More Reasons to Worry about Spreadsheets

Karen Lopez - listmistress@Infoadvisors.com — Fri, 23 Nov 2007 00:04:49 GMT

We've all dealt with the risks associated with the proliferation of user-developed spreadsheets and desktop databases. I've even heard that more business functions are run from data copied out of corporate databases than in the databases themselves...and I don't doubt that one bit.

I know why users want to copy and control locally their own copy of data (and I don't blame them for wanting to do this), but the problems I come across when gleaning requirements from users is often related to the whole "I'll just do it in a spreadsheet or MS Access" attitude. Sure, it's a get-er-done attitude, but it often suffers from quality assurance and peer review steps that we typically see in enterprise-class application development projects. At least we give the appearance of testing, right?

The staff at ITBusiness.ca have pulled together a very scary list of examples of spreadsheet errors, gaffs, and flaws that cost companies billions of dollars:

Kodak spokesman Gerard Meuchner said the hefty $11 million severance error was traced to a faulty spreadsheet.
Details of the $2.818 billion record profit result for the 12 months to September 30...were embedded in a template of last year's results and were accessible with minor manipulation of the spreadsheet. (Some news reports indicated an employee had thought that a black cell background fill would hide black text.)
Fannie Mae, which finances home mortgages, stated in a news release of third-quarter financials that it had discovered a $1.136 billion error in total shareholder equity
Shares of RedEnvelope Inc. lost more than a quarter of their value Tuesday after the company warned of a fourth-quarter loss due to weak Valentine's Day sales and a budgeting error that resulted in an overestimation of gross margins.
A simple spreadsheet error cost a firm a whopping $24 million. The mistake led to TransAlta, a big Canadian power generator, buying more US power transmission hedging contracts in May at higher prices than it should have.

Think there are enough scary stories in the article to help you on your next quest to get enterprise data under enterprise quality control? There's a website by the European Spreadsheet Risks Interest Group (EuSpRIG) that collects media stories of spreadsheet errors that have put companies at risk. They currently have almost 100 stories.

I wonder what we'd find with a similar effort to track MS Access errors?

Karen Lopez: Musings on Data, Process, and Architecture

More Reasons to Worry about Spreadsheets