servicepathservicepathservicepathservicepath
  • Home
  • Why ServicePath
    • Failed CPQ
    • Digital Transformation
    • Optimizing After Acquisitions
    • The Rapid Rate of Change
  • Products
  • Integrations
    • CRM Integrations
      • Salesforce CRM Integration
      • Dynamics CRM Integration
      • NetSuite CRM Integration
    • API, Webhooks, Parsers, and Data Provider Integrations
  • Industries
    • Managed Service Providers
    • Systems Integrators
    • Software and Technology Companies
  • Clients
  • About
    • Origin Story
    • Leadership Team
  • Resources
    • Blog
    • News
    • Case Studies

Broken Spreadsheet Blunders – The Rise of Digital Transformation

    Home Blog Post Broken Spreadsheet Blunders – The Rise of Digital Transformation
    NextPrevious

    Broken Spreadsheet Blunders – The Rise of Digital Transformation

    By Finlay Walker | Blog Post, Multi Author | 0 comment | 23 September, 2020 | 6

    The rise of digital transformation has been accelerating in recent months with organizations understanding the need for digital systems to enhance governance, agility and collaboration. Organizations now are more distributed than ever; one tool that has been a staple of the enterprise has been the spreadsheet. The convenience of a spreadsheet is well noted however with increasing separation and distancing of organizations the governance around these assets becomes problematic. As a result, organizations are looking to improve governance and revenue acceleration and are hence investing in Configure Price and Quote (CPQ) systems in order to avoid the use of the spreadsheets that have exposed them to risk. The benefits of CPQ are clear, when the right implementation and support is provided from a CPQ vendor. However, unfortunately, this is rarely the case, which leads to 50% of transitions from spreadsheets to CPQ systems failing and organizations finding themselves reverting back to the ancient spreadsheets. Undoubtedly, it is a double-edged sword.

    In the 21st century, the spreadsheet continues to cause havoc for organizations across the world with almost one out of every five large businesses suffering financial losses as a byproduct of spreadsheet errors. In most cases, it is small to medium sized organizations that are unable to digest these costly errors, thus leaving these businesses permanently scarred.

    Why are there so many errors?

    Spreadsheet ‘blunders’ are constantly occurring and with the complexity and room for human error at any point whilst using spreadsheets, these costly mistakes will long continue. Furthermore, as a spreadsheet grows, the complexity and opportunity for mistakes increase; meaning that even the most basic spreadsheet has the potential to grow into a complex error-prone tool for an organization.

    Highlighted below are some of the most significant spreadsheet errors in history which caused significant damage to not only these businesses finances, but also their reputation within their markets:

     

    • Fannie Mae – The United States Federal National Mortgage Association

    Fannie Mae relied on a spreadsheet when changing its accounting system in order to generate some vital calculations required for a new accounting standard. The issue being that the spreadsheets contained significant errors that altered the results by over $1.1 Billion. The company later spotted a $1.137 Billion error in total shareholder equity due to “honest mistakes made in a spreadsheet used in the implementation a new accounting standard” The result was hundreds of hours of work to restate its 2003 third-quarter financials and a permanently tainted reputation.

    • Fidelity – American Multinational Financial Service Corporation

    Fidelity were forced to cancel a $4.32/share year-end dividend distribution. Human error was once again at fault for this disaster as an employed tax accountant omitted a minus sign when they transcribed the net capital loss of $1.3 billion from the fund’s financial record to a spreadsheet. This turned that loss into a gain, causing the dividend estimate to be off by $2.6 billion.

    • JP Morgan  –  American multinational Investment Bank and Financial Services

    Due to several faulty equations in a spreadsheet (used to model risk) and a process that mandated the copying and pasting of a large number of cells, JP Morgan severely underestimated the downside of its synthetic credit portfolio, which ultimately led to the bank suffering approximately $6.5 billion in losses and fines.

    • London Olympics Games 2012

    A member of staff who was working on a vital spreadsheet accidentally inserted “20,000” into a cell instead of “10,000” which led to the London Olympic Committee selling 10,000 tickets for non-existent seats at four minor heats of synchronized swimming. This blunder not only damaged the reputation of the committee but enforced a financial cost as they were forced to upgrade the ticket holders to tickets for major events- causing a great financial loss.

    • TransAlta – Multi Billion Electricity Power Generator and Wholesaler

    TransAlta one of the largest electricity providers within Canada experienced a cut and paste error in a spreadsheet which in turn cost the organisation $24 million. This mistake lead TransAlta to acquire more US power transmission hedging contracts at much higher prices than it should have.

    Listed above were five of the most significant errors in recent decades that have come out to the public however, not every organization states when a spreadsheet error has occurred. These unstated spreadsheet blunders may not be made public in a hope of preserving reputation however the internal financial damage cannot be hidden.

    Despite the clear fundamental flaws of the spreadsheet, it is a tool that can be used successfully for small, less complex tasks. However, when trying to configure prices and quotes, it is fundamental an organization has an accurate reliable system with strong governance in place, in order to avoid the costly errors demonstrated above.

    For more information on how to finally defeat the ‘zombie’ spreadsheet check out the Broken CPQ/Zombie Spreadsheet blog.

    With the new reality of a distributed work force, companies have been working to improve governance and reduce errors with the digitization of systems and slowly moving away from spreadsheets. Which has benefited them by speeding up processes and driving good revenue. All organizations thought they had good governance and control, however in the move to remote work, the organisations have come to identify the risks of using spreadsheets without good governance. The movement to a distributed workforce has, in fact, been a catalyst for the rise of digital transformation.

    No tags.
    Avatar

    Finlay Walker

    More posts by Finlay Walker

    Related Post

    • We Need More Standard Services!!

      By Salman Ahmad | 0 comment

      Many of our clients engage with their customers through custom/bespoke service offerings that are designed, engineered, costed and

    • Managing the inevitability of change

      By Salman Ahmad | 0 comment

      There is something that is constant in our existence as service providers – that is change. Economic changes, evolving customer demands

    • Change of Name, But Not a Change of Vision

      By Salman Ahmad | 0 comment

      When we originally set out to build servicePath we had a vision to build a great platform to solve the challenges we faced when working within IT

    • The Squeezed Middle

      By Salman Ahmad | 0 comment

      You need real time intelligence to make fact-based decisions. In a market place where the

    • Cost…Configure, Price, Quote (C-CPQ)

      By Salman Ahmad | 0 comment

      In our last insight from Iain Logan, our UK MD, we explored the importance of cost to serve(CTS) and the value

    • Moving to a Subscription-revenue Business

      By Salman Ahmad | 0 comment
      Another update from servicePath UK on the rapidly and continually changing economies of IT and Telecom market, specifically affecting VAR/Resellers. From the disruption of Cloud to the consumerisation of IT, the business models (VAR, Reseller)

    • Choice Paralysis

      By Salman Ahmad | 0 comment

      On a recent run listening to a podcast the topic of “choice paralysis” came up as a well known situation where offering too much choice can lead to less sales, not more.

    • Business Rules Engine

      By Salman Ahmad | 0 comment
      With our 2015-JUNE release of the servicePath CPQ platform we have introduced a new Business Rules engine. This was developed with a number of specific objectives: Support the powerful functionality of the existing rules engine,

    NextPrevious

    Recent Posts

    • SERVICEPATH HONOURED IN G2 WINTER AWARDS – CPQ MOMENTUM LEADER December 17, 2020
    • Do the Best Sales People Care About CPQ and QTC? November 19, 2020
    • The Business Case for Configure Price Quote (CPQ) from a Finance Leader Perspective October 9, 2020
    • Broken Spreadsheet Blunders – The Rise of Digital Transformation September 23, 2020
    • Remote Work – 153 days in September 4, 2020

    Archives

    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • July 2020
    • June 2020
    • April 2020
    • March 2020
    • January 2020
    • November 2019
    • October 2019
    • August 2019
    • July 2019
    • May 2019
    • February 2019
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • January 2018
    • July 2015
    • January 2015
    • November 2014
    • September 2014
    • August 2014
    • June 2014

    Categories

    • Blog Post
    • Multi Author
    • News
    • Product Manager
    • Solution Manager

    Connect

    • Let’s Talk
    • Contact Us
    • Blog
    • Email

    Navigation

    • Product
    • Industries
    • Clients
    • About Us

    Quick Links

    • Managed Service Providers
    • Systems Integrators
    • Software and Tech Companies
    • Leadership Team

    Headquarters

    5500 N Service Rd, Suite 801

    Burlington, ON

    L7L 6W6

    647.479.8849

    ServicePath, Europe

    27, Old Gloucester Street,

    London

    WC1N 3AX

    sales@servicepath.co

    Subscribe

    Signup to be notified of news and product updates.



    Privacy Statement | Anti-Slavery Statement | © servicePath, Inc. All Rights Reserved

    • Home
    • Why ServicePath
      • Failed CPQ
      • Digital Transformation
      • Optimizing After Acquisitions
      • The Rapid Rate of Change
    • Products
    • Integrations
      • CRM Integrations
        • Salesforce CRM Integration
        • Dynamics CRM Integration
        • NetSuite CRM Integration
      • API, Webhooks, Parsers, and Data Provider Integrations
    • Industries
      • Managed Service Providers
      • Systems Integrators
      • Software and Technology Companies
    • Clients
    • About
      • Origin Story
      • Leadership Team
    • Resources
      • Blog
      • News
      • Case Studies
    servicepath
    FREE DEMO