Issuing a request for proposal (RFP) requires collaboration between internal departments and external organizations — and managing all of the information that passes between people can get complicated.
Many organizations turn to Excel to help track and manage this process … but too often that brings more problems than solutions.
“We were sending out RFPs in Excel documents,” explained Mark Rieder, SVP of HR technologies and benefits administration at NFP. “The whole process was so piecemeal it made it very difficult to bring the results together in an easy-to-compare way.”
And Mark’s experience isn’t unique.
Below, we explain four of the biggest dangers of relying on Excel for this crucial business process.
Risk #1: Human Error
Using Excel comes with a high risk of human error. In fact, Forbes once wrote an article suggesting Microsoft’s Excel Might Be The Most Dangerous Software On The Planet.
In the article, Forbes explains how an erroneously entered equation in Excel cost investment bank JP Morgan several billion dollars.
JP Morgan, was running huge bets (tens of billions of dollars, what we might think of a golly gee gosh that’s a lot of money) in London. The way they were checking what they were doing was playing around in Excel. And not even in the Masters of the Universe style that we might hope, all integrated, automated and self-checking, but by cutting and pasting from one spreadsheet to another. And yes, they got one of the equations wrong as a result of which the bank lost several billion dollars (perhaps we might drop the gee here but it’s still golly gosh that’s a lot of money). [Emphasis added.]
Risk #2: Lack of Accountability
Making matters worse, when employees do make mistakes using Excel, it’s almost impossible to find out who exactly made the mistake.
An article detailing how an Excel error cost Tibco and Goldman $100 million — and led to a lawsuit — highlights this issue.
“Upon further examination, Tibco and Goldman discovered a key document – a spreadsheet – had overstated the number of fully diluted shares. This dreadful situation meant that the implied equity consideration was $4.14 billion instead of $4.24 billion. Moreover, this spreadsheet error led to a miscalculation of Tibco’s equity value, a $100 million savings for Vista, and a slightly lower payment to Tibco’s shareholders. The mystery regarding who created the $100 million spreadsheet error has yet to be solved.” [Emphasis added.]
Risk #3: Poor Information Security
The most common way teams collaborate using Excel is to email the spreadsheets back and forth. Unfortunately, this practice can lead to private information landing in the wrong hands.
The same article that details how Excel landed Tibco and Goldman in hot water explains how emailing Excel spreadsheets led to disaster for Schwab Retirement Plan Services (SRPS).
“A spreadsheet containing personal information belonging to participants in a company-sponsored retirement plan serviced by SRPS was accidentally emailed through a secure channel to a participant in another retirement plan serviced by SRPS. Included in the spreadsheet were the names, addresses, dates of birth, Social Security numbers, dates of termination (when applicable), employment statuses, division codes, marital statuses, and account balances for each of the 9,400 participants.” [Emphasis added.]
With privacy concerns at the top of everyone’s mind, this isn’t an issue your organization can afford to ignore.
Risk #4: Wasted Time
Every hour your employees spend working in Excel is an hour they can’t spend working on something that’s of real value to your company … and managing RFPs in Excel is often very time-consuming.
At ihouse, the RFP team used to spend hours poring through Excel spreadsheets just to ensure the information was accurate.
“When using an Excel template, we would have to go through each category to ensure there were no errors from all the copy and pasting,” said Ronni Beckwith, Principal, HR technology consulting practice leader at the consulting firm. “The Excel formulas would often break in the process. It took a lot of time to reconcile.”
At NFP, Mark and his team spent hours copying and pasting information vendors submitted into the appropriate Excel file.
“Their answers would be so long they couldn’t fit [in Excel], so they’d end up submitting proposals in Word documents,” Mark said. “Combining everything into Excel was incredibly time-consuming,”
How To Automate Your RFP Process
RFP360 is an automated, end-to-end RFP management software that can remove these concerns.
According to Ronnie at ihouse, who previously used Excel to manage RFPs, “RFP360 is much faster” and “the new electronic process ensures full transparency. If there’s ever a question about how we came to a decision about a selection, we have a full record of the event.”
Eric Hollenbach, project analyst at Lockton touted the increased accuracy of information.
“I have more confidence in our information now,” he said. “Not having to manually compute Excel matrices not only saves a lot of time, but it also means more data integrity.”