Insights for Procure-to-Pay and Finance Leaders

Innovators and Troublemakers: how the electronic spreadsheet was created

Our industry often focuses on the here-and-now, but there’s a rich history of innovators and troublemakers who’ve reshaped the world of trade. Their creations turned the world of trade on its head and reshaped entire fields of industries.

Welcome to the first in our new series telling the personal stories behind some of the most important inventions in finance, trade and technology — and a few tales about some troublemakers. To kick things off, here’s the story behind the advent of the electronic spreadsheet and the men who created it.

Paper days

Prior to 1979, creating a spreadsheet was a nightmare. Quite literally, a “spread sheet” was a sheet you spread out on a large table. It was a handwritten or printed blank table and you had to manually enter every number and equation into it.

Let’s go back in time for a second. Imagine you’re working with a cheese company and they want to know how much money they can earn selling string-cheese for 20 cents more than they have been. You get to create a spreadsheet on 11×17 paper — maybe a few of them taped together if one isn’t big enough — and lay it out on your big old table. Then, you set to work calculating the numbers. This could take you hours and maybe days. You have to do all the math and arithmetic and then double check that every cell has the right information. If there’s a mistake, get out that old manual eraser and fix it.

Boring, right?

Then, when you’re all done and you present it to your client. Let’s say they like your work but not your numbers. They ask you to recalculate them using 30 cents instead of 20. You’re exhausted, you’re furious, and you have to start all over again.

The dawn of the new spreadsheet era

Enter Dan Bricklin. The year is 1978 and he’s daydreaming in his accounting class at Harvard Business School wondering “wouldn’t it be great if we had a blackboard where all the numbers could automatically recalculate when you made a change?” Conveniently, the Apple II personal computer has just hit the market and Dan gets one. He tinkers around, runs a program on it, and voilà: the first digital spreadsheet is in prototype. He knows he’s on to something revolutionary here, but he doesn’t have a clue how to get it off the ground.

Luckily, his old friend, Bob Frankston has a few ideas. Bob knows his way around a computer and together, they become the official co-creators of the electronic spreadsheet.

Suddenly, what used to take days takes hours — maybe minutes. To understand how momentous a shift has just taken place, let’s go back to our string cheese example: you can find the 20 cent cell, change it to 30, and the software does the rest. No erasing, no 11×17 paper, no large tables.

The accounting industry is transformed. There are apocryphal stories of accountants taking jobs, calculating the numbers immediately, holding on to the job for a few days, shipping it off to their clients, and still getting praised for a quick job. It’s almost too fast, no one knows what to do with it.

Double-edged technology

The technology catches on quickly but like all new tech, it isn’t all good news: accounting jobs are hit hard. From 1980 to now, the industry has shed 400,000 bookkeeping and accounting clerk jobs. There just isn’t as much work as there used to be for those data entry jobs to last.

But as we know, when prices drop, more people can afford a product. That holds true for services like accounting, too. And the digital spreadsheet makes it really cheap to hire accountants. Companies that once couldn’t afford to hire accounting services now actually can because what used to take days and multiple clerks, now only takes hours. So the loss of those 400,000 clerk jobs turns into more like 600,000 accounting jobs. And those accounting jobs pay a lot more than those clerk jobs that were lost.

So, tip your hat to the true pioneers: Dan Bricklin and Bob Frankston. They made your job a whole lot easier and contributed to a radical shift in markets and accounting…they even inspired a World Championship of Excel Spreadsheets.

Modern tech successor to disruptive innovation

And while the spreadsheet rules supreme in finance, new innovations are taking that work into the cloud. Companies are continually looking for innovations to gain an edge, and in our field, e-invoicing and automation both have the potential to shift accounts payable and the finance field into more strategic realms. A fully digital financial space will take away the parts of the job that are boring and mindless, just as the original digital spreadsheet did for accounting.

Next time in Innovators & Troublemakers, we’re telling the story of Maclom McLean and how his Intermodal Shipping Container changed the world of global trade. Subscribe to our blog to read it first.