“Step Away From The Spreadsheet, Keep Your Hands Where I can See Them”

‘Poor’ J.P. Morgan was hit by a $920 million fine last week related to last year’s partially Excel-generated ‘London Whale’ trading debacle.

That’s on top of the estimated [cue Dr. Evil voice] SIX BILLION dollars they lost before the giant bets were curtailed. The positively heroic, nay, epic loss was caused by 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, with their gelled-back hair and red suspenders, scorning a mid-day repast... Sorry, I slipped back into the ‘80s for a minute there. Where was I? Oh yes, the elite that run the Powerhouse of the Global Economy. I certainly won’t be passing around a hat for them (Ex-J.P. Morgan executive, down to my last $25 million... anything helps.)

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 most whizzy 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, right?

Er..nope. A key element in this spectacular FUBAR was the humble spreadsheet, and its all-too-human operative. Let’s just say 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...Wait, what does this audit report on the SEC 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. But although it is fun to take potshots at august agencies and world-class bankers... You there! You in the back, sniggering, can you honestly say there aren’t a few little spreadsheet shenanigans going on somewhere in your business? A little work-around spreadsheet to ‘get things done’? Many organizations have “fully automated processes” which happen to be carried out manually and documented on tattered sticky notes decoratively arranged around a computer screen? Because if you do have those spreadsheet-based Accounts Receivable or billing-related functions you are by no means the exception.

What stands true for J.P. Morgan stands true for many enterprises. (Possibly even the SS Enterprise, illogical though that would appear at first glance... see what I did there?) 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 above, we are all human (unless you employ actualspreadsheet monkeys, in which case please let me know where you found them! I still want a monkey-butler). And that means fat fingers, it means it’s-Friday-afternoon-I’ll-just-eyeball-the-figures, it means, in short, that Mistakes Will Be Made.

Not all those mistakes will fall into the SIX BILLION dollar category, but these things are all relative. Let’s say you run a key part of AR through a couple of people who manually key and re-key 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). Of course, this happens to be the week you need to get your quarterly invoices out or the week your key customer has to get your bill into their system or you miss the window and have to wait for their next quarterly payment run...You get the picture.

Taking the often error-prone, manual elements out of the revenue generation, capture and reporting processes that are the lifeblood of your business is something of a no-brainer. We do this for our customers, repeatedly, by automating various Finance processes. Thankfully, spreadsheets are no longer an integral part of Finance processes customers benefit from the stream of information that is more available, predictable and auditable.