From the rise of Visicalc in 1979 on the Apple, to Lotus 123 on DOS to Excel on Windows, spreadsheets have become, after the accounting system, the number one program accountants use on a daily basis (some may argue that spreadsheets are indeed the number one program.) In fact, so many accountants rely on spreadsheets today to do to all their work that instead of the powerful enabler that gave accountants a leadership position in business today, it has become a potential handicap that will soon have them automated away by programmers and artificial intelligence.
The problem we see today is that so many accountants do not understand the risks they are unknowlingly take on as well as the shortcomings spreadsheets have over other solutions. A number of studies have shown over 80% of spreadsheets have errors, with 1% of all cells having forumula errors alone. If you have more than 20 formulas, you now have the potential of having a material significant error. Our colleagues at SPRIG have done a great job of highlighiting the impact of errors in spreadsheets, from $6 Billion dollar loses at JP Morgan, to lawsuits to complete banking and company failures.
For a profession that prides itself in being conservative, risk adverse and double checks everything, why do accountants continue to rely on 30 year old technology as their prime tool? Why do they turn to the ‘duct tape of accounting’ for all their problem solving and decision support?
- First is comfort level. Spreadsheets are easy.
- Second is cost. The only factor you have to put in is time and a bit of logic.
- Third is self-confidence and desire to ‘do it myself’.
With the rise of internet technologies, big data, analytics and decision support, accountants must learn new skill sets to ensure their relavence and leadership in today’s economy. What do they need to do?
- First, they need to embrace a team approach across the organization to building their decision support systems
- Second, they need to learn about how databases work and how to bring together different data sets other than just accounting
- Third, they need to learn about decision making frameworks
If accountants begin to understand how to become decision support experts as opposed to spreadsheet experts, they will find the demand for their services will increase and their opportunities for advancement will expand.
Contact us if you would like to find out more about decision support systems.