For JPMorgan Chase, a spreadsheet error played part in the $6 billion trading loss in 2012 in the “London Whale” affair. Every 9 out of 10 spreadsheets have an error, majorly human error. Apart from human error, spreadsheets are vulnerable to many security breaches. Here we understand the major reasons why businesses should stop using spreadsheets for business management.
1. Danger of Fraud
The main reason for the heightened danger of using spreadsheets for business is the lack of controls making it easier to manipulation of values and entries and security threats. On top of the increased vulnerability, it is nearly impossible to track down the changes made and locate the person responsible for it.
2. Susceptible to human error
Humans are bound to make errors. Even a person doing the same task for years is susceptible to error. Managing sensitive data on spreadsheets manually has a high possibility of human error creeping in without the knowledge of the person. A missing zero is the sales figure or a misspelled name would make businesses incur huge financial losses. The time has come for businesses to move to better alternatives in order to reduce the possibility of human error.
3. Inefficient regulatory compliance monitoring
With increasing and dynamic regulatory compliances, keeping track of them on a single sheet would lead to the high data volume in a single file. This information is kept in a spreadsheet, and are susceptible to file becoming corrupt over a period of time leading to loss of information. With the implementation of complex regulations like Sarbanes-Oxley (SOX), Basel II, GDPR, etc., tracking the compliance is now much more difficult than earlier.
4. Inability to adapt to dynamic business scenarios
If your business lacks a dynamic attitude to adapt to business scenario changes, it is bound to become extinct. So for dynamic business attitude, agile systems need to be in place. With spreadsheets normally accessed by one individual, the understanding of the data structure would be limited to the person handling it and other stakeholders having no clue about the information.
5. Lack of collaboration
Businesses activities are run simultaneously by teams made up of people from diverse backgrounds. Exchange of ideas, documents, files, etc. Facilitate effective communication. With global organizations having multiple teams across the globe, spreadsheets can be exchanged only via email. With increased security breach risks in an email, relying on email for confidential information is dangerous. Also, with the same sheet used by multiple people, the chances of data duplication are very high with no secured validation process in place.
6. Lack of Decision-making support
As businesses analyze data from multiple departments; retrieving data from different departments, compiling them in a single sheet and summarizing the data to derive meaningful insights can be a very cumbersome and time-consuming task. Even after this, it may not guarantee the accuracy of data retrieved. This slow and inaccurate spreadsheet analysis can delay important business decision-making process leading to loss of competitive advantage in the market.
In all, spreadsheets have many numerable shortcomings which makes them unfit for business purpose. Many companies in realization have adopted VComply to manage their business functions efficiently.Add to favorites