Spreadsheets R Toast

Ivan Schneider, Writer, specializing in financial technology | 1/7/2013 | 21 comments

Ivan Schneider
Spreadsheets were fine in the 1980s -- and at the time, they represented an innovative solution to a wide range of do-it-yourself computing challenges. You could see what you were doing on one sheet, perform calculations, write scripts, and so on.

But the problem with spreadsheets is that the visual presentation constrains our mental picture of the data within a two-dimensional space. Sure, you can add worksheets and "Save as" with last year's data. But once you start adding dimensions to your rows and columns outside what you can comfortably fit on a single screen, you start to lose track of the plot.

You start cutting-and-pasting, there's data everywhere, your formulas become more and more opaque, and before you know it, you're the only one in the world who can understand what you're doing. Rather than audit your work, your supervisors instead begin to trust you, and that's when you might start taking chances with the firm's money. From there, it's not too long before regulators are trying to figure out how your spreadsheet managed to destroy billions of dollars in a bank's market capitalization due to an unsupervised gamble.

A useful concept in programming involves maintaining separate layers. Keep the data away from the business logic, and keep the business logic away from the presentation. Each layer should stand on its own. If you make a change to the data, you shouldn't have to change the business logic, and if you change the business logic, you shouldn't have to change the presentation logic. (Here's a chart from Microsoft that shows how the separation concept works.)

Excel makes it far too easy to keep the data, business logic, and presentation layers in one place. On a single worksheet, you can have some cells containing data, other calculated cells with your business logic, and an adjacent chart acting as your presentation layer. Although there are many ways to do things in Excel, the blank ledger of a new spreadsheet invites people to use Excel in a very specific way, which is also the easiest and most intuitive way, and that is to pile everything into one big scratchpad.

What's more, when it comes to rigorous statistical analysis, there are known issues involved with using Excel. As the ability to perform analytics on large data sets becomes more important, the short-term benefit of ease-of-use gives way to the long-term benefit of learning an environment purpose-built for analytics such as R, a powerful environment for statistical computing.

An analogy:

Modeling data in Excel is like cooking a meal using whatever happens to be in your refrigerator, and then serving up the completed dish to your friends. They may like your cooking, but if they have any questions about whether you used dairy, gluten, shellfish, or peanuts, they're on their own because you don't even know what's in there.

By contrast, using R is like sending someone not only a cooked meal that's ready to be popped into the microwave, but also a full recipe with step-by-step instructions detailing exactly how you made it, plus a grocery bag containing all of the required ingredients should they wish to modify the recipe to their own tastes. Even if you hacked around for hours looking at a dataset from every which way, the precise steps that you took along the way are visible, traceable and auditable. That's good for risk managers as well as people with food allergies.

Certainly, writing a repeatable recipe is more difficult than hacking around in the kitchen until it looks right. However, it's precisely that discipline that underscores the potential benefit of using R in business settings.

Don't let the complexity scare you off. If you work with data, you owe it to yourself and your career longevity to learn this new set of tools. If you're interested in making the switch from the spreadsheet to an interactive development environment for statistical computing, visit the R-Project site, take a course, try this Excel-to-R toolkit, and let me know how it goes.

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DBK   Spreadsheets R Toast   1/23/2013 10:53:16 PM
Re: jeepers!
stotheco - I agree there is still plenty of room for spreadsheets.  The are easily created and cusstomizeed for buinsess applications.  Especially small to mid sized and project based.  Being able to load calculators to generate proposals is key to many existing companies.  It might change at some time but not right away.
singlemud   Spreadsheets R Toast   1/21/2013 10:03:33 PM
Re: about time
I ever used R and Excel. They server on difference purpose. R is good to make math model and analysis. Excel is good for different team communication. Since almost everyone has excel installed on his computer. A graphics excel will be perfect.
Pubudu   Spreadsheets R Toast   1/11/2013 2:11:26 AM
Re: Tinym
Yes, World and Publisher is not god for high resolution professional printing. What I met is compared to PowerPoint World and Publisher is much easier to use.
Susan Nunziata   Spreadsheets R Toast   1/10/2013 10:53:36 PM
I Hope U R Right
Thanks for a great post Ivan. Love this: "You start cutting-and-pasting, there's data everywhere, your formulas become more and more opaque, and before you know it, you're the only one in the world who can understand what you're doing."

In working on research projects, I've been on the receiving end of these. I call it "when good spreadsheets go bad." Not only is it cumbersome, it also interferes with the ability to have historical contiunity of information in your organization. If the person who created that complex spreadsheet is the only one who really understands it, and that person departs, the resulting material ends up being pretty useless.
kstaron   Spreadsheets R Toast   1/10/2013 12:09:15 PM
about time
While I love a good spreadsheet,  Excel has always had some issues, espeically with their mathmatical formulas. And don't even get me started on Works. Being albe to have something that provides tyou with a bit more transparency is almost always going to be helpful. For anyone that has used R over a standard spreadsheet, what are the big differences you feel will make this the new tech?
tinym   Spreadsheets R Toast   1/9/2013 11:05:45 PM
Re: Tinym
I assume people chose these programs because they were familiar. However, Word and Publisher are only slightly better but even those two aren't suitable for high-quality commercial printing.
Pubudu   Spreadsheets R Toast   1/9/2013 1:20:34 AM
Re: Tinym
Tiny; Do you have any idea why they use power point to design latter head and others while they have Microsoft word or Microsoft publisher in new package. What I feel is if someone can work with power point, he will be able to work with other packages also. Microsoft office package is very user friendly office package which use lot of GUI.
tinym   Spreadsheets R Toast   1/9/2013 12:32:28 AM
Re: jeepers!
I would join the movement! Did you know some people use PowerPoint to design their company letterhead and business cards? They expect this stuff to print well on an offset press but it doesn't. I've seen other design work done in Excel as well. Microsoft Office may have easy-to-use tools but they certainly aren't right for every job.
Sara Peters   Spreadsheets R Toast   1/8/2013 10:50:23 AM
Re: jeepers!
@Technocrat  Well said:  "I think Ivan takes it to another level and considers the demands of big data, which I am certain Excel is poorly suited for."  If we're going to keep up with these new demands we need to stop trying to force old tools to handle them. Otherwise we're creating a recipe for large errors at best and large frauds at worst.
Sara Peters   Spreadsheets R Toast   1/8/2013 10:42:12 AM
Re: jeepers!
@Ivan  Fascinating. Maybe we should get those people in the Anti PowerPoint Party to start a political movement against Excel too.
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