“If you only have a hammer, you tend to see every problem as a nail.”
- Abraham Maslow
Microsoft Excel is one of the most powerful, widely used software applications of all time—and the most misused. In 2003 Microsoft CEO Steve Ballmer said there were about 400 million users of Microsoft Excel. Everywhere you look; Excel is used, misused, and poorly used to “solve” a wide variety of problems.
Excel is wonderful. It enables end users to create simple ad-hoc solutions and sophisticated applications. It is the common solution for proposal pricing, cost analysis and cost estimating. Excel’s greatest strength, however, is also a great risk for companies. As software is developed, bugs and errors surface and are fixed. Excel applications usually short circuit the development process and break, a lot, when it counts.
In the mid-1980s, Microsoft Corporation developed Excel to compete with Lotus 1-2-3. Released in 1987, the first incarnation of Excel was version Excel 2.05 (there was no Excel 1.0). By 1988, Excel displaced Lotus 1-2-3 and has dominated the spreadsheet market ever since. Excel versions 2.05 through 7.0 had 16,384 rows and 256 columns. Excel versions 8.0 through 11.0 had 65,536 rows and 256 columns. Excel 2007 Version 12.0 and later workbooks are “limited” to 1,048,576 rows and 16,384 columns and the number of spreadsheets in a workbook is only limited by the PC’s memory. Like bacteria growing in a Petrie dish, the number of cells in Excel has grown logarithmically – from 4.2 million to 16.8 million to today’s 17.2 billion.
Not all spreadsheet errors are inconsequential. Like a child playing with matches who burns down the house, some spreadsheet mistakes have traumatic consequences.
It is helpful to categorize spreadsheets into three groups:
Intentional spreadsheet applications are purposefully developed by software programmers using standard software controls and testing that are then deployed to end users. De-facto spreadsheets are constructed by end users and deployed within their own work group. Accidental spreadsheets are designed by an end user for personal use, inherited by the person who succeeds the designer and by precedence become part of the established process. Accidental legacy spreadsheets are the most common.
In his book Antifragile: Things That Gain from Disorder, Nassim Taleb suggests seeing anything that matters in three categories of exposure:
“Antifragile” is his neologism for the opposite of fragile. Where a robust or resilient system stays the same by resisting shocks and change, an antifragile system grows and improves with exposure to volatility. In a fragile system, mistakes are rare, consequential, usually irreversible, and painful. Mistakes in an antifragile system are routine, small, benign, quickly overcome, and avoided in the future – errors are learning opportunities.
Spreadsheets are often viewed as tactical tools not subject to the same scrutiny as other database or functional applications. In most organizations, however, spreadsheets are mission critical parts of their analytical, decision-making and reporting processes.
Clearly, business systems that rely on electronic files stored on personal computers and file servers connected to networks are better, faster, and cheaper than the antediluvian systems they replaced. But the requirement for reliable compliance frameworks compels organizations to establish controls on the creation, documentation, use, and maintenance of mission-critical spreadsheets.
Fortunately, scanning tool applications can be used to analyze workbooks. The website “Spreadsheet Analytics” lists 17 applications that audit and assess the complexity of spreadsheets.
Evaluate the risk associated with critical spreadsheet error based on the potential impact and assign a subjective grade (e.g., Green, Yellow, and Red).
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