Electronic spreadsheets have been around way longer than you think. In fact, the first software, LANPAR, was developed in 1969 for Bell Canada and AT&T. Needless to say, countless estimates have been calculated on spreadsheets ever since. However, while Excel and other spreadsheets have been the best option for decades, they do lack some critical functionalities. This means that if you rely on them for estimates, you could put your profits at risk. To see why, check out these six unavoidable problems.
1. Spreadsheets are more prone to error
Research has shown that each cell in a spreadsheet has a 1% to 5% risk of containing an error. When you add up the number of cells in a single spreadsheet, you can see why the error risk is so significant. Then consider that people often work with several sheets, and it should come as no surprise that an estimated 9 out of 10 spreadsheets contain errors. Simply put, mistakes in a spreadsheet are easy to make and hard to find. In fact, in nine separate experiments, only 60% of spreadsheet errors were found.
2. They leave no audit trail
When errors almost inevitably occur, you are often left wondering why and how they came about. Intentional changes can pose the same risk. Sometimes a number for an estimate needs to be changed, which means the changed value lives everafter in later estimates without explanation. Not knowing the source of the mishaps means that they are more likely to happen again. What’s more, it makes securing a mistake-free and additional-cost-free production chain harder. This is an issue especially when you consider how important error-tracking is for learning and steering clear of avoidable costs in the future.
