Using disconnected spreadsheets for forecasting, budgeting, planning and reporting creates a host of issues, including:

• Wasting weeks every year manually consolidating a mass of individual spreadsheets
• Inability to easily model potential future scenarios or answer what-if questions
• Measuring actual spend against plan is a major chore
• Talented finance staff spends too much time on low-level, non-value add activities.

These challenges are ongoing and exponential. The longer you rely on spreadsheets for “collaborative” planning, the higher the costs are. Most of these costs are “soft” costs – time, manpower, delays. But there are hard costs too – in the form of errors. Some of these errors might be small. Some might have a significant impact on your company. Here are a few examples:

Famous Spreadsheet Errors

J.P. Morgan’s “White Whale” debacle was a result of a spreadsheet user error. The firm was using Excel spreadsheets to model Value at Risk (VaR) for the Chief Investment Office. The model was built by copying and pasting data from one spreadsheet to another. Several cells in this model contained faulty equations due to a failed copy-and-paste process. This led the firm to severely underestimate the downside risk of one of its credit portfolios, which led to approximately $6.5 billion in losses and fines. 

The municipality of West Baraboo, Wisconsin, relied on spreadsheets to calculate how much its borrowing would cost. The spreadsheet had a sum that was missing one cell. This resulted in West Baraboo underestimating the total cost of a 10-year bond, meaning the village had to pay $400,000 more interest on the bond than it originally thought.

Lazard, Ltd. Is an investment bank that advised SolarCity Corp. The bank had a computational error in a spreadsheet. This error led Lazard to discount the value of SolarCity Corp by $400 million. This happened when Tesla Motors Inc. was purchasing SolarCity Corp.

When Vista Equity Partners purchased Tibco Software, Tibco shareholders received $100 million less than originally anticipated. This was a result of a spreadsheet error that overstated Tibco’s equity value.

The chances might be slim of your company suffering one of these financial disasters. But if you are still relying on spreadsheets for forecasting, budgeting, planning and reporting, you are likely to be experiencing one – if not many – of the nine circles of spreadsheet hell. 

What are they? Download this eBook, The Nine Circles of Spreadsheet Hell, to learn them – and the hidden costs of spreadsheets.