For most people, the spreadsheet must seem like a relatively recent innovation, something that has probably been around as long as Microsoft Windows (or around 21 years). So it would come as a surprise to learn that the spreadsheet was invented in 1969, having first been postulated in 1961.
Running on an IBM mainframe, it was first taken into commercial production at a number of Bell companies, and GM. The patent for this spreadsheet was granted in 1982, after 12 years of litigation.
In between, VisiCalc was conceived of in 1978, and once it was released on the early Apple microcomputer, it became the killer application that sparked the adoption of the personal computer. Simply put, it gave millions of business people a compelling reason to acquire their own PC.
After that, we had Lotus take over the market, and acquire VisiCalc's VisiCorp, before Microsoft released the first version of Excel in 1985, and it soared to a market dominance it has never since surrendered.
In the process, hundreds of millions of people have become addicted to their spreadsheets, an addition that, like all addictions, is not good for them.
Power and freedom
Spreadsheets are brilliant for the freedom they confer on users, and the power they put in the hands of the average person.
The power that resides in the hands of the average user can be heady, but this intoxication can lead to corporate hangovers.
Adrian van der Merwe is MD of 8th Man Consulting.
A good example of this is the case cited on the Internet of one Jim Ho, noting that VisiCalc was also available on the HP85 in the '80s: "The MIS folks were most disturbed because they could see the writing on the wall. The Honeywell that was just installed for $10 million could not do what the HP85 was doing for less than $10K! I can still remember the sad look on the manager's face when I showed him the colour plots."
The power that resides in the hands of the average user can be heady, but this intoxication can lead to corporate hangovers. Here's why:
* Spreadsheets are not 100% reliable. Research studies show that 94.2% of spreadsheets in the field contain errors, with 5.2% of cells in unaudited spreadsheets containing erroneous data. There are hundreds of documented cases of organisations being exposed to unacceptable levels of risk, which in many cases have cost the companies concerned millions in direct loss of revenue, and so pervasive is the problem that a special interest group has arisen to address it. Visit it at http://www.eusprig.org/ and be amazed at how much spreadsheets can cost.
* Lack of auditing and revision control, which can make it hard to see who changed what and when.
* Loss of centralised control. It is beyond the scope of any organisation to guarantee the integrity of the sheer volume of spreadsheets which users are deploying. It is impossible to apply proper security and audit trails and prevent errors. Given these factors, is it any wonder that it is so hard to arrive at a single view of truth, and why executives in a boardroom will often disagree with each other over issues that should be quite easy to resolve?
* Difficulty in collaboration. Standalone desktop tools do not easily lend themselves to teamwork, not least due to version control among multiple stakeholders.
This is by no means an exhaustive list of the problems associated with spreadsheets: Wikipedia has a more comprehensive and detailed list, and it is worth perusing at http://en.wikipedia.org/wiki/Spreadsheet.
Why persist?
All of this leads to the question why people continue to use spreadsheets to the extent they do.
Well, the obvious reason is that they love the devolution of power to their desktop, and the fact that they can run a big portion of their analytical lives without corporate intervention.
But there are significant drawbacks. Consider this: a survey of 343 financial professionals by the Business Performance Management Forum revealed that all agreed that spreadsheets were one of the major problems delaying or disrupting the budgeting process.
The solution has to be the ability for many people to run their forecasts, plans, forecasting, budgets, analysis, reporting, balanced scorecard and more, off a single, uncontested, multidimensional view of the truth.
This is what enterprise performance management is about, and the sooner organisations realise that this is the way to go about organising, managing, coordinating, predicting and generally managing their affairs, the sooner they can move to a far better, more predictable and more profitable world.
* Adrian van der Merwe is MD of 8th Man Consulting.
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