The risks of Excel:Source: http://www.audinator.com/Horror_Stories.html

“Microsoft Excel is one of the greatest, most powerful, most important software applications of all time.”

(Excel) provides enormous capacity to do quantitative analysis, letting you do anything from statistical analyses of databases with hundreds of thousands of records to complex estimation tools with user-friendly front ends. And unlike traditional statistical programs, it provides an intuitive interface that lets you see what happens to the data as you manipulate them.

As a consequence, Excel is everywhere you look in the business world—especially in areas where people are adding up numbers a lot, like marketing, business development, sales, and, yes, finance.

But while Excel the program is reasonably robust, the spreadsheets that people create with Excel are incredibly fragile. There is no way to trace where your data come from, there’s no audit trail (so you can overtype numbers and not know it), and there’s no easy way to test spreadsheets, for starters. The biggest problem is that anyone can create Excel spreadsheets—badly. Because it’s so easy to use, the creation of even important spreadsheets is not restricted to people who understand programming and do it in a methodical, well-documented way.

The following extract is from:

Source: http://iss.leeds.ac.uk/info/311/spreadsheets/208/overview_of_spreadsheets/1

IntroductionSpreadsheets are still the most popular PC software in the world. In 1977 the first personal computer, the Apple II, was produced. One year later the first spreadsheet, Visicalc, was produced and became a runaway success. People bought the Apple II in order to use Visicalc. In 1981 IBM produced their first PC, and with it came Lotus 1-2-3. Lotus quickly overtook Visicalc in sales and went on to become the most popular applications software in the history of computers. The early success of the Personal Computer has been largely attributed to its use with spreadsheets.

Spreadsheet Fundamentals

What is a Spreadsheet?A spreadsheet is a tool for working with and analysing numerical data. In structure it consists of a grid of rows and columns, rather like a large sheet of graph paper. Each row is numbered, usually from 1 to about 8,000, and each column is labelled by a letter. The sequence of letters is usually A to Z, then AA, AB, AC... and so on. A typical spreadsheet is shown in Figure 1.

Figure 1 Spreadsheet Fundamentals.

This is the basis of it. It is from this simple structure some very complex and powerful calculations can be performed.

At the intersection of any column with any row you get a cell. A cell is like a box that has a label and contains information. The label of the cell is called the cell reference or cell address and this is derived from the cell's column letter and the row number. So, a cell in column C and row 3 has the cell reference C3.

The Structure of a SpreadsheetFor the computer a spreadsheet contains two layers. The storage layer and the display layer. The storage layer contains the information in the spreadsheet as it is stored by the computer in the spreadsheet file. The display layer is what you actually see on screen.

The Storage Layer

Every cell can contain one of three types of information:

1. Numbers 2. Text 3. Formulae

Each type of information is identified by the starting letter: a number starts with a number; a piece of text starts with a letter or some other character; a formula starts with either a number or a special symbol, typically '+' or '='.

The Display Layer

The display layer does two things between the data that is in the storage layer and what is presented to you on screen. Firstly the display layer performs any calculations from the storage layer and displays the results. Secondly it formats the raw information it displays. The format of a cell affects only how the cell is displayed, but it does not affect the contents of the cell. Thus the number .05 can have a number of different formats (or meanings) depending on

what it represents to you. For example it can be £0.05, 5% or 0.0500 depending on whether the figure relates to money in the bank, the inflation rate or the result of an experiment. Similarly the word "Label" can be displayed in a variety of fonts, font styles, colours or background shading.

As far as the spreadsheet program is concerned a number, or a piece of text, is stored in the same way in every case because all the calculations or text operations will be the same with it. However you can display it differently so that it is more meaningful to you and other people who need to read your spreadsheet.

The Content of a SpreadsheetNumbers

The basic element of every spreadsheet is numbers. If you have no numbers then you do not need a spreadsheet. However, your numbers may mean different things.

As mentioned above, any number you type into a spreadsheet will be stored in the same way, no matter what it refers to. So the result of a scientific calculation will be stored in the same way as a figure relating to a budget proposal. This is fine as far as calculations are concerned, but it does not make the spreadsheet easy to read. Therefore most spreadsheets have the ability to display numbers in different ways. Typically there are fixed formats (normal numbers with a fixed number of decimal places), scientific notation, currency and commas (to delimit 1,000's). All these formats are for display purposes only, but they are important in making your spreadsheet clear to yourself and other readers.

Text

You could have your spreadsheet just filled with numbers and calculations, and it would still do the job for you perfectly well. However, if you have a mistake in your calculations, or you need to edit the spreadsheet, or more important someone else needs to look at your spreadsheet, then screens and screens full of numbers are not very informative.

Text in a spreadsheet is used mainly for labelling and annotating the numbers so that you know what the numbers refer to. Most spreadsheets also have some simple database capabilities, including searching and sorting, and here the text itself is important. Text is always important when it comes to presenting your numbers and calculations to other people. Most spreadsheets therefore allow you to present your text in a variety of typefaces, sizes and styles to add visual impact to a presentation.

Formulae

Spreadsheet cells can contain formulae instead of text or numbers. When a formula is entered into a cell then the result of the formula is displayed rather than the content. You could have a formula entered into a cell that just says, for example, '2+2'. The cell would display '4' as the result of the calculation, but the cell contents are still in fact '2+2'. Every spreadsheet package has a command line outside the main spreadsheet area that displays the contents of the cells. The command line is also referred to as the formula bar and it represents the storage layer of

the spreadsheet. The grid area of cells is called the workspace and it displays the results of any calculations plus any formatting, so it represents the display layer.

A formula can also be made up of references to other cells. This means that we can set up a system of cascading calculations where the result from one cell can be fed into the formula of another. A typical formula can look something like this:

+C3+C4

What this means is "Add the contents of cell C3 to the contents of cell C4 and display the result in the current cell". A formula involving cell references has to start with a special formula symbol to tell the spreadsheet that this is a formula rather than something else. This is necessary because you want to allow for the occasions when a column heading might also be a cell reference. For example, if you were entering in data about different British roads you may want a column heading saying 'A1'. The spreadsheet needs to know that this A1 is a label (referring to the A1 road between London and Edinburgh) and not a reference to the cell A1.

The Basic Operation of a SpreadsheetThe spreadsheet has a number of advantages over other methods of performing numerical calculations. Let's take the simple example of a shopping list, as shown in Figure 2.

Figure 2 A Spreadsheet Used With A Shopping List.

Some advantages are immediately obvious. Firstly, all the numbers are visible and can be checked for errors and corrected - unlike a calculator where the number disappears as soon as you perform the calculation. Secondly you can label the numbers with some text to identify what the numbers relate to.

The calculation is set up the with the result appearing at the bottom of the column. This in itself is not much of an advance on any other calculating mechanism. However, if you change one of the numbers in the calculation - say the price of sausages - then as you press the key to enter that number into the spreadsheet you will find that the calculation is performed again automatically and the new total arrives. This is illustrated in Figure 3.

Figure 3 Recalculating Totals.

This is probably the biggest reason why spreadsheets are so useful. You set up the calculation to happen automatically and then you can play around with the figures to see what results you get. This is the basis of what is termed What-If Analysis or Sensitivity Analysis that underlies a lot of financial prediction and mathematical modelling work.

FunctionsThe calculations that a spreadsheet can perform are further enhanced by a large range of functions. These functions often work on a number of cells together to produce a single figure result. A typical example is the SUM function that adds up all the cells in the range you specify.

For example, we used the formula +C3+C4+C5+C6+C7+C8 to add up the column of figures in our shopping list. Instead of writing that formula in we could have written the function =SUM(C3:C8) and this would have produced the same result whilst being a lot quicker to write and easier to understand.

These functions are the power tools for successful spreadsheet work. Using functions it is possible to build up very complex calculations step by step. In advanced spreadsheet programs you will find the basic set of functions augmented by functions to use the spreadsheet as a database; or statistical functions that allow you to do regression, t-tests and analysis of variance, Fourier Analysis or some engineering calculations.

GraphsIt is often quoted, "A picture is worth a thousand words" and this becomes very true when you are confronted with a large table of numbers. Although you know these numbers mean something, their physical quantity makes it difficult to pick out any patterns you may want to identify. It is for this reason that graphing facilities are now considered essential. They are able to provide an instant visual overview of your data - they help spot any differences in a set of values - or a trend that one or more sets may be indicating.

For example in 1976 a survey of Academic Staff grades related to sex was performed. The summary table of result is as follows:

Figure 4 University Academic Staff in the UK by Grade (1976).

From the raw figures it is clear that in each category there are more male than female employees. However, what is not clear is whether this percentage is maintained over the grades, or whether it changes as the grades get higher. If we plot the results on a 100% stacked column chart then the pattern becomes clearer, as shown below.

Figure 5 Graphic Representation Of The Staff Grade Table.

The graph shows us that there is a much higher percentage of female employees in the lower grades than in the upper grades, but that overall academia was very much a male preserve in the mid-1970s. Precisely why this should be so is perhaps a matter for debate.

Presentations and FormatsThe spreadsheet's role in processing data and drawing graphs has meant it has developed into a tool for presentation as well as for analysis. …Such drawing abilities may include the ability to draw lines on the spreadsheet to separate titles from data, or to point an arrow at particular figures for emphasis. The formatting abilities should include the ability to put different cells of data in different fonts and the ability to italicise or embolden text for emphasis. Even simple features such as these can make a big difference to the readability of a spreadsheet when you come to present your data to someone seeing it for the first time.

The Spreadsheet as a DatabaseAlthough spreadsheets are designed to work mainly with numbers, in real life you are not just working with numbers but textual data as well. This has lead to the development in many

spreadsheets of the ability to act as a simple 2 dimensional, or flat-file, database. Although they are often not as easy to use as a specialised database package they are adequate for simple tasks. More importantly, the database functions that the spreadsheets supply can be very useful in searching and sorting data in a spreadsheet.

Spreadsheet EditingWith any computer program it is important to be able to edit the information easily. Spreadsheets must allow you to change the numbers in a cell, alter a formula or edit a piece of text - i.e. alter the content in the storage layer. You need also to be able to alter the display format of any of the cells - i.e. alter the display layer.

Editing of a spreadsheet is done on discrete units of the spreadsheet known as ranges. A range is defined as any rectangular block of cells. The smallest range is a single cell, the largest the whole spreadsheet. The important point is that the range must be rectangular, so for example you cannot have an 'L' shaped range.

Just as you can move words and paragraphs around in word-processors, you can move cells around in spreadsheets. This is especially useful if having typed in all your numbers you then discover that you haven't left any room for titles and need to move the whole block down the spreadsheet a little. The task is usually accomplished by selecting the range of cells you want to move and then performing a Move command. An alternative to using the move command might be to insert blank rows or columns at the top of your spreadsheet to create the necessary space.

Spreadsheet editing abilities cover more than just altering what is already in the spreadsheet. In many cases there are editing functions that speed up the entry of information or the setting up of formulae in a worksheet. For example, say we are setting up a series of calculations for the sales of a product over three months. The example spreadsheet is shown below.

Figure 6 Editing A Spreadsheet.

To total up all the months we might have to write the following formulae[1] in column F:

F2 @SUM(B2.E2)

F3 @SUM(B3.E3)

F4 @SUM(B4.E4)

To save us typing these formulae individually every spreadsheet has a copycell or autofill procedure. The way this works is that you enter the formula into one cell, say F2. You then copy that cell to the other two below it. Now you would expect the other two cells to read exactly the same as F2, but instead the spreadsheet will recognise the formula and translate

the cell references B2 and E2 to become B3.E3 or B4.E4, depending which row number the formula is in. Thus instead of writing out nearly identical formulae into each cell you just write it out once and copy it. The spreadsheet deals with the cell references relatively and alters them accordingly. What about the situation where you want a cell reference to stay the same when you copy it. Say you wanted to add VAT (Value Added Tax, similar to GST) to all the figures in the sales spreadsheet. It would make sense to put the value of VAT into just one cell and reference it. Then when VAT changes we only have to change the value in one cell, not in every cell containing a VAT calculation. Say we place VAT in cell G1, and set up a formula to calculate Totals + VAT in the column H. The first formula in H2 would read +F2*G1. If we copied it down then the next formula would read +F3*G2 because it would be copied relatively. In order to 'fix' a cell reference and make sure it isn't altered we have to make it an absolute reference. In most spreadsheets this is done by placing $ signs in front of the column and row reference.

Therefore the formula in cell H2 will now read +F2*$G$1. When copied down the column the reference G1 (represented by $G$1) will be kept so the next line will read +F3*$G$1

Some spreadsheets can also fill out a series of numbers or dates, so that if you place the value 1 in a cell and use an autofill command to copy it across a range of cells, then the spreadsheet will automatically create the series 1,2,3,4,.. in the subsequent cells. In more powerful spreadsheets you can have more complex series where you enter the first two or three cells and the spreadsheet automatically calculates the rest of the series. Some spreadsheets will fill in the days of the week, months of the year or quarters if you give the starting word (e.g. Mon, Jan, Quarter 1). The most advanced products will let you define your own Autofill sequence.

Naming RangesThe system of referencing cells by their row and column is a very efficient one but in practice can make using a spreadsheet that someone else has set up quite difficult. It would be far easier to work with sensible English names rather than obscure codes. For example, the following two formulae may mean the same, but which one makes most sense to you?

=D17*$G$1

=Cost*VAT

To achieve this readability, most spreadsheets allow you to name a cell or a range of cells. You can then use this name instead of the cell reference in formulae. So, in the above example where the cell G1 contains the VAT rate (currently 17.5%) we can either refer to the 17.5% using the cell reference, G1, or we can name the cell 'VAT' and use that. It means that when other people read our calculations, or when we read them again later, it will be obvious immediately what is going on without having to actually look at cell E7 to see what it contains.

It is also possible to name whole ranges. If you have a table of expenditure where one column contains all the individual costs for, say, books, you can name that column range 'Books'. Then at any point on the spreadsheet you can use that name instead of the range it refers to. Again, consider which of the following makes more immediate sense:

=SUM(W67:W99)

=SUM(Books)

By careful naming of ranges and individual cells you can create spreadsheets that read a lot more like English, and a little less like Assembly language.

Spreadsheet DesignMany people look at the simplicity of a spreadsheet and just start typing numbers in. However the very fact that the spreadsheet is simple and flexible means that you have to think and plan it before you start your real work. Many people think that the planning stage of any project is a waste of time when they want to get on with some tangible work. However, by properly planning your spreadsheet you can save yourself a lot of effort later and make the sheet much more readable to yourself and anyone else.

Basic CharacteristicsThere are a few fundamental rules to spreadsheet design: if they are not obeyed the result will be, at best, a difficult spreadsheet to use or, at worst, a spreadsheet producing erroneous results. One USA company once lost $2 million because of an incorrect spreadsheet. Therefore every spreadsheet you produce should have the characteristics listed below.

AccuracyIf the numbers in your spreadsheet, or the calculations you set up, are simply wrong then the results and your conclusions will be wrong. This is a simple case of GIGO (Garbage In = Garbage Out).

Clarity

As mentioned above, if you need to present your spreadsheet to someone else, then they must be able to see quickly what the numbers are and how the results have been achieved. Also, if you need to edit your numbers yourself, you need to be able to see quickly and easily what the numbers relate to and what you need to change.

Flexibility

Will you want to change the spreadsheet design at any time? Is it being set up to solve one problem or are you developing it as you work at the problem? Are you setting the spreadsheet up to solve a sequence of similar problems? A spreadsheet that is flexible so that it can be easily changed is well worth having.

Efficiency

Some spreadsheets can be laid out to minimise the time it takes to number crunch the calculations. If you have a very large spreadsheet then this may be worth while looking at. However, it is probably more worthwhile to look at how easy the spreadsheet is to use for yourself. Can you find the areas you want to work on easily? Is entering the data a fairly simple process? Maximising the efficiency of the spreadsheet operator is important if the spreadsheet is to be used a lot.

Auditability

The results that the spreadsheet produces are only as good as the numbers and the calculations that produce them. Is it easy to prove to someone else that you have got your calculations right in the spreadsheet. If an error did occur would you be able to locate it quickly. When you design your spreadsheet make sure that you either know, or can easily find out, what is going on in the spreadsheet at any stage.

Table 1 Spreadsheet Characteristics.

LayoutThe idea of INPUT - PROCESSING - OUTPUT which underlies the "Garbage In = Garbage Out" principle is a good basis for starting your design. You therefore need an area of your spreadsheet that deals with the input, an area that deals with the calculations and an area that deals with the resulting output. On top of this you will want an area to identify what the spreadsheet is, an area to document what the spreadsheet does, and finally an area for any macros you may have written for the spreadsheet.

Every spreadsheet design should have up to six separate areas for the different information. These areas are:

Identification Area

This identifies the title of the spreadsheet, the person who created it, what the spreadsheet was created for, the date of creation and the date the spreadsheet was last altered. Every spreadsheet, no matter how simple, should have an identification area.

Documentation Area

This should describe the spreadsheet in more detail, including details of all the calculations if necessary. In a simple spreadsheet this area may not be big, or even needed at all, but in large or complex spreadsheets it is crucial if you are to be able to come back to the spreadsheet after a few months.

Input Area

This is where the initial data should go. Any constants or controlling parameters you wish to use should go in this area.

Work Area

This is the area that performs the calculations. If possible the calculations should be annotated with comments to explain what they are doing. It is worth setting your calculations out as a series of simple calculations rather than trying to do everything in one huge cell formula - it makes them much easier to read and even easier to check for errors.

Output Area

This area displays the results. It is sometimes convenient to place the input and the output areas next to each other so that you can see the effect on the output of changing a parameter in the input.

Macros Area

Complex spreadsheets may have a set of macros attached to them which are saved on the spreadsheet along with everything else. You will need an area in which to store them, as well

as space to annotate the macros with comments explaining what they do. Documentation is especially important here as most macro languages are difficult to read.

General RulesFirst a few general rules about spreadsheet design. A spreadsheet normally looks the same no matter what area of it you are looking at, so it is important that you know where all your data is and how you can navigate your way to it easily. For this it is useful to sketch out your design on a piece of A4 graph paper. Divide the paper up into sections, label each section as to what it contains and give the cell references that delimit the areas on the spreadsheet. It is also helpful to have a table of contents for your spreadsheet - what it contains and the range of cells that each item is held in - as this is useful for auditing your spreadsheet later.

Navigating around a spreadsheet can be done either along the rows (or down the columns), or else in pages (screenfuls). The pages method is often the most convenient and the quickest so it makes sense to organise your data on the screen so that comprehensible chunks can be viewed on a single page, or a screen, at a time. This may mean leaving odd columns or rows blank in order to group the data properly, but this is worth it for everyday use

Due to the unexciting nature of spreadsheet interfaces, in reality there are only really three major design ideas that you can employ, namely block design, linear design and multisheet design.

Block Design

This sort of design is ideal for small spreadsheets, and is also very popular with novice spreadsheet users. Everything is positioned as near to the top left hand corner as possible, as shown below.

Figure 7 A Representation Of A Block Design.

The advantage is that just about everything is visible on the one screen. The disadvantage is that this design is not at all flexible, and you would have to do some awkward moving around with areas to expand the identification, documentation or work area.

Linear Design

The linear design is overall much better as it allows for expansion of any of the areas and is often more efficient for the computer when calculating.

Figure 8 Representations Of Linear Design.

Which of the two directions you choose is up to you. The vertical design is far more like the way you would lay out the problem on a word processor. The horizontal design means that you can format whole columns to the correct width for the information they contain as that will be the same the whole way down the spreadsheet. It also allows for easy downward expansion.

Multisheet Design

Many spreadsheets allow you to make links to other spreadsheets; others - the majority these days - are called "three-dimensional spreadsheets" in which several worksheets are incorporated into one spreadsheet file. The speed of these links varies from getting instantaneous results to a significant delay. If speed is not a problem then it can be useful to put different items on different spreadsheets and have one spreadsheet as the summary data. The conceptual model might look like this:

Figure 9 Multiple Spreadsheet Work.

Alternatively, you could have one sheet for your documentation, one with your input and output side by side and a third in the background doing the actual calculations. As a general rule, multiple worksheets are easier and quicker to work with than one huge spreadsheet, so if you can use a number of small worksheets then this is advised.

Appendix 2 Spreadsheet ChartsBar Chart

This shows the numerical differences between various categories of data. Each row or column of the spreadsheet appears as a set of bars with the same pattern or colour.

Stacked Bar Chart

Here the bars are stacked on top of each other to give you a cumulative total for each category as well as the differences between the series.

100% Bar Chart

The bars are all stretched to be the same length in order to show what percentage each bar is of the total.

Line Chart

This type of graph is good for showing trends or changes in data. Each line represents a row or column from your spreadsheet of data.

Area Chart

This is a line chart where the lines are 'stacked' to show the total in each category. The change in the total can then be viewed. Here the graph is the same data as above but the lines are cumulatively stacked. Thus the value for any one point is the distance between itself and the point directly below.

Hi-Lo Close Chart

This type of graph shows the range between high and low values within one category. It is useful to show error bars on charts of data, or to show the spread of data around a line of best fit.

Pie Chart

This type of chart is best if you want to show the percentage breakdown. Each pie slice represents an individual value; the whole pie represents one spreadsheet column or row.

X-Y Chart or Scattergram

This type of graph shows numerical values from the spreadsheet along both X-axis and Y-axis. Each marker represents the relationship between the X and Y values.

Appendix Excel Functions And GraphsExcel has over 300 basic functions and 12 basic graph types. On top of this Excel has some prebuilt macros to perform complex analyses, and each graph type has an average of 6 variants. To detail all these here would be impractical, so here are some examples of what Excel can do in terms of graphs and macro functions.

FunctionsExcel has the following range of functions:

Database Date and Time External Engineering Financial

Information Logical Lookup and reference Math and trigonometry Statistical Text and data

Excel has a number of what are called 'add-in' functions that do more complex tasks. These are really an associated macro library of complex calculations for specific tasks.

GraphsBelow are some examples of the sort of graphs one can produce with Excel.

3D Column Graph

This is a three dimensional graph in that you can have two category axes and one value axis. You can also add perspective tilts (as shown) and alter the angle from which you view the graph. It should be noted, however, that these types of graphs are actually less clear than a normal 2D column chart.

Graph with Trendline

Excel can add regression trendlines to ordinary graphs to help show where the data is going. Excel will even display the regression equation if required.

Contour Graph

Excel can produce a crude contour graph which is an extension of the 3D area graph. The colours merely represent values on the value (vertical) axis, so the graph is still only three-dimensional.

Enhanced Graphs

Here a column chart has been enhanced by the addition of some clip-art pictures to represent values instead of colours or patterns. These do not show any more information but can add some interest to a presentation.

Source: http://iss.leeds.ac.uk/info/311/spreadsheets/208/overview_of_spreadsheets/1