Financial bloggers have called it “the most important software application of all time.” Others have argued that it changed the world. Whichever side of the fence you fall on, it’s hard not to admit that Excel is one of the most powerful and versatile programs at a company’s disposal. For nearly three decades it’s been heralded as the gold standard of spreadsheets; the electronic mainstay of the business office space — from high-powered brokers who use it to model financial risk, to backoffice associates keeping tabs on unshipped packages.
We’ll confess, it’s a bit difficult to find fault in a $99 piece of software that forever changed the way millions of people do work. Well, almost. There is one little problem. You know, not a huge one. Certainly nothing that would cause a major world bank to lose, say, 6.2 billion dollars or anything.
Except that for twenty-five years we’ve all been using Excel wrong and oh, it actually did. (Looking at you, JPMorgan Chase.)
What it all comes down to is human error, and the fact the Microsoft Excel is many things. But there is one thing it is not:
Microsoft Excel Is Not Database Software
It’s a blunder we’ve all made. What do you do when you have a ton of flexible data that you need to organize and manage? Like most cubicle warriors, you open Excel and… make a spreadsheet.
While it’s absolutely brilliant for performing calculations with certain data sets, and for displaying the results in pretty ways, the issue with using Excel as database software is that it wasn’t built for that purpose. That particular function was bestowed upon its less appreciated younger sibling, Microsoft Access. What this means is Excel doesn’t have any of the features a proper data manager calls for (aside, of course, from tables).
With database software the tables are all relational. What this means is that customer data plugged into one table (e.g. contact info) would be immediately accessible across the all other associated tables (e.g. orders or sales), through their customer ID number. In the case of a data manager, informations needs only to be entered once, whereas with Excel any relational data will have to be manually inputted across multiple tables each time the information changes — a tedious and time-consuming chore.
For the ingenuitive worker who realizes it can be done faster with copy and paste, they’re flirting with danger; mistakes are all too easy. For the now disgraced London Whale, a trader who earned his nickname while buying positions for JPMorgan Chase, it meant the implosion of a career, a reputation in tatters, and a moniker now synonymous with the most egregious trading loss in history — all because the Excel-based “Value at Risk” model he used had copy-pasted errors.
The London Whale, by all accounts, is a modern day parable — a cautionary tale of what happen when software is used the way you it shouldn’t be. In his case, the model operated off of relational data spread across multiple Excel spreadsheets, despite there being far better alternatives.
At this point the $6.2 billion question we hope you’re asking yourself is “what database options do I have? Are there any for my business?” The answer to that question is a resounding “YES!” Depending on what kind of data you need to manage, there are several in fact.
Take passwords, for example. A number of companies have received flak lately after security breaches revealed that they’d been storing customer login info in Excel — a method arguably as secure as printing them all out on an off-white ream of dot matrix paper and stuffing them in a drawer. (Possibly, less so.) The better solution would be something like 1Password or Lastpass, two programs purpose-built for the secure storage of passwords.
If your need is on the financial side (either for budgeting, accounting, or invoicing, etc.), you have a number of choices, including Quickbooks and Freshbooks. For customer data, the most appropriate system to utilize is CRM (customer relationship management), such as Microsoft Dynamics or Salesforce. On the inventory end, both Dynamics and Quickbooks might again serve you well, but there’s also SAP Business One, among others.
One of the biggest draws of database software is that the information can be accessed and modified by a number of users at the same, all of who can run queries and build reports simultaneously, without it altering what someone else is seeing.
Take customer service representatives, for example. When you phone a call center, and someone looks up your account, they’re doing so with database software. In fact, most of time they don’t even have to look up your account, because the system queried your phone number as you called in, and popped your profile up on their screen automatically.
But that’s the way databases work: as a streamlined, integrated data hub through which all other processes can flow. Imagine all the time saved.
You can’t do that with Excel. And the sooner people stop trying the better off we’ll all be for it.
Contact JNT Tek for an evaluation of your business software to find out if you would benefit from changing your practices.