Brief

Report: Spreadsheets add multiple levels of risk to operations

Dive Brief:

  • Spreadsheet risk occurs for two main reasons: the imperfections of the platform itself and the predictability of both data and logic flaws put in by users, according to a recent white paper by Logility.
  • The report argues spreadsheets are inadequate at realistic supply chain planning network through accurate demand tracing and simultaneous sourcing. To wit: An estimated 94% of deployed spreadsheets contain errors, while 90% of spreadsheets over 150 rows long include errors.  
  • The tool carries many risks for supply chains, including: a tendency towards error; too many likely single points of failure; poor “what-if” analysis; a lack of scalability; Tower of Babel-like information isolation; ERP integration doesn't exist; and slow time-do decision making.

Dive Insight:

Spreadsheets have become ubiquitous in number-based presentations and compilations, yet their effectiveness is keenly doubted. Given the speed with which most companies jump aboard new methods, new idea trains, and most of all, new technology, what is it that remains so appealing about an allegedly inaccurate platform?

Ease of use is foremost. It takes very little time and effort to learn and master spreadsheet rules. Certainly human error can play a part, but are other systems completely free of the possibility? Another factor in their deployment is cost. Most companies already have a spreadsheet program installed — in fact, it probably came with whatever word processing program they purchased way back when. With the pressure routinely exerted on supply chain managers and their staff to reduce, cut costs, and save, continuing to utilize an older technology is going to win out over the purchase of a new platform altogether.

There's little doubt that Big Data and the insights associated with modern platforms can benefit business processes. But until it's certain that a company requires a specialized new platform to better position itself within its industry, many users will likely stick with spreadsheets.

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Filed Under: Technology
Top image credit: Dollar Photo Club