Almost one in five large businesses has suffered financial losses as a result of errors in spreadsheets, according to a recent article in the Daily Telegraph. Disturbingly, 16% of large companies admitted finding inaccurate information in spreadsheets on more than ten occasions in 2014. So what’s the remedy? In our view, Cloud reporting tools.
Why Cloud reporting tools? Because spreadsheets have invaded businesses’ management reporting processes—which is something that they were never designed to do.
Research carried out by polling organisation YouGov on behalf of spreadsheet training and modelling experts F1F9, for instance, highlights that 56% of British companies use spreadsheets to prepare their accounts. 48% of manufacturing businesses use spreadsheets to manage pricing decisions. And 78% of UK businesses say that key financial decisions are supported by spreadsheets.
And in many cases, Cloud reporting tools could not only do the job better, but do it error-free, as well.
Cloud reporting tools: fit for function
The key difficulty with spreadsheets is simply put. They’re powerful, and yet ubiquitous. The spreadsheet program Excel comes with every copy of Microsoft Office, for instance—meaning that there’s a spreadsheet on almost every computer desktop.
Yet that ubiquity is dangerous: because they’re everywhere, everyone thinks that they know how to use spreadsheets, and use them properly. Yet that YouGov research suggests widespread ignorance about basic spreadsheet good practice.
59% of companies have spent nothing on external spreadsheet training courses in the previous year. And in one-third of businesses, none of the financial decision makers have ever received any external spreadsheet training.
Cloud reporting tools are different. Drawing on a Cloud-based data warehouse, constructed from a company’s ERP and other databases, they use powerful ‘point-and click’ technology to deliver self-serve reporting.
In short, unlike spreadsheets, Cloud reporting tools are a direct window into a business’s ERP data, without no further data extraction and transformation necessary.
Cloud reporting tools: not as expensive as spreadsheets
On one level, of course, it’s easy to see why businesses have become so reliant on spreadsheets. In terms of cash cost, they’re ‘free’, being bundled in with productivity suites such as Microsoft Office.
It’s a charade that everyone goes along with. But the reality is very different. Building and maintaining spreadsheets is incredibly time-consuming. Much spreadsheet ‘analysis’ is not analysis at all, but simple spreadsheet-building. And—back to that YouGov survey for a moment—57% of the businesses surveyed reported that bad spreadsheets have resulted in wasted time.
So perhaps spreadsheets are aren’t as ‘free’ as supposed. And that’s before factoring in the cold hard cash cost of flawed spreadsheets.
As noted above, for instance, nearly one in five large businesses has suffered financial losses as a result of errors in spreadsheets. And sometimes, those losses can be fairly hefty.
Investment bankers JP Morgan lost £250m through a spreadsheet bug in 2013, reckoned that article in the Telegraph. Another bank was fined £150 million after covering up a spreadsheet error. And the high-profile collapse of the West Coast rail franchise bid in 2012 was attributed to spreadsheet error by the government department in charge of the bidding process—a blunder that cost the taxpayer £60 million.
Cloud reporting tools: why wait any longer?
So what’s to be done?
Spreadsheet training can help, to be sure. So too, doubtless, can the sort of spreadsheet modelling best practice enshrined within the FAST financial modelling standard.
But a better plan, we think, would be to try and minimise the use of unnecessary spreadsheets, by replacing them with Cloud reporting tools wherever possible.
Which needn’t be a long, drawn-out process. Here at Matillion, for instance, we reckon to implement Cloud reporting tools as part of our Cloud BI solution in eight to ten weeks, from signed purchase order to first reports being produced.
Cloud reporting tools are ‘capital light’ too. No on-premise reporting software to buy, no data warehouse software or ‘extract, transform and load’ middleware to buy, and no servers to buy.
Instead, there’s just a single, monthly subscription.
Cloud reporting tools: next steps
Don’t take our word for it, though. Read our case studies, and hear what our customers have to say about Matillion’s Cloud reporting tools.
Or download one of our free e-books.
Either way, you’ve started the process of reducing your business’s dependency on buggy, expensive spreadsheets. Which has to be good news.
To find out more about implementing Cloud Reporting tools in your business, download our free eBook below.