Spreadsheet assets

Tom Grossman made a great comment at Eusprig this year.

He pointed out that if a person who costs 200k USD a year (which is a salary in the region of 40-50k GBP (100k USD) plus overhead type costs), if such a person spends 3 months building a spreadsheet, then the organisation has an asset valued at 50k USD (25k GBP) (on a historical cost basis). Many exec level cars are assets of this kind of value. Consider the different level and type of maintenance and management those 2 assets get.

Great observation I reckon, what do you think?

 cheers

Simon

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3 Responses to “Spreadsheet assets”

  1. Harlan Grove Says:

    US$200K total remuneration plus benefits and payroll taxes generally means someone who isn’t going to be spending 3 months full time developing a spreadsheet model.

    If you mean documentation and maintenance are usually lacking for most if not all in-house applications, you’re right (sad but true). However, it’s not just spreadsheets.

  2. Ross Says:

    Humm, but the car is used to 100k mile then sold for 40/50% of cost? How many spread sheets get sold? Of course that’s not a good comparison, because only 1 person can drive the can, but many can use the SS. And a ss can add value to a org, where are car cant. But no one is going to move or stay at your company because it offers them a nice spreadsheet, etc etc. I don’t think the comparison is a fair one really, although the numbers fit nice and I see the point he’s making about asset value and upkeep cost, not sure if it’s fair that’s all.

  3. Kath McGuire Says:

    Hi Simon et al,

    I too really liked this analogy.

    And I don’t think that the numbers matter too much, think of the cost to the business in of all of the business critical spreadsheets and compare that with some fixed asset you can look at and touch and scratch!

    I like the analogy because it works in a different ways. You would control unauthorised access to an physical asset so as to not let people damage it (this clearly does not happen with spreadsheets), and you would spend money on maintaining the physical asset, understanding that if you don’t look after it it will become less effective and less valuable. This also does not happen with spreadsheets.

    The analogy will of course have limitations (a spreadsheet does not have a steering wheel), but that’s not what’s important. What’s useful is the insights that can be gained from the similarities not the differences.

    If many businesses cared as much about their spreadsheets (or data-related assets) as they do about their cars, then we might have a little less to talk about at next year’s conference!

    :)

    Kath

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