Gotransverse
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Mar 05, 2013It is still creeping upwards, but for now let’s pin it at an estimated [cue Dr. Evil voice] 9 billion dollars. What is it? It’s the positively heroic, nay epic, loss JPMorgan ran up in 2012 betting on something called a synthetic credit portfolio. Even for these guys that is a decent chunk of change, not necessarily readily available down the back of the sofa.
Now I’m not here to drum up support for our esteemed Captains of Industry, the elite that run the Powerhouse of the Global Economy, nor pass round a hat (“Ex-JP Morgan executive, down to my last 25 million”) for them, with their gelled-back hair and red suspenders, scorning a mid-day repast… Sorry, I slipped back into the ‘80s for a moment. Where was I? Ah yes, JPM.
Now you’d think, wouldn’t you, that playing with the aforementioned Global Economy in much the same way that the wine-stained fingers of the Olympians casually interfered with the ancient Greeks, these guys would have the whizzy-est of whiz-bang technology to support them? Stuff that would make Steve Jobs clench everything. Stuff that ‘Q’ would dismiss as too ridiculously far-fetched. Stuff that Scotty would be trying to get Kirk to sign a Federation Purchase Order for?
Er… Nope. A key element in this spectacular FUBAR was the humble spreadsheet, and its all-too-human operative. Let’s just say that cut-and-pasting was involved and draw a discreet veil over it for now.
Of course, a revered and above-reproach organization like the Securities and Exchanges Commission would have taken a good hard look at this situation. Just as it did with its own systems and processes, right? Wait, what does this SEC audit report say?
“Many of the agency’s financial reporting processes are still manual in nature and reliant on spreadsheets and databases to both initiate transactions and perform key control functions.”
I know, I know. Fish, barrel, gun. Although it is fun to take potshots at august agencies and world-class bankers—hey, you there at the back sniggering! Can you, hand-on-heart, say there aren’t a few little spreadsheet shenanigans going on somewhere in your business? A little work-around spreadsheet to ‘get things done’? A fully automated process that happens to be carried out manually or via well-worn sticky notes decoratively arranged around a computer screen? If the answer to any of those questions is yes, you are by no means the exception.
What stands true for JPM stands true for many enterprises (possibly even the SS Enterprise, illogical though that would appear at first glance). Enterprises are collections of people and people like to use what is familiar. Which is why, especially amongst finance people, the spreadsheet tools with which they cut their teeth will always hold a place dear to their hearts.
But as I mentioned before, we are all human. (Unless you employ actual spreadsheet monkeys, in which case please let me know where you found THEM! I still want a monkey butler. Oh, and a hover-car.) And that means fat finger errors. It means, “Oh, it’s Friday afternoon I’ll just eyeball the figures and get out of here.” It means, in short, that mistakes will be made.
Now not all of these mistakes will fall into the 9 billion dollar category, but these things are all relative. Let’s say you run a key part of your A/R through a couple of people who manually key and re-key data into a series of bursting-at-the-seams spreadsheets, and they are both hit by the flu the same week (or heaven forbid, Morrissey’s double-decker bus gets involved). And it’s the week that happens to be the week you need to get your quarterly invoices out, or the week your key customer has to receive your invoice lest you miss the window and have to wait for their next quarterly payment run, or...You get the picture.