Spreadsheets and Long Term Corporate Survival

This talk by Grenville Croll focuses on the question whether the use of spreadsheets has an advantage to an individual or a company. A very interesting line of thought. He gathered this idea from a PhD thesis by F. MacMillan that did a comparable analysis for decision making software.

Since he ran a company that sold spreadsheet analysis software, he has a large database of companies. Those companies were placed into different categories, based on an expressed interest in, or a purchase of a spreadsheet related product. This rank is an indication whether a company was using spreadsheets and what theyw ere doing to mitigate the risks.

He combined this data with data from the UK companies house, that registered whether companies are still in existence. His results show that companies that used @Risk (a monte carlo add-in) have a better chance of surviving (68%) versus 55% of companies that were not using it.

Also the intensity of ESP products seems to relate to the chances of survival for a company. According to the author this finding gives credibility to the hypothesis that spreadsheet risk issues affect company success in the long run. There were many questions from the audience debating the applicability: for instance, the fact that a company stops existing might also be caused by a name change, a merger or an acquisition, rather than a bankruptcy, or the fact that the data only includes bigger companies. Despite this, I believe the analysis done is fun and relevant, and a great attempt to research the real impact of spreadsheet use.

 

 

 

1 Comment

  1. Grenville Croll

    Hi Felienne

    Thanks for the prompt write up. I have incorporated and acknowledged delegate feedback from the EuSpRIG 2012 conference – great to meet you there by the way! – in the final version now posted on http://arxiv.org/abs/1207.1921

    Steve Kraynak from Microsoft pointed out that one of the most important results in the experiment was the constancy of the survival rates in the control samples across the six differing types of company and individual. This means that other factors which could potentially have an effect on the result did not have any effect – else we would have seen some significant variation across the differing groups.

    Another important issue raised was the effect of corporate acquisitions. This is covered as above, however it is worth mentioning that any corporate acquirers who were also UK Ltd companies must have been included in the population from which the data was sampled.

    I’m looking for ideas as to how to follow this study up, so suggestions are most welcome

    Much enjoyed your paper too!!

    Regards

    Grenville

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