Spreadsheet Software: Management Landmines; the Software That Increased Productivity Also Increased Potential for Disastrous Errors

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While today's headlines are devoted to the continuing crises of LDC debt, Supreme Court challenges to interstate banking, and yet another bank legislation "reform," the seeds of a far more pervasive and potentially more damaging crisis are being sown. The perpetrators of this sinister plot? Hundreds of individual employees, many of them trusted officers and managers, acting alone and unchecked.

The source of this impending crisis lies in spreadsheet errors, created on personal computers (PCs) using enormously popular financial planning software. Once buried in the thousands of floppy diskettes circulating through banks and major financial institutions, they represent a management minefield of staggering -- and growing -- proportions.

Most insidious is the fact that many of these landmines are as silent as they are deadly. Unlike the computer games of the neighborhood arcade, where driving off the electronic racetrack results in unmistable disaster accompanied by dramatic visual and audible explosions, most spreadsheet errors deliver their half-truths quietly and persuasively, with no warning that the vehicle is now off the course and out of control.

This description may well strike you as a bald exaggeration of the current situation. In reply, we can only observe that, to date, most of these landmines remain unexploded and largely undetected. Miscalculations

While the PC coupled with spreadsheet software has provided managers with a greatly expanded ability to do complex calculations, so has …