Michael Alexander - Excel Power Pivot & Power Query For Dummies

Years of consulting experience have brought this humble author face to face with managers, accountants, and analysts who all have had to accept this simple fact: Their analytical needs had outgrown Excel. They all faced fundamental challenges that stemmed from one or more of Excel’s three problem areas: scalability, transparency of analytical processes, and separation of data and presentation.

Scalability is the ability of an application to develop flexibly to meet growth and complexity requirements. In the context of this chapter, scalability refers to Excel’s ability to handle ever-increasing volumes of data.

Imagine that you’re working in a small company and using Excel to analyze its daily transactions. As time goes on, you build a robust process complete with all the formulas, pivot tables, and macros you need in order to analyze the data that is stored in your neatly maintained worksheet.

As the amount of data grows, you will first notice performance issues. The spreadsheet will become slow to load and then slow to calculate. Why does this happen? It has to do with the way Excel handles memory. When an Excel file is loaded, the entire file is loaded into RAM. Excel does this to allow for quick data processing and access. The drawback to this behavior is that every time the data in your spreadsheet changes, Excel has to reload the entire document into RAM. The net result in a large spreadsheet is that it takes a great deal of RAM to process even the smallest change. Eventually, every action you take in the gigantic worksheet is preceded by an excruciating wait.

Your pivot tables will require bigger pivot caches, almost doubling the Excel workbook’s file size. Eventually, the workbook will become too big to distribute easily. You may even consider breaking down the workbook into smaller workbooks (possibly one for each region). This causes you to duplicate your work.

In time, you may eventually reach the 1,048,576-row limit of the worksheet. What happens then? Do you start a new worksheet? How do you analyze two datasets on two different worksheets as one entity? Are your formulas still good? Will you have to write new macros?

These are all issues that need to be addressed.

Of course, you will also encounter the Excel power customers, who will find various clever ways to work around these limitations. In the end, though, these methods will always be simply workarounds. Eventually, even these power customers will begin to think less about the most effective way to perform and present analysis of their data and more about how to make data “fit” into Excel without breaking their formulas and functions. Excel is flexible enough that a proficient customer can make most things fit just fine. However, when customers think only in terms of Excel, they’re undoubtedly limiting themselves, albeit in an incredibly functional way.

In addition, these capacity limitations often force Excel customers to have the data prepared for them. That is, someone else extracts large chunks of data from a large database and then aggregates and shapes the data for use in Excel. Should the serious analyst always be dependent on someone else for their data needs? What if an analyst could be given the tools to access vast quantities of data without being reliant on others to provide data? Could that analyst be more valuable to the organization? Could that analyst focus on the accuracy of the analysis and the quality of the presentation instead of routine Excel data maintenance?

A relational database system (such as Access or SQL Server) is a logical next step for the analyst who faces an ever-increasing data pool. Database systems don’t usually have performance implications with large amounts of stored data, and are built to address large volumes of data. An analyst can then handle larger datasets without requiring the data to be summarized or prepared to fit into Excel. Also, if a process ever becomes more crucial to the organization and needs to be tracked in a more enterprise-acceptable environment, it will be easier to upgrade and scale up if that process is already in a relational database system.

One of Excel’s most attractive features is its flexibility. Each individual cell can contain text, a number, a formula, or practically anything else the customer defines. Indeed, this is one of the fundamental reasons that Excel is an effective tool for data analysis. Customers can use named ranges, formulas, and macros to create an intricate system of interlocking calculations, linked cells, and formatted summaries that work together to create a final analysis.

So what is the problem? The problem is that there is no transparency of analytical processes. It is extremely difficult to determine what is actually going on in a spreadsheet. Anyone who has had to work with a spreadsheet created by someone else knows all too well the frustration that comes with deciphering the various gyrations of calculations and links being used to perform analysis. Small spreadsheets that are performing modest analysis are painful to decipher, and large, elaborate, multi-worksheet workbooks are virtually impossible to decode, often leaving you to start from scratch.

Compared to Excel, database systems might seem rigid, strict, and unwavering in their rules. However, all this rigidity comes with a benefit.

Because only certain actions are allowable, you can more easily come to understand what is being done within structured database objects such as queries or stored procedures. If a dataset is being edited, a number is being calculated, or any portion of the dataset is being affected as part of an analytical process, you can readily see that action by reviewing the query syntax or the stored procedure code. Indeed, in a relational database system, you never encounter hidden formulas, hidden cells, or dead named ranges.

Data should be separate from presentation; you don’t want the data to become too tied into any particular way of presenting it. For example, when you receive an invoice from a company, you don’t assume that the financial data on that invoice is the true source of your data. It is a presentation of your data. It can be presented to you in other manners and styles on charts or on websites, but such representations are never the actual source of the data.

What exactly does this concept have to do with Excel? People who perform data analysis with Excel tend, more often than not, to fuse the data, the analysis, and the presentation. For example, you often see an Excel workbook that has 12 worksheets, each representing a month. On each worksheet, data for that month is listed along with formulas, pivot tables, and summaries. What happens when you’re asked to provide a summary by quarter? Do you add more formulas and worksheets to consolidate the data on each of the month worksheets? The fundamental problem in this scenario is that the worksheets actually represent data values that are fused into the presentation of the analysis.

The point being made here is that data should not be tied to a particular presentation, no matter how apparently logical or useful it may be. However, in Excel, it happens all the time.

In addition, as discussed earlier in this chapter, because all manners and phases of analysis can be done directly within a spreadsheet, Excel cannot effectively provide adequate transparency to the analysis. Each cell has the potential to hold formulas, be hidden, and contain links to other cells. In Excel, this blurs the line between analysis and data, which makes it difficult to determine exactly what is going on in a spreadsheet. Moreover, it takes a great deal of effort in the way of manual maintenance to ensure that edits and unforeseen changes don’t affect previous analyses.