How to Mitigate the Risks and Spreadsheet Management Overhead Associated with Excel

Spreadsheet applications, such as Microsoft Excel, have become powerful and critical business tools in an era of expedited, digitized and agile business practices. In fact, over 70% of companies use Excel as their main program for bookkeeping and widely utilize Excel to support other business processes. Excel spreadsheets serve as usable, cost-effective alternatives to lengthy software development processes for business owners requiring instantaneous calculations and results, in an attempt to keep up or overtake competitors. As such, they are user-friendly, flexible, can be easily modified, and may be applied with speed and ease to multiple business-related needs and functions, including data gathering, calculation and analysis, graphing, bookkeeping and various other uses.

Yet, these clear advantages simultaneously serve as inherent risks to business owners and executives: Excel spreadsheets are standalone files, operating almost entirely without any form of system-wide control. Anyone can access and work on Excel files, anyone can also inadvertently make crucial errors to the xls files.

Errors on Excel spreadsheets tend to fall into the following three categories:

• Errors of input, including typos and misplacing data in wrong slots
• Errors of formatting
• Error of calculation

The first two of these failings are the results of human error. Untrained or unseasoned program users tend to trust the analysis prepared by Excel, blindly accepting results as correct, without bothering to double-check for errors or miscalculations. Companies lack adequate measures for preventing such errors from occurring, or even lessening the risks of said errors on the company’s ventures. Therefore, a certain amount of risk is attributed to low/poor Excel usage standards at businesses.

An additional pitfall of Excel-related work is a high management overhead. As the number of employees rises, larger amounts of funds must be allocated towards salaries, reducing corporate revenue. Spreadsheet risk is controlled by huge manual effort for monitoring data entries, validating their accuracy, sending files over emails, copying and pasting data, consolidating information and periodic analysis. Furthermore, certain Excel operations require human input, as data such as KPIs cannot be programmed with a single Excel formula.

These blunders and complications can be crippling for companies, leading business Excel users to seek new ways to manage their spreadsheets.

Approaches to mitigate Excel related risk and cost of manual processes fall into the following three categories:

• Automation Tools
• Database infrastructure
• Spreadsheet Management System

Potential solutions exist in the field of automation geared towards offsetting the inherent risks of manual data input. Web-based tools, such Google Sheets and dedicated in-house development, can be used for automated collaboration and to enable programs to be run smoothly and effortlessly. Automating checks reduces, albeit does not eliminate, risk and cost associated with human error. Programs such as Google Sheets pose other data manipulation limitations and lack some of Excel’s most robust functions. In-house developments can render the process most efficient with respect to tailoring the program to each company’s specific needs. However, this involves a great exertion of efforts and resources, as well as high maintenance costs, according to system adjustment needs.

Another possible solution is to store data in databases instead of in spreadsheets. Utilizing databases would eliminate some human error, but would not eradicate risks and costs posed by Excel use altogether, as connecting Excel files to any database requires extensive manipulations that must be repeated for every individual Excel template. Furthermore, certain databases would be used for certain needs. A single database cannot adequately take care of each task.

A third budding solution is to employ a “Spreadsheet Management System” tailored to each company’s individual needs. A spreadsheet software or control framework is a program or structure formulated and implemented in-house or by a third-party software or consulting firm that provides technical solutions by defining the spreadsheets’ potential risks, as well as associated controls to be considered, in an attempt to mitigate errors. In addition, spreadsheet management systems reduce the overall high management overhead costs, by cutting the manpower needed to operate the files.

Several spreadsheet management systems are currently available, including Dropbox and Sharepoint. These systems tend to focus the files themselves notifying users regarding updates, such as changes made to the file and newer version availability. However, these systems do not understand the nature of such changes, whether they are important to the business or not and how they impact other aspects of the project.

Datarails is a revolutionary spreadsheet management system that focuses on the spreadsheet’s data level. As a cloud platform that seamlessly integrates into a company’s existing work routine, the Datarails algorithm utilizes a deep understanding of spreadsheet data’s structure and logic across multiple Excel files, versions and users and automatically converts it into a secure and solid SQL database, enabling to extract deeper and more meaningful analytics and powerful insights with a single click of a button!