Understanding the hidden costs of spreadsheets versus the ROI of an online database

  • Spreadsheets perform well when working with data on a smaller scale but gradually lose their practicality as the size of data increases
  • An online database, apart from being easily scalable, can address the data storage requirements of almost any business model – at a lower price

Understanding the hidden costs of spreadsheets - Kohezion

Spreadsheets play an integral role in our professional lives. We start using them while in school and by the time we land our first jobs we become adept at data processing and can perform complex analysis with them. But, as effective as they may seem, we have now reached a point in time where it has become necessary to make the move to online database software solutions.

The reason for the shift is that while our spreadsheets may have been indispensable tools in the past, they have since been outgunned by more powerful and reliable data processing applications found on the market today. There is now an abundance of online database software solutions that allow us to perform complex calculations and extract comprehensive information without having to write a single line of code. This method of creating software solutions, without having to use a computer programming language, is known as no-code development.

Fun fact: No-code development was a by-product of the scarcity of programmers. It can be said that programmers were “too good for their own good” and that they may have pushed themselves out of a job. Perhaps, that’s why GitHub’s CEO, Chris Wanstrath, said, “…the future of coding is no coding at all.”

That’s right; why would anyone want to spend time struggling with spreadsheets, when with the same level of know-how and much less time and effort it is possible to perform on a much higher level without the need of a computer programmer or database administrator?

To have a clearer picture of how damaging it is to depend on spreadsheets, and how high the return on investment (ROI) of an online database is, let us have a closer look at the two ways of data processing:

The drawbacks of spreadsheets

To appreciate how the use of spreadsheets results in a negative ROI, we will need to have a look at the individual drawbacks that it brings into the data processing procedure of a business. These drawbacks include:

  • Wastage of manpower – it takes time and extra effort to consolidate information from data that is stored in separate workbooks and spreadsheets. Monotonous jobs like tracking which piece of data comes before which one, whether changes that were made in another linked sheet were intentional or done by mistake, cleaning up data to make sure it is in the right format… are all perfect examples of a job that would drive anyone up a wall besides wasting their time.

Fun fact: A study done on treasury teams across the world found that they wasted an average of around 5,000 hours per year!

  • Delayed response – when, as mentioned above, staff members waste their time and energy on aggregating data to extract information that is required to make urgent decisions, and it doesn’t end on schedule, it will result in loss of opportunities.
  • Erroneous information – continuing from above, things could become even direr if the information that has been extracted is actually wrong. Even worse, if the data is required to make daily decisions, the margin of error increases as time goes by. Anyone who has to act on such information could land themselves, and their business, in hot water.
  • Loss of data integrity – spreadsheets can have the capability of protecting data on the file-level and not on the cell-level. Should there be multiple versions of the same spreadsheet found floating around on the computers of a business, chances are there will be the same number of data variations found in them. Deciding which one holds genuine, current data will be a pain-of-a-job to tackle and might not even be spotted until it’s too late. Here too, setting up folder- or file-level accesses, locking/unlocking sheets, and keeping track of versions will drain resources that could be put to better use somewhere else in the business’ processes.

Fun fact: Studies have shown that 90% of all spreadsheets, with over 150 rows, contained errors which could have occurred at any stage of the data’s capture-to-consumption phases.

  • Hidden costs – for every given dataset there can be more than one ways to extract information from it. But, with each method, the problems increase when, instead of having one approved way of getting the job done:
    • A new formula that a data processor uses is wrong and yet too complicated for anyone else to decipher and,
    • If, for example, an analyst spent hours trying to come up with a formula that addressed a requirement and, forgetting to share it with other analysts, someone else down the line had to spend even more time on the same problem thinking it hadn’t already been resolved. This is akin to inventing the wheel – over and over again.
  • Disconnected workers – data that is spread across disconnected spreadsheets will result in a staff that can never be on the same page. With every department, and even every staff member, having their own copy of a spreadsheet, there is no way everyone across the board will have the same outlook about the business. Management will have one view, finance will see it another way, and the staff in the field will have a third one – in short, chaos will be the order of the day.

Fun fact: A study has shown that although spreadsheets are popular in almost every business in existence, it is responsible for a whopping $60 billion in wasted productivity annually!

Apart from all these drawbacks, let us admit one thing: spreadsheets are boring! Whether it is the person who has to capture daily data on them, the analyst who has to transform it into meaningful and consumable information or the manager who has to go through it all to make critical decisions based on it all, everyone will – sooner or later – be fed up of it all.

The way forward – an online database

Now, let’s have a look at the advantages of an online database software solution and why it is the better option:

  • Scalability – an online database can be created to meet the data demands of any business model – big or small.
  • No redundancy – data is stored in one place (and only one place) meaning redundancy can be brought down to nil, zero, zilch!
  • One data, one formula – everyone will have access to the same data and, thus, processed information. Decisions will be unanimous as they will all be based on the same reports and analyses that will come from that same data.
  • Time-saving – running the most complex of reports will only take mere seconds – at worst, minutes – as the data processing power behind today’s servers is immense. Instant decisions can be made by just looking at these reports.
  • Global access – the physical location of the people accessing the information won’t matter as the boss at headquarters will have a real-time view of it all even as his staffs in the field are feeding data into the servers.
  • Professional reporting – the front-end applications of online database software solutions usually come with reporting formats that, with a few clicks, will result in impressive and informative reports that are not only pleasing to the eye but look professionally-made.
  • No-code database creation – today’s online database solutions do not require the user to be a tech-savvy genius. As a matter of fact, anyone who has an average level of expertise with spreadsheets (Citizen Developers, that’s you!) can be trusted to create applications that can precisely address a business’ data-processing requirements

Besides this all, wouldn’t it make more business sense to have a data storage solution that doesn’t require babysitting servers, paying for an IT team, and having to worry about data security issues? Why not simply focus on core business processes and let the professionals take care of the data?

Why move from spreadsheets to an online database?

A business that plans to grow needs to also plan for the future of its data processing: spreadsheets need to give way to online database solutions.

If things are still not clear enough, let us have one more look at the reasons why you need to move your spreadsheets into an online database:

  • Data is more secure in an online database than it is in a spreadsheet
  • Processing time is negligible in an online database when compared to spreadsheets
  • Anyone, anywhere can access and collaborate on the data in an online database – something that is almost impossible with spreadsheets
  • The accuracy of extracted information is guaranteed as long as the data stored in an online database is correct while spreadsheets increase the chances of human error occurring along the whole process – from data input to reporting
  • There is no special knowledge required to create an online database – anyone who is good with a spreadsheet will be just as good at creating databases online

All in all, making the move from spreadsheets to an online database will increase a business’ ROI on its data storage and consumption solution. This is especially true when the business can use online database software at a fraction of the price it would take to run the whole spreadsheet-dependent process.

Yes, you read that right: it is much cheaper – and cost-effective – to use an online database solution than it is to try to rein in the chaos that comes with spreadsheets. The bigger a business grows – the more chaotic it will become.

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