To remain competitive in business, one needs to remain not only informed about their own business, but also about the prevailing wisdom in the market – today’s blogpost regards both of these needs.
A few years ago IBM published a white paper on the dangers of running your business using spreadsheets. The paper’s available here, and it’s really worth a look if you care about running your business. It’s common for businesses to use spreadsheets to monitor every part of their business.
A lot of businesses think they get on just fine with spreadsheets, but IBM points out that “If the only tool you have is a hammer, every problem looks like a nail.” The point is rather cryptic, but the meaning soon becomes clear – Spreadsheet software is so ubiquitous that we soon come to think of it as the solution to every problem, whether that problem is a calculation, or a list that needs to be maintained. Spreadsheets are fantastic multi-purpose calculators, but they serve so many purposes, wrangling them to do what you want them too can be impossible.
For instance, Nevada City California ended up with a five million dollar deficit that no one knew about because a formula had been overwritten. The white paper is full of stories like that one. It’s food for thought – a system built for its one purpose will always be superior.
And that’s only the most eye-catching of the examples in the paper, it’s also the simplest to paraphrase. The others are quite obscure, which makes them tough to anticipate. The difficulty in anticipating these problems is why a good number of businesses think they’re doing perfectly well with spreadsheets – these problems aren’t evident, until they cause problems.
The more obscure problems arise from the fact that a spreadsheet cannot be dynamic. I.e. they cannot take into account what the information in each cell represents. Businesses rely on a complex matrix of data, where each value can influence another. Unless a system can take into account the relationships between the data on display, it will very rarely provide an accurate outcome.
That was the circumstances that led to difficulty at Warmington Fires. The company used a spreadsheet for costings and quotes – the spreadsheet ballooned out to over 8,700 lines; not only was it impenetrably dense, if a mistake were made, the odds of spotting it were slim. Say a figure represented labour time, human-error could result in an incorrect figure being entered, but if the system took information directly from the punch-clock, then those errors could virtually be eliminated.
That’s what Cin7 was able to offer Warmingtons. We developed for them, a system where the quoting and costing system was fed directly from the payroll system. By using Cin7, every figure in their system is dynamic, representative, and taken in to account when making calculations. It’s also easy for information to be entered, because its clear what information goes where.
The idea extends to their multi-level BOMs, which takes in information from the inventory, and feeds it into the costings. With Cin7, everything’s integrated.
