform means having to retrain the entire business staff, which could be unaffordable and risky. As a result, it would take a very long time for any other tool to outcompete spreadsheet use, especially to the extent that it becomes obsolete. The spreadsheet is entrenched in most businesses and will face more competition these days than it did previously, but it’s not going away soon.
“People will live with a solution they understand rather than make a change to something new that they don’t understand.” Mark Rocky, Production Scheduling Practice Leader at Profit Point.
There is a healthy movement to install and implement centralized solutions, allowing more and quicker access to company data, but in my opinion, spreadsheets will not be abandoned. Spreadsheets will continue to coexist with other solutions. No one can accurately predict the future, but as an economist, I say the spreadsheet is here to stay for some years in the future.