In the April/May 2015 issue of the Journal of Accountancy , columnist Jeff Drew asked a group of panelists to discuss the future of the spreadsheet. Drew noted “last fall (Sept 2014) that IBM officially ended support for Lotus 1-2-3, which was one of the world’s dominant spreadsheet program.” He further noted the “demise was barely noticed in accounting circles, where the spreadsheet application was once hailed as revolutionary”.
Lotus 1-2-3 hit its peak in the mid to late 80’s and 90’s before Excel was introduced with its popular Microsoft Windows 95 suite.
Future of Excel
JOA panelist J Carlton Collins, CEO of ASA Research, “predicted that CPAs will still be using Excel 100 years from now”. Collins noted “Excel will continue to improve, as evidenced by the new business intelligence capabilities of Excel 2013, which includes Power Map and Power View”. Rick Richardson, Founder and Managing Partner of Richardson Media & Technologies, spoke about business intelligence products such as Tableau that offer “data engine capabilities that we couldn’t get in a spreadsheet”. David Cieslak, referred to as “Inspector Gadget and founder of Arxis Technology, noted their firm work with Adaptive Insights. Cielak stated Adaptive Insights is a “super spreadsheet. It still uses rows and columns but it allows you to do high-powered financial modeling, reporting, consolidations, budgets and forecasting.”
The key in the above comments is that all these scenarios suggest that spreadsheet usage is more than lists in columns and rows. Spreadsheets are decision making tools so by adding a business intelligence database on top, the user will be able to more reliably analyze the data in those lists.
If a tree falls in a forest….
The Lotus 1-2-3 program tree fell last year and nobody heard a thing. Do we really expect Excel to be popular in 100 years? Will Microsoft Excel also go quietly in the night and what will be those elements that drive those changes? Like the abacus before it, people found other tools to use. The reasons for the change might surprise you.
Microsoft’s Spreadsheet Plans
San Diego Technology Examiner Victoria Wagner Ross wrote in February 2014 that “Excel is a cornerstone of Microsoft’s software sales to businesses, so it matters a great deal to the company’s future the release of services such as Microsoft Power BI for Office 365, as the new, supercharged version of Excel.
‘Excel was a great spreadsheet, but it wasn’t sufficiently powerful to meet all the needs of BI,’ Mr. Amir Netz said, a Microsoft technical fellow. The new product, Microsoft hopes, will be ‘fast and easy to use, like an online service, and with a full scale of abilities,’ Mr. Netz added.
“Power BI is the intelligent way to move all sorts of data into and out of Excel’s rows and columns, both from the corporate databases and other data sources from Microsoft’s compilation of data from surfing the web. Microsoft cleans up the numbers so the entries on the spreadsheet are reliable. Public data is stored in Azure which also serves as a link to proprietary data that corporate customers can look up from the field.”
User Impact on Spreadsheets
If we look at the typical error rates in Excel, the majority are caused by humans. In a University of Hawaii study “While people are about 95% to 98% accurate when they make spreadsheet cells entries, they are only about 50% to 80% successful when they attempt to detect if there is an error in a cell [Panko, 2010b]”.
As Justin Thiele wrote in “Humans vs. Microsoft Excel: The Quest for Smart Tools”, “at the end of the day, all of these “Excel Errors” were really “Human Errors”. Excel’s outputs were correct, but the inputs weren’t. The wrong cells were selected, formulas were incorrectly pasted, etc. Very human mistakes. Blaming Excel is no different than blaming a calculator or an abacus.”
As we noted in an earlier blog titled “True Cost of Using Excel”, the error rate jumps dramatically on the spreadsheet is shared with another individual. In 2013, Jeremy Olshan reported in MarketWatch, “Close to 90% of spreadsheet documents contain errors.”
Starting to see the Shift
Spreadsheets are a great and inexpensive tool to capture lists of data. The only error risk is from not entering data correctly. The powers at Microsoft are already showing how a database business intelligence add-on can better ensure the calculations and the analysis are correct. The reason is simple. Databases of any kind, once programmed correctly, will provide a consistent result that humans cannot step on. So the risk is restricted to the data entry only yet that eventually will be better validated with tools that analyze data and look for blank cells or inconsistent fields.
As Victoria Wagner Ross wrote “This (Microsoft) vision and marriage is seen in the BI entry because the online product will be changed monthly, with plans eventually to change features as frequently as each day, ‘you’ll never see a 2.0 version of this — it will just change,’ said Mr. Netz. ‘Gradually you’ll see that disappear’ from all of Microsoft’s enterprise software, he said. ‘It’s a different engagement with customers — constant change.’”
Excel could likely shed its skin and morph into two types of products, such as an analysis tool that automatically connects to other data sources and a simple data entry/list creation and tracking tool. If it tries to do both, it might become a resource hog.
Then we might look back and say what happened to Excel like we are doing with Lotus 1-2-3. Change is constant so expect these products to focus more on what they do best and not try to be all things to all people. They all realize they need to reduce the chance of user error. To do that, change must happen and it looks like it has already begun.
So as we move forward, look for database solutions that automate things that many currently do in Excel. Sales commission management is clearly a task that belongs in a database and not in a spreadsheet. Advanced analytics and reporting has also begun as noted in Microsoft’s strategic plan. Other BI tools such as webKPI.com are available to the user to ensure consistent reporting without the risk of user error.
So farewell to Lotus 1-2-3 for laying the vision that a generation quickly adopted for spreadsheet computing. Amazing it lasted as long as it did and maybe we will be saying the same thing about Excel in the years ahead as it transforms into an entire new computing tool to make humans more efficient.
Currently, Steve is Vice President of Marketing and Channel Development for sales provider CellarStone, Inc. Steve also runs a LinkedIn group called "QuickBooks and Business COaches".
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