Why So Many Businesses Refuse to Upgrade Their Manual Spreadsheets (and How It’s Killing Them)

For a couple of decades now, spreadsheets have been one of the most efficient ways to store, organize, and parse complex information related to your business. You could use them for almost anything, from tracking your business’s finances to managing inventory.

And to be sure, there are still some applications where spreadsheets, manually tracked, are the best available option. But increasingly, there are superior systems available to replace those old, manual spreadsheets. For example, if you have a platform that automatically collects membership subscription fees and manages members’ statuses, there’s no real need or advantage to track them manually in a spreadsheet. If you have an automated inventory tracking system with RFID chips and scanners, you shouldn’t need to log every transaction by hand.

Despite this, business owners everywhere are reluctant to make the transition—and unwilling to abandon the spreadsheets to which they’ve become acquainted over the years. Why is this the case? And are spreadsheets really that bad?

How Spreadsheets Can Kill Your Business

Spreadsheets waste time and money in a few different, important ways:

  • Manual entry. For the most part, when you’re working with a spreadsheet, you’ll need to enter every value manually. This requires someone’s attention, and in some cases, their full-time work. Over the long haul, this wastes hundreds, if not thousands of man-hours that could have been automated, freeing up the talented people entering data to accomplish bigger and better things.
  • Mistakes and errors. One important consequence of manual human entry is its susceptibility to human error. One missed keystroke could skew an entire column of data. One bad formula could lead you to make a business decision based on bad information. You might have systems in place to double check and verify that all the information in a spreadsheet is correct, but that takes more time and effort, ultimately compromising the value of the system.
  • Updating issues. How often does something in your business change? For example, you have a new product, you’ve hired a new worker, or you’re forced to comply with some new regulation. Often, this means going back to your spreadsheet and overhauling to make room for the new variables or new requirements. With the right software system, you won’t have to worry about this; there will be built-in controls that allow you to easily modify your work, and periodic updates that bring you new features as well.
  • Collaboration interference. Have you ever tried to collaborate with someone on a spreadsheet remotely? It’s a nightmare. You’re forced to either pass different versions of the spreadsheet back and forth, or rely on read-only copies using your cloud software. Either way, this is disadvantageous compared to a cloud-hosted system that allows multiple users to work on records simultaneously.
  • Limited analytical capabilities. There are tons of Excel formulas you can use to run basic operations and analyze your data. You can even gain access to detailed charts and graphs to project your data in a visual way. However, there are fundamental limitations to the analyses you can conduct within the confines of a spreadsheet. If you use a more advanced system, you’ll be able to pay closer attention to the metrics that matter most—and you won’t have to manually build the systems that highlight them.

Why Business Owners Are Unwilling to Evolve

With clear benefits to more automated, sophisticated software in most cases, why aren’t more business owners making the switch? These are some of the most common points of objection:

  • Cost concerns. Some software systems are expensive, both to initially purchase and to implement. Business owners are afraid to spend thousands of dollars on something they don’t fully understand (or don’t fully trust). While this is understandable, most systems are less expensive than they think.
  • Status quo favoritism. Some people are so used to the way things are that they don’t want to think about the way things could be. It’s called status quo bias, and we’re all affected by it in one way or another. Still, it can be hard to overcome; typically, the best way is with a thorough cost-benefit analysis.
  • Unfamiliarity with new tech. If you don’t know that a better system exists, how could you possibly consider switching to it? Some business owners simply aren’t familiar enough with the new technology available to understand that spreadsheets are antiquated in many applications.

Even faced with all the advantages of a more elegant system, some business owners will continue to refuse to upgrade. And unfortunately, those businesses will continue to suffer. Still, armed with more knowledge, you can make better decisions for your business—or hopefully persuade some of the decision makers in your business to move forward.

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