As businesses grow and become more digital, so too does the amount of data available to track and analyze. For people to take advantage of the abundance of data and make well-informed decisions, you must have access to a tool to get a single, real-time, fact-based version of the truth. Unfortunately, because of its familiarity, Excel is used as a catchall for business data. If you're using spreadsheets as your data analytics solution — it's worth reassessing your business tools —ready for the future.
With access to actionable data, decision makers are able to identify new opportunities, streamline operations, increase sales, support company growth and help their business gain a competitive advantage.
In small companies, spreadsheets can be sufficient to get the job done. Spreadsheets have many great uses. However, for growing companies, spreadsheets alone are inadequate for making data-driven decisions. In this blog, we will discuss some reasons why Excel spreadsheets are insufficient as a data analytics solution on their own.
Spreadsheets are prone to human error
Studies have shown that one in five large companies have suffered significant financial losses due to spreadsheet errors. As spreadsheets become more complex, error rates increase. An error in one cell can cascade throughout your data. Mistakes like this can easily go undetected, allowing a company to make vital decisions based on flawed information.
Grenville Croll, a spreadsheet risk expert, said, "Spreadsheets have been shown to be fallible, yet they underpin the operation of the financial system. If the uncontrolled use of spreadsheets continues to occur in highly leveraged markets and companies, it is only a matter of time before another 'Black Swan' event occurs causing catastrophic loss." Croll's study shows that one-third of large businesses report poor decision-making as a result of spreadsheet problems. Business cannot afford the risks of a system prone to such errors.
On the other hand, BI tools, like Phocas, collect data from your various data sources and calculate the answers on the back end. Quality BI tools are not prone to the erroneous calculations or human error.
Excel is time-consuming
The time required to ensure your data is absolutely error free isn’t practical in many companies in today’s fast-paced world of business. Manually creating, manipulating, verifying, integrating, updating, and merging data into spreadsheets can be a full-time job. This time could be better spent on tasks to grow your company. This level of data management can be accomplished faster and more accurately with BI software.
Spreadsheets don’t allow for data discovery
Providing your spreadsheets are error-free, they do allow you to analyze specific metrics. Beyond this, there is very little room for data discovery because Excel does not allow the user to follow the data through. Instead, it requires a mathematical understanding of the data. Analyzing more than this would require pivot tables or manually generating views of additional dimensions. Compiling this information is burdensome, time-consuming, and often results in inadequate analysis. In the end, the critical information you need isn’t readily available or assuredly reliable.
At Phocas, we collect your data from your various sources such as customer records, your supply chain and financials. We gather it together so that it can be queried in seconds. Your data is now accessible in real-time and is presented in a way that is easy-to-understand. You have a clear view of what is selling and what is not; where sales are happening and where they are not; why, and who or what is responsible. At minimal expense and lightning-fast speed, we assemble your assorted datasets and present the information as a single grid, dashboard, or graphical view of your business for an overview of both trends and KPI performance.
Advanced use of spreadsheets require expert skills
The majority of spreadsheet users can perform simple functions such as “sum” and “sort.” But most users find it difficult to create complex formulas. Therefore, an analysis of complex data in Excel requires much more expertise, often requiring an additional hire. “The unpleasant truth after teaching thousands of adults how to use Excel is this: … learning Excel can be difficult. It will take you months of practice to feel a small growing confidence…,” said an instructor for Your Excel Coach, an online learning program. Implementing a BI tool is a much more cost-effective solution.
Due to Phocas’ intuitive design for the everyday user, each department is empowered with a single view of the truth. All employees are able to easily analyze your data and build, refine, and share their discoveries with colleagues and department heads. CoolDrive's Chief Financial Officer, John Goodrham, spoke about his experience with implementation. “We had about three people confident and competent on Cognos. We have about 90 people who could use Phocas competently". In 30 minutes, you’re taking them from raw beginner to intermediate user. It has a really nice interface.
Spreadsheets can present a security risk
While data security on ERP systems is very effective, that security is gone once data is exported to an Excel spreadsheet because spreadsheets do not have the same stringent access controls. Even password protected spreadsheets can be compromised by third-party tools available online. Spreadsheets are often downloaded onto individual computers and then shared through email which can be easily hacked. Because there is not a built-in editing trail, anyone can the edit the spreadsheet’s formulas or other data. Spreadsheets can also be freely copied onto unencrypted USB drives and taken off location. Unsecured data could cost a business dearly if it somehow wound up in the hands of competitors. Because of the ability to share reports and communicate within the software, there is no need to export sensitive data; making a BI tool the most secure solution.
While spreadsheets are useful for simple calculations, when they are used in lieu of a BI tool, they can expose your company to reputational and financial risk, lost productivity and significantly slower time-to-insight as information workers struggle with the inherent limitations of spreadsheet-based reporting and analysis. As more businesses become aware of the security risks, inefficiencies, and errors prone to spreadsheet use, companies worldwide are turning to BI as the appropriate solution.
For more information on business intelligence and how it works with Excel, download our free eBook: Excel and BI: friends and foes.