MICROSOFT EXCEL is 30 years old this month and has already enjoyed a career longer than many of today’s practicing FDs.
As a young professional, I used VisiCalc on a clunky pre-Windows microcomputer, which took such a long time for the blank screen to refresh after pressing the calculate command that I could make a coffee or visit the pub. I befriended Lotus 123, flirted with WYSIWYG then fell in love with Excel, as did everyone else.
I remember our first and very expensive IBM PC which was given its own altar in the centre of the office and had its own log, in which we all had to book our 20-minute slots. It turned some of us into amateur programmers, but nowadays most habitual spreadsheet users hardly realise that they are programming, and they claim, ‘I am just using Excel.’
Not that we could have predicted it 30 years ago, when the movie Back to the Future was released, but we are now in a risky, unregulated, multiple version of the truth, an uncontrolled world of spreadsheet mania. The Excel spreadsheet has displaced some of our basic everyday thinking because it is such a powerful and sophisticated tool that is easy to use and speaks a common language of all accountants, but it is unnecessarily habit-forming.
A mischievous screensaver installed by my IT department bears the slogans ‘95% of spreadsheets contain errors but 95% of users believe their spreadsheets are error-free’ and ‘Spreadsheet Stress = Excel Hell’.
It is not always the users who are at fault, despite their universal lack of decent Excel training, the lack of internal audit checks and the sporadic focus on spreadsheet risks. Indeed, Excel has suffered its own well-known glitches – eg, don’t ask it if 1900 was a leap year, ignore the ‘2007 problem’, don’t mention its floating point errors.
One estimate is that 17% of large US businesses have suffered financial losses due to poor spreadsheets and their overreliance on them. Excel has been described as a friendly nuclear power plant which amateur operators can keep running most of the time and where most of the mistakes are not serious – but the wrong mistake can be catastrophic.
Regulation, governance and SOX obligations are becoming increasingly influential over the abuse of spreadsheets, and the adoption of IFRS requires a dimension of disclosures and standardisation to which Excel is not best suited.
The demand for increasingly specialist software, open-source data warehouses and other sophisticated tools will take us on a path away from the old complexity of giant Excel models, and there is also a need for a better approach to the controls over data storage and analysis. However, the only way to prevent people from using Excel inappropriately for running important systems and for underpinning fundamental decisions is to develop viable alternatives.
Looking back, we take for granted the enormous contribution that Excel has made to our professional lives. It has become the global industry standard, and it is so ubiquitous that it is bound to remain popular well into the future, and rightly so.
However, the FD role is a strategic one focused on people and the external world, supporting the CEO and the wider organisation. We should not be spending much of our time mucking about with Excel spreadsheets. ?
Last month the SFD was in Dublin for a university graduation event and saw a folk group called ‘The Four Normans’, which was unusual as there were five of them, none was called Norman, and they seemed to have been doing it for more than 30 years.
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