Stupid errors in spreadsheets could lead to Britain’s next corporate disaster by Rebecca Burn-Callander.
From the post:
Errors in company spreadsheets could be putting billions of pounds at risk, research has found. This is despite high-profile spreadsheet catastrophes, such as the collapse of US energy giant Enron, ringing alarm bells more than a decade ago.
Almost one in five large businesses have suffered financial losses as a result of errors in spreadsheets, according to F1F9, which provides financial modelling and business forecasting to blue chips firms. It warns of looming financial disasters as 71pc of large British business always use spreadsheets for key financial decisions.
The company’s new whitepaper entitiled Capitalism’s Dirty Secret showed that the abuse of humble spreadsheet could have far-reaching consequences. Spreadsheets are used in the preparation of British company accounts worth up to £1.9 trillion and the UK manufacturing sector uses spreadsheets to make pricing decisions for up to £170bn worth of business.
Felienne Hermans, of Delft University of Technology, analysed 15,770 spreadsheets obtained from over 600,000 emails from 158 former employees. He found 755 files with more than a hundred errors, with the maximum number of errors in one file being 83,273.
Dr Hermans said: “The Enron case has given us a unique opportunity to look inside the workings of a major corporate organisation and see first hand how widespread poor spreadsheet practice really is.
First, a gender correction, Dr. Hermans is not a he. The post should read: “She found 755 files with more than….
Second, how bad is poor spreadsheet quality? The download page has this summary:
- 33% of large businesses report poor decision making due to spreadsheet problems.
- Nearly 1 in 5 large businesses have suffered direct financial loss due to poor spreadsheets.
- Spreadsheets are used in the preparation of British company accounts worth up to £1.9 trillion.
You read that correctly, not that 33% of spreadsheet have quality issues but that 33% of poor business decisions can be traced to spreadsheet problems.
A comment to the blog post supplied a link for the report: A Research Report into the Uses and Abuses of Spreadsheets.
Spreadsheets are small to medium sized data.
Care to comment on the odds of big data and its processes pushing the percentage of poor business decisions past 33%?
How would you discover you are being misled by big data and/or its processing?
How do you validate the results of big data? Run another big data process?
When you hear sales pitches about big data, be sure to ask about the impact of dirty data. If assured that your domain doesn’t have a dirty data issue, grab your wallet and run!
PS: A Research Report into the Uses and Abuses of Spreadsheets is a must have publication.
The report itself is useful, but Appendix A 20 Principles For Good Spreadsheet Practice is a keeper. With a little imagination all of those principles could be applied to big data and its processing.
Just picking one at random:
3. Ensure that everyone involved in the creation or use of spreadsheet has an appropriate level of knowledge and understanding.
For big data, reword that to:
Ensure that everyone involved in the creation or use of big data has an appropriate level of knowledge and understanding.
Your IT staff are trained, but do the managers who will use the results understand the limitations of the data and/or it processing? Or do they follow the results because “the data says so?”