Big Data has been around for a while now and there is a big move to manage teams, departments and businesses with dashboards containing the major KPIs (Key Performance Measures) bespoke for that business.
This is all good business practice and we are already doing this with some of our clients and our own business, although it does of course rely on the use of the right KPIs.
There is also another more ‘hidden’ issue to consider and this is how the data is used and calculated. Behind a lot of these dashboards and output is a spreadsheet but the spreadsheet is only as good as the person who has developed it and keyed in the formulas and assumptions.
There have been some high profile and expensive mistakes using spreadsheets. JP Morgan Chase in 2012 had in one case accidentally added two cells in a spreadsheet instead of averaging them and this caused the ‘value at risk’ to be underestimated and resulted in $6bn in subsequent losses!
In another example M&S had to issue a correction to a quarterly trading statement to the stock market when it realised an error in their spreadsheet incorrectly reported group sales were up 1.3% when in fact they had fallen 0.3%
According to the European Spreadsheet Risks Interest Group, which really is an organisation, they estimate of all spreadsheets that contain formula c24% of them have mathematical errors.
It always pays to give the output and the key numbers a sense check to make sure they show what you are expecting them to show, but ultimately it pays to check the detail.