"In the spring of 2018, a major liquor and wine retailer in the UK lost 60 percent of its
market value – £500 million – in a matter of weeks, due in part to an "arithmetic error" in a
spreadsheet. The Times of London commented, 'Not for the first time, human error with
spreadsheets has led to disaster.'"
"In early 2019, a large Canadian firm in the emerging legal cannabis industry cited
'spreadsheet error' as a cause of under-reporting earnings. The company's news release
said, "The correction was made due to a formula error in the spreadsheet supporting the
year- to-date adjusted EBITDA loss calculation."
Anticipate Complex Market Dynamics
There are a host of mathematical models available today to instill greater insight into the
complex dynamics of the marketplace. These models help company staff to view, understand
and predict competitive movement, customer behavior changes, and market demand.
Unfortunately, technology can't change everything. Take Kodak for example, the company
that was at one time synonymous with the art of photography. Kodak was way ahead of the
competition when it invented the digital camera back in 1975. Sadly, it did not view this
technology as the major disruptor it eventually became in the marketplace. Instead, for the
next 10 years, the company maintained its course, and took no action to change its market
strategy. The result: the company lost 75% of its value before filing for bankruptcy in 2012.
Businesses should -- and often do -- adjust their business strategies over time. And while
trends and objectives will ebb and flow, advanced analytics can help identify patterns and
next steps with data-driven reasoning. Rather than taking a leap of faith, risk management
systems that are augmented with data analytics and artificial intelligence can discover the
best course of action based on actual patterns in data.
2. Financial Forecasting and Performance
It is imperative that today's financial data is timely, up-to-date, and accurate. But according
to research by IBM, 58% of midsize and large companies still use spreadsheets to manage
their planning and budgeting processes. The study cited several cases:
Spreadsheets and other static financial tools tend to be cumbersome, prone to error and
limited in their capabilities. As data volumes continue to grow, much of it is captured in
individual silos across the organization. Today's businesses need better tools and processes
to collect and integrate that information. Even more importantly, they need the ability to
effectively plan, budget and forecast financial performance.
LEVERAGING DATA | 4
