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Analytics Advantage: The Hidden Costs of Excel
Actionaut Shaun Davis recently launched “Analytics Advantage,” a weekly newsletter of actionable insights, proven strategies, and top tips for getting the most from your data and making high-stakes decisions with confidence. Here’s a sample issue. We hope you’ll subscribe.
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Excel is transformational, but it introduces hidden risks and costs to your business.
The convenience is like a siren song to the ears of your analysts. It’s just so easy — copy, paste a couple of formulas, and boom: there’s your answer.
Excel is a crutch that introduces hidden costs and risks into the day-to-day operations of your business.
Here’s how:
Excel enables shortcuts at the cost of a long-term solution
We’ve all run across the Excel Monster that a go-getter creates. They weave together sources, transform data, and magically you get a new insight into your business.
And then, they leave your company for another job…
These Excel Monsters come with little-to-no documentation. The knowledge (and job security) the go-getter retains is real.
They hide and defer the cost your growing organization has for real data infrastructure. Those bills will come due at some point, often at a critical moment.
Excel significantly increases the risk of errors
Any solution is only as strong as the quality controls built around it. But, Excel amplifies these risks.
One of the key features of Excel is the ability to crunch some numbers with little-to-no overhead. I still use it, but only for the right situations.
In untangling the Excel Monsters, I’ve uncovered countless errors in formulas and data which result in material differences in the conclusions drawn.
Miss a couple rows on a lookup formula? Hope those rows don’t include a significant markdown on your orders, resulting in a rosier-than-reality report on your profit.
I’ve even seen straight-out cooking of the numbers. Not in the illegal, Arthur Anderson way, but bad nonetheless.
Let’s just multiply this key metric by another number, and voila, everything looks great.
Excel is no replacement for modern data infrastructure
Just ask the UK Health authorities.
During peak COVID, they were dropping tons of data because they chose the original Excel file format (XLS), which only handles 65,000 records. Everything else was just dropped. Oops.
Excel isn’t made to move millions of records. It’s a lightweight, highly-flexible solution. But it doesn’t scale.
These Excel Monsters take tons of time to open. Lost time and productivity just waiting to load the data. Not to mention what happens when the file gets corrupted….
How can you control the risk of Excel Monsters hiding in your company?
Three steps you can take today:
- Be curious about the data you’re shown
- Push analysts to use Excel for the right reasons
- Create an analytics strategy
Be curious about the data you’re shown
You see tons of data every day.
It’s hard enough to keep your Email Monster tamed and at bay, much less to understand the nuance of how insights are derived from your data. Be curious about where the data is coming from that you’re using to drive the insights you’re making decisions on.
Key questions to ask:
- How did you bring this data together?
- What tools are you using to create this?
- How much time did it take to create this?
Push them to explain it in simple terms. Analysts will often shroud the ugly parts of a process in technical terms.
Push analysts to use Excel for the right reasons
There is an Excel Monster lurking somewhere in your business. As you uncover these monsters, seek to understand why they exist (Think: Chesterton’s Fence).
Key questions to ask:
- Why is Excel the right tool for this job?
- Is there another tool that can create this data more efficiently?
- We’ve been paying for this other tool you asked for over the past year. Why did you choose to use Excel instead of it?
- How much data could this handle?
Create an analytics strategy
Planning your data infrastructure investments is like any other business process. Don’t let the technical side scare you off. I’ve partnered with numerous organizations to quickly find the critical path to move their data culture forward.
What you get from an analytics strategy from me:
- Objective, outsider view of your data and analytics function
- Key next steps to build towards better analytics
- Assurance that the Excel Monsters will be slayed
Want to take action?
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The clock is ticking…..
Shaun Davis, your personal data therapist, understands your unique challenges and helps you navigate through the data maze. With keen insight, he discerns the signal from the noise, tenaciously finding the right solutions to guide you through the ever-growing data landscape. Shaun has partnered for 10 years with top data teams to turn their data into profitable and efficiency hunting action. Learn more about Shaun.
