Spreadsheets: we love to hate them. They are used for many business functions and are deemed necessary by companies. They track financials, deliverables, basically anything that has a quantity assigned to it and can be managed with a formula. Unfortunately, spreadsheet data is far from accurate. An article by Forbes estimated that a whopping 90% of spreadsheets have errors in them. Here is a collection of the most serious spreadsheet blunders from articles around the web. Our bet is after reading these; you'll think twice about how you're tracking your data.
1. $24 Million Error at TransAlta
This one comes from CIO.com. In their article, they list eight very large spreadsheet errors that cost the companies involved billions of dollars. Coming in at #2 is the $24 million "clerical error" at TransAlta, a Canadian power company. In June 2003, a spreadsheet error cost the company $24 million. Due to a simple cut-and-paste error, they bought more US power transmission hedging contracts at higher prices than they should have.
2. Barclays Acquires Lehman Brothers and Accidently Buys Wrong Assets
This serious blunder is courtesy of Fortune. When Lehman Brothers crashed in September 2008, Barclays decided to acquire part of its assets. However, a simple error that involved 'hiding' cells caused Barclays to accidentally purchase assets they had decided they weren't interested in. The result was that it acquired 179 contracts they didn't want to buy, costing them a hefty sum.
3. Harvard Professors Miscalculate Economic Growth
In 2010, two Harvard professors wrote a paper outlining the relationship between a country's debt and its economic growth. The paper concluded that when a country's debt hits 90% of its GDP, growth slows substantially, and they tend to see their economies shrink -0.1%. Unfortunately, an error in the professors' formula excluded the first five countries on the list, skewing the data. The actual result was that in fact, when a country's debt hits 90% of its GDP, its economy grows by 2.2%.
4. $1.3 Billion Profit Error by Fannie Mae
In 2003, Fannie Mae reported that it had found a $1.3 billion dollar error that overstated their profits. The culprit: an honest spreadsheet error, made by an employee when transitioning to a new accounting regulation.
5. London Olympics Sells 10,000 Tickets it Doesn't Have
In 2012, a simple mistake in a spreadsheet caused the London Olympic Committee to sell 10,000 tickets they didn't have. According to the Mirror, a staffer accidentally wrote 20,000 in a cell instead of 10,000 and the mistake wasn't discovered until the tickets had already been sold. When the organizing committee eventually realized their mistake, they had to scramble to upgrade ticket holders to tickets for major events.
As you can see from the above sampling of horror stories, the consequences of a spreadsheet error is expensive and embarrassing for the company and people involved. Because so many contracts are still managed manually on Excel, contract management is especially at risk for errors and blunders. Check all of your data carefully, and while you're at it, you might want to check out our contract management software and eliminate the risk all together.