As resource planning, forecasting and capacity planning, and project tracking, become more complex, the Excel spreadsheet is no longer the go-to-tool for project managers in professional services organizations.

In 2005, when Eastman Kodak had to restate two quarters worth of financial records, spreadsheets were used, as was done in the past. However, this time around, an employee added too many zeroes to the pension and other employment termination benefit records of another employee. When calculations on the spreadsheet were made, it showed an overstatement of $11 million in severance payments. Robert Brust, Kodak’s then Chief Financial Officer (CFO) and Executive Vice President, said, “The error itself involves an incorrect calculation of a severance accrual for one employee, the only such error out of approximately 6,000 employee reductions made this year.” On making the error public, the company’s stock fell significantly, around the time when it was already losing more than $100 million every quarter.

With more than 30 years into existence, the Excel is undeniably a force to reckon with, especially in project-based businesses (or the professional services industry). The Excel spreadsheet, till date, remains the first go-to-software for generating reports and analyzing data for all kinds tasks.

That said, unless one is a data junkie or a spreadsheet enthusiast, mining through numerous columns and rows, across several tabs or spreadsheets can become extremely stressful for say, a project manager working on resource planning. While it is useful for a business until such time it achieves a certain scale of number of projects or resources, there are several more horror stories from the corporate world that clearly state the shortcomings of an overdependence on spreadsheets.

Here are some of the reasons why a spreadsheet limits organizations and departments as they evolve and scale up to the next phase of their business cycle.

According to the BBC, in the UK, over 15,000 Covid-19 positive cases were left out of infection counts and contact tracing efforts only because the Excel sheet used to track infections, ran out of space.

1. Excel limitations can lead to huge catastrophes

In the UK, for example, over 15,000 Covid-19 positive cases were left out of infection counts and contact tracing efforts only because the Excel sheet used to track infections, ran out of space. The BBC reported: Developers picked an old file format to do this — known as XLS. Consequently, each template could handle only about 65,000 rows of data.

While this is an extreme case, but it highlights the fact that spreadsheets cannot be used as a database resource even for project-based businesses, especially when the business reaches a certain scale. Excel cannot be used as datasheets to manage resources or projects as there is a limit to the number of rows and columns you can use. It also presents character limits challenges in cells, sheet limits for links, earliest date set, furthest date set, and so on. These limits make it difficult for spreadsheets to be used for larger datasets, often used in project-based businesses.

2. Error-prone Excel data caused by manual nature of work

According to MarketWatch, close to 90% of spreadsheet documents contain errors. One incorrect entry can result in a massive snowball effect on the entire data, and cost organizations thousands or millions of dollars. Apart from the Eastman Kodak story, there are many other incidents where companies had to cough up millions of dollars due to human errors in Excel sheets.

While “human-error” is increasingly becoming an acceptable term in business, it most certainly should not be the cause of business loss. Spreadsheet errors occur for many reasons, including logic mistakes, incorrect formulas, and misuse of built-in functions which can not only significantly derail the project, but also cost relationship issue with clients.

According to MarketWatch, close to 90% of all projects are prone to errors that can result in unprecedented losses due to unaccounted costs, downtimes, and/or delays.

3. All the data, all the time: Difficulty in viewing data on Excel

The moment you open a spreadsheet, you will see everything it holds. It seems great initially, but as the data grows, you gradually meet the loading screen icon more frequently than your data. The sheets become bulky enough to even load, leave alone manage and make changes.

This is especially true when the sheet has had a slight overdose of complex formulas. Of course, there are other methods to avoid such situations which involve avoiding certain formulas. But the point remains: there is a high probability of you missing some key resource insights given the project-data overload, on your eyes, or perhaps because the spreadsheet is unable to highlight it for you.

4. Version worry, no audit trails caused by multiple spreadsheets

Multiple stakeholders or project teams using a particular spreadsheet can quickly turn into a nightmare with multiple data versions or files. Questions such as who accessed the data last; who made changes to it; what are these changes; or can the calculations be validated, would then arise.

And when you don’t find the right answers at the right time, you start all over again. You can add version name (e.g.: File_V1.xls) to a file name and pray that everyone in the project team retains the same practice for data sanctity, but you can never be sure. You instead need a system that gives one source of the truth and can be accessed from anywhere. It will help different teams within the firm – from HR, sales, finance, and operations delivery – to stay accurate using one data view.

5. Dismal future project and financial projections

Spreadsheets are usually used after a project or milestone to extract metrics and analyze relationships between various parameters. While that practice remains prevalent, professional services organizations now want a peek into the future with the ability to showcase project trends, growth, and resource and finance forecasts, etc.

These forecasted values are in most cases based on past data and a few plug-in programs. However, to what extent can a project manager rely on the accurate predictability of the software remains questionable. A spreadsheet can work only on minimum evaluation parameters. Hence, the moment these parameters increase, or the complexity of their relationship increases, the spreadsheet becomes highly prone to errors.

Conclusion:

Changes are never easy to implement. When you want to move beyond the spreadsheet, it is likely to draw a sceptical response from the organization as well as the employees. Your peers may retort that it will perhaps cost a lot; we haven’t reached that scale, etc. There are those who would say that we don’t have time to train the team or maybe all that we need is an Excel geek who can handle the reports and analysis for the project and nothing more.

What project managers may not realize is that hiring a new talent has a greater cost involved in the longer run. Because time is money, if you continue to rely only on the Excel spreadsheet, it will pile up unwanted tasks, lead to wastage of effort, and loss of opportunity.

If you can simplify or automate all your work related to reporting, it will not only save time and money, but also result in improved billable hours and greater employee productivity and satisfaction. Apart from the risks you will minimize due to human error and flawed calculations, your clients will consider sticking with you due to faster and cheaper delivery of projects made possible by automation.

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