I was having this intense discussion with a friend of mine, trying to convince him to upgrade himself from a $30 Microsoft Excel to a sophisticated (more expensive than $30) system, when he stopped me in mid sentence and said, “you know what Anup, for the last two decades I have taken my core business decisions on numbers popping out from an excel file and I’ve never had a problem. The only times I ever had a problem all I had to do was re-boot my machine and lo! Everything was back to normal”.I had heard this so many times in my life, I knew I had to get some quantified data regarding the perils of Microsoft Excel to convince my friend, and last week bumped into an outstanding Spreadsheet Risk Management presentation done by Protiviti.
Based on their analysis, here’s what could happen to my friend with his excel sheets, if his guardian angel takes a nap
Honest Mistakes can happen: like …S#*t happens!
• Fidelity : A Missing Minus sign caused Fidelity Magellen Fund to overstate projected earnings by USD 2.6 Bn and miss a promised dividend
• Fannie Mae : After releasing Q3 earnings figures , Fannie Mae had to restate its unrealized gains by USD 1.2 Bn. This was a result of “honest mistakes made in a spreadsheet used in the implementation of a new accounting standard”
• Provident Financial : Provident earnings for 1997 to 2002 had to be restated by USD 70 Mn, due to an error in a spreadsheet model calculating the debt amortization
And if you have a rotten apple around : S#it will definitely happen!
• Allfirst : US Subsidiary of Allied Irsih Banks : A currency Trader John Rusnak began losing money in trades in 1997. He used a series of Spreadsheet entries to hide his losses, which continued to increase. When the fraud was discovered, his losses amounted to USD 691. 2 Mn. Turns out, AIB ended up selling off All first Subsidiary all because of our helpful little Excel spreadsheets.
Anyone who’s got a Dog named “Macro”, or who gets into an elevator and double clicks the button for the floor he wants, may find all the examples mentioned above as “doomsday” predictions; but for the average Joe who believes in safe sex, I think the examples above and a read through of the Protiviti report are good enough to stop misusing excel and making it a replacement for your core business applications.
Ok, so don’t you guys want to know what happened to the guy who told me he’d re-boot his machine? I went back to office and sent him an email “The term reboot comes from the middle ages. Horses which stopped in mid-stride required a boot to the rear to start again. Thus the term to rear-boot, later abbreviated into reboot!!!! Wake up buddy, we’re no longer in the middle ages”
On a more serious note "Guys, Wake up"?
