Spreadsheets are ubiquitous, heavily relied on by organizations to manage data and make critical business decisions. Spreadsheets are an excellent tool for independent analysis. The problem is that they are often stretched far beyond their home territory. Furthermore, spreadsheets tend to have limited scalability beyond the desk and the fidelity is constrained by the organization’s ability to invest in additional technology capability to manage its reliability.
It’s imperative to note that the goal of inputting data in a spreadsheet is not to get an answer, but to get the correct answer. Often a wrong answer is much worse than no answer at all. There are a number of features of spreadsheets that present a challenge to error-free analysis. It is extremely common for data to be added to a spreadsheet after it has been created. The augmentation of data can go wrong, rendering a correct spreadsheet incorrect. Even the most experienced practitioners, using all the armory at their disposal to prevent mistakes from creeping in as they work, will make common errors from time to time. The requirement in organizations to work under huge pressure to achieve deadlines makes the probability of error even higher. Some of these errors will be caught by the fail-safe mechanisms built in. But some will not.
Additionally, many spreadsheets take all night to compute. These computations can be complicated and commonly fail. However, when such spreadsheets are replaced by capabilities more suited to the task, it is not unusual for the computation time to be cut to a few minutes and the process much easier to understand.
Why Do Organizations Continue to Use spreadsheets?
The technology acceptance model holds that there are two main factors that determine the adoption of a technology: the perceived usefulness and the perceived ease-of-use. Perception need not correspond to reality. The perception of the ease-of-use of spreadsheets is to some extent an illusion. It is easy to get an answer from a spreadsheet, however, it is not necessarily easy to get the right answer. Thus the distorted view. The difficulty of using alternatives to spreadsheets is overestimated by many people. Safety features can give the appearance of difficulty when in fact these are an aid.
The hard way looks easy, and the easy way looks hard.
When Do Spreadsheets Go Wrong?
In a recent survey conducted by Daptiv, it was revealed that 76 percent of IT organizations still rely on spreadsheets for critical decision-making purposes. Spreadsheets are good when small amount of data needs to be managed. However, the "spreadsheet as database" is not always easy to maintain. At some point of enterprises will need specialized application capability to manage their database for managerial purposes. Research, such as that reported by Raymond Panko in "What We Know About Spreadsheet Errors", has found that most of the spreadsheets used by organizations contain errors—and that a considerable number of those errors are serious. In one case reported in Panko's research, the error would have caused a discrepancy of more than a billion dollars! Finally, academics have published studies of the prevalence of spreadsheet error and have sought to identify circumstances dangerous in the context of error and other circumstances that are regarded as safer. Therefore, unless spreadsheets are being used for single functionality, it must not be overburdened with complex calculations and codes.
One of the most widely used tools for project management in software teams today is the spreadsheet. Although fairly cheap and easy to use, spreadsheets are extremely vulnerable to errors. They hide problems that can hinder the success and create more costs than one has planned for. Here are some of spreadsheets’ inherent limitations:
To be fair, spreadsheets aren't the only models that contain errors. We all know that software has its fair share of bugs. But the sheer number of spreadsheets, coupled with "homespun" development, and the difficult of reviewing their logic, makes spreadsheet development the Wild West of the modeling community. If you are using spreadsheets for anything more than individual prototyping in your organization, I would recommend you to seriously consider replacing them with models that are more suitable.
This is a question that has been posed many times and answered many times. Yet, we continue to see PMOs failing very often. Does it mean that the answers that have been presented are incorrect? Not necessarily. In fact, most answers surrounding metrics and value are relevant but don’t address the question of “fit”. The metrics that make sense for one business may not make sense for another.
At the end of the day it is about demonstrating value to the business as a whole. A successful PMO is a PMO that is focused on business value and helps the C-suite succeed in its strategic objectives. Daptiv’s four-part PMO Success Webinar series explores this in more detail. The goal of the webinar series is to provide real-world insights on how PMOs can become strategic assets to the business.