So, what is the problem with spreadsheets anyway?

In general, the problems associated with spreadsheets can be split into two main areas:

1. Design, Development, Flexibility and transparency of internal processes

It is precisely because most Finance people, who are responsible for developing and maintained the models, are NOT trained in the design and development of spreadsheet models that there is an issue. No Financial or IT Director would allow an unqualified and/or inexperienced database administrator to develop and maintain the vast and complex transactional databases that now run Businesses. Yet, when it comes to the design and development of Management Reporting, Budgeting and Planning systems, which are relied upon to manage multinational businesses, this practice is commonplace. The issue here is not that the Finance Department is not financially astute, they are. The issue is that they are not technically trained in the use of Spreadsheets.

Spreadsheets are inherently inflexible to changes in the design of the models they map. This is due to the method spreadsheets use to link data, which is on a cell-by-cell basis. The internal formula structures written into spreadsheet models are not dynamic, so if there is a change to the NATURE of a formula in one sheet, it is not automatically replicated in all the subsequent sheets or workbooks. Every model change, no matter how small, has to be manually replicated in each affected sheet and/or workbook.

Further, it is not possible to follow what methodology is being used to drive the model within a spreadsheet. This is because all the formulas that are used to connect and manipulate the data within the model are hidden. There is a severe lack of transparency of the underlying formulae and therefore the methodology being used to drive the models.