Firstly, let me say I actually like spread sheets, I use them nearly every day and they are an excellent tool for quick KPI calculations, minor planning and forecasting. They allow me to brain storm financial ideas and collate small amounts of data to visualise. The problem is that the same versatility that makes them such a brilliant invention - is also the same reason they regularly exceed the very boundaries of their usefulness, sometimes with disastrous results.
What is disturbing is that most business spreadsheets contain errors,there is even a group that collates a chilling collection of real-world business losses due to spread sheet errors.
As a software application the humble spread sheet is a great example of an application that is close to the pinnacle of its evolution, as the digital ‘work horse’ of the business world, it has undergone such extensive refinement over the last 50 years, that it is difficult to see how any major changes could do anything to significantly improve the application, in fact any further substantial development would probably attract an unwanted boost of even further misuse.
The problem with KPIs and spreadsheets
The main problem is that business users simply lack business applications needed for day to day tasks , such as performance management and KPI Tracking, they rely on spreadsheets as a convenient ‘gap filler’ – which in turn becomes the answer to every KPI collation, management, database and forecasting need. It’s with this well intentioned user the problems usually begin.
How KPI spreadsheets get out of control
After creating performance goals and the subsequent KPIs on a single spreadsheet, our user then understandably shares with others, they are asked to contribute to the data – even add more KPI ideas. In turn this data needs to be tweaked, a second version is saved, a calculated KPI is removed -more columns are added along the way. Momentum builds – different stakeholders view the purpose of the spread sheet slightly differently, so more information is required, calculations are culminated across several sheets.
Like a pandemic this spreadsheet literally ‘Spreads’ around the organisation evolving and mutating, and then, in the blink of an eye this error riddled, over complex, mutant KPI spreadsheet inadvertently becomes the De facto monthly report, there is no version control, no way to interrogate the data and no security.
KPI spreadsheets the major drawbacks
One of the main benefits of implementing a KPI strategy is so that real time information is available to users who can make faster more informed decisions, this is also the major drawback for KPI data contained in spread sheets, it’s static and requires interpretation.
Performance improvement relies exclusively on the quality and frequency of the data supplied. Spreadsheets do not offer a stable, secure platform needed for users to access and maintain this data.
Did I mention, spreadsheets are great?, but ...
Spread sheets are not KPI databases, and a spreadsheet is not a KPI Software application.
Furthermore, I’d go as far as to say:
A KPI spreadsheet should only be used by the person who created it.