Dodging the Drawbacks: How to Embrace Excel for Reporting
Even when organizations have business intelligence (BI) solutions and ERP reporting tools like those from SAP or Oracle E-Business Suite (EBS), they often turn to Microsoft Excel for reporting and analysis because it’s easy and flexible. Although finance and other teams love Excel, using it to store volumes of ERP data introduces significant audit risks that could be costly to both your balance sheet and reputation. So, can organizations tackle the drawbacks of Excel and still achieve timely, accurate reporting? We’ll take a look here, as we did in our recent Excel e-book.
Dangerous Drawbacks to Excel
In a previous blog, we detailed risks associated with Excel. Perhaps the biggest drawback of using Excel for reporting with an ERP system like Oracle EBS or SAP is data integrity. Each time you open a spreadsheet, you potentially accesses outdated data, not necessarily the latest database figures.
While spreadsheet errors are rare on a per-cell basis, large programs usually have at least one incorrect bottom line value ― and errors are extremely difficult to detect and correct. Research shows that spreadsheet developers and corporations are highly overconfident in the accuracy of their spreadsheets, and errors can have costly consequences, as these examples demonstrate:
- Fidelity Magellan Fund overestimates dividend by $2.6 billion due to error transcribing into a spreadsheet, causing promised dividend distribution not to occur.
- A $6 billion trading loss at JP Morgan was partially attributed to errors from incorrectly copying and pasting data into a flawed Excel spreadsheet model.
- An $11 million severance error at Kodak resulted from a faulty spreadsheet.
- A spreadsheet typo caused the University of Toledo to underestimate its budget by $2.4 million.
Look Closely at How You Use Spreadsheets
If these scenarios sound scary, it would be good to ask yourself how your organization is using Excel. A closer look can help you avoid the risks by addressing any shortcomings:
- How confident are you that errors don’t exist in your company’s spreadsheets?
- How do you currently assess risks involved with using spreadsheets?
- Do you know where and by whom spreadsheets are used throughout your business?
- What spreadsheet controls do you have in place today? Are these working?
- Are users adequately trained in the use (and misuse) of spreadsheets?
- Have you developed protocols for collaborative spreadsheet use aimed at reducing errors?
Some Reporting Alternatives Fall Short
If you can’t confidently answer the previous questions, you may start looking for an alternative solution, like third-party software that runs off a proprietary database. These applications may promise to remove your “outdated spreadsheets,” but they require a significant investment of both money and time for the license, implementation, change management and ongoing training.
Spreadsheets offer a natural way to manipulate data, which is why such applications feature an “Export to Excel” button. As soon as you do so, though, it’s back to square one. Your data is outdated and you again risk a “subsystem” of spreadsheets with no organizational control. This scenario can also occur when using standard reporting tools from ERP vendors, which also come with a high price tag.
It’s OK to Love Excel
Spreadsheets are here to stay and that’s good: they are simple to use, flexible and valuable throughout the workplace. But because they are so pervasive, controls are critical. However, neither solutions from ERP vendors or propriety database software fixes the primary underlying risk when using Excel for reporting ERP data: the “broken link” between ERP data and the spreadsheet itself.
Fortunately, some third-party Excel-based software works directly with the Oracle or SAP database by providing a direct, real-time link from Excel, while preserving the underlying ERP security authorizations. As an interface with SAP or Oracle, the Excel-based reporting solution gives users all of Excel’s features and functionality without the very real risks associated with multiple versions and users, calculation errors, inconsistent master data references and complex cross-referencing. This real-time link to ERP data lets you love Excel and dodge those dangerous drawbacks.
Author: Simon Parkes
Solutions Specialist, Excel4apps