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The Paradox of Excel

A couple of weeks ago there was an article on newstatesman.com which had as its title, “Is Excel the Most Dangerous piece of Software in the World?” (Read the article here).

Microsoft Excel

It is a rather inflammatory article showing a picture of Bill Gates talking about Office with a caption under the picture saying “Bill Gates threatens the world with Microsoft Office in 2003.” The central point of the article, as to why Excel is so dangerous, is that Excel is the software that JPMorgan used to track the “value-at-risk (VaR) model for the synthetic portfolio”. They note that the risk model was “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another”. They continue to note that in the process of creating the spreadsheets, they had “divided by their sum instead of their average,” in essence blaming Excel for a human error.

Thus the question: is Excel good or is it bad? Many in the IT world look askance at Excel thinking that a database tool, a programming tool, a specialised BI application, or some other solution is a better option than using Excel. On the other hand, Excel is known to nearly all in the business world.  Additionally, in the cost-benefit ratio comparison of using Excel as compared to other options, Excel will often win.

My background in BI has not, until recently, included Microsoft BI. I cannot recall the number of times I was called into an account to help them replicate functionality they had built in Excel into a “proper” BI tool; they didn’t want it changed, just replicated. Why duplicate good functionality in Excel into another BI tool? In many cases it was so they could automate the updating and distribution of the information. In many other cases, they had moved beyond the limit of older versions of Excel’s storage capabilities. 

How is it that one of the most maligned pieces of software by IT is also what IT often uses itself for prototyping and what many businesses use to generate greater levels of understanding and insight into their business? In commenting on the paradox, Curtis Pokrant said: “Most if not all IT shops have disdain for Excel and explicitly state they do not support Excel applications…odd situation that IT actively disengage from these heavily used applications while criticizing lack of proper technical standards.”

In my years in BI I have done some very cool things that have provided necessary insight into business and, in some cases, changed how they operate aspects of their business. In spite of my years with traditional BI tools, I would not be surprised if Excel has generated more business insight for businesses than traditional Business Intelligence, Data Mining and Big Data all combined. But how can it be so disdained and yet so used and trusted? It is a paradox.

In the past, the insights generated by Excel have been somewhat hampered by limitations on the amount of data that could be used. However, with the addition of PowerPivot, that limitation is largely removed. In Excel 2013 with the addition of Power View and its intuitive visualisation of the data, Excel provides even more ways to gain insight.

I often think of Excel as a Swiss Army knife – a tool with a wide range of capabilities. It does many things well and in the right hands, it can sing. However, if it is used as the sole repository of information or without proper process controls and reviews, it can also be detrimental to the business.

Is it an essential tool for business? Yes. It is the analytic tool of choice for many analysts and for most accounting and finance professionals. Is Excel the right tool for every situation? No. Just like the Swiss Army knife, it has great value and purpose, but there are times when you need to use a different tool.  That is why Microsoft BI is not completely dependent on Excel, there are other tools as well to meet specific needs. There is no one-size-fits-all BI solution; any BI solution will have different components to address the range of reporting and analysis needs; either that or the tool will only address certain aspects of a reporting and BI solution.

To know if the Excel usage in your organisation is risky or if it is good, look at the business processes in place around its use. Are spreadsheets subject to review? Does testing occur on the accuracy of the data generated? How much (if any) manual intervention is required – increasing the chance of human error? Do not be in a position where someone writes of your company’s use of Excel as “dangerous”. It is not Excel that is good or bad; it’s how it is used.

If you have questions about your analytics, business processes, data sources, or any aspect of the generation and dissemination of your business information, give us a call – we can help.

Posted by: Mark Worthen, Senior Consultant, Enterprise Applications | 12 March 2013

Tags: Business Intelligence, Data Mining, Microsoft, Power View, BI, Microsoft Excel, Office, Big Data, Excel, Excel 2013, Microsoft Office, VaR Model

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