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London Stock Exchange Glitch – Could Cloud Computing Have Saved The Day?

Monday, September 15th, 2008
A software error shut down the London Stock Exchange for a day.

A software error shut down the London Stock Exchange for a day.

Just when you think that you have the worst job in IT, a story like this comes along! Last Monday the London Stock Exchange (LSE) experienced a full day outage. Traders who were ready to trade were unable to connect to one of the LSE’s main trading applications. No connect, no trading.

If you’ll think back about a week or so, you’ll realize that Monday was a very important day in stock trading land. The U.S. Government had just stepped in to shore up Fannie Mae and Freddie Mac. What this meant is that over in London, there were lots of traders who wanted to buy/sell British bank stocks because of what they thought the impact of this move would have on British stocks. However, for a full day nobody could trade anything!

The LSE uses a trading program called TradElect which is a 15 month old proprietary application that they’ve build using Microsoft technology. It appears that the traders were unable to connect to this application and that is why everyone experienced the outage.

The big question is why? Their trading volume grew too quickly and caused their software/hardware capabilities to be exceeded. Although the LSE is not talking, we can probably take some educated guesses at to what went wrong here. Since TradElect has been in service for 15 months, it’s probably not the fault of the functionality of the application. Additionally, since the problem lasted the entire day, clearly the IT team was unable to revert to a previous version of the application in order to fix the problem – so no “upgrade gone wrong” problem here. My guess is that this is an old fashion “too much volume” problem.

I almost hate to use the term, but could “cloud computing” be the solution for the LSE? Specifically, should they design their apps to run on their servers in their data center but build in an option to expand to additional servers located in some secure cloud in the event that there is a surge in trading like (tried to) happened on Monday? You can never guess at exactly how much computing capacity that you’ll need and perhaps this is where the brave new world of cloud computing can shine. Maybe this is a question that the next LSE CIO will have an opportunity to answer…

Have you ever had a problem where one of your applications get overwhelmed with too much user volume? Did the app go down or just stumble? What did you do? Probably even more importantly, what changes did you make later on to prevent the situation from happening again? Leave a comment and let me know what you think.

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Posted in business, Uncategorized | 1 Comment »

What To Do When Everything That You Know Is Wrong

Thursday, September 4th, 2008

CIOs can be responsible for leading a company in to an economic stall
In most IT departments, everything is fine until it isn’t. Sometimes this is a result of actions that the IT department has either taken or not taken, sometimes it is a result of what’s going on in the company as a whole. No matter, everyone in IT is personally impacted when a previously successful company enters an economic stall and starts to streak towards the ground. How does an IT department end up in a situation like this and what can they do about it?

We’ve talked about some of reasons the companies and IT departments collude to enter a stall, things like being trapped by having a premium product, abandoning a core market segment too early, or just flat running out of good talent with which to lead the IT department. Some of you might be thinking that such strategic matters are beyond the scope of the IT department; however, I’d disagree. IT is an information collection and distribution organization and because of this we need to be the ones who fully participate in the company’s strategy discussions.

Studies done by researchers at The Executive Board, an executive think-thank, have shown that one of the leading causes of an IT department’s failure to notify a company of an impending revenue stall is IT management’s failure to align changes in the company’s external environment to the existing company strategy. This failure rests squarely on the CIO’s shoulders.

Just to drive this point home a bit more, it turns out that the assumptions that IT leadership teams have held for the longest period of time (or currently hold the most deeply), are the ones that are going to come back and bite them the hardest. One of the reasons that this happens is because during the annual review of the company’s strategic plan the CIO does not challenge the “assumptions and risk” section – he/she is willing to treat it as so much boilerplate and just let it go.

So what can a good CIO or IT manager do to help the company avoid an economic stall? It turns out that research in this area has reveled four best practices for detecting the red flags that signal that a stall might be coming up. We’ll talk about them next time…

Have you ever been working in an IT department where the CIO was an active player in planning the company’s strategy? How did the IT department support him/her as they did this – just collecting info or did you actually process it in order to turn the information into knowledge? Was the CIO accepted by the rest of the company or was he/she treated as an outcast? Leave a comment and let me know what you think.

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Posted in business, ceo, CIO, it strategy, profit, revenue stall | No Comments »

Out Of Time, Out Of Talent – Why IT Departments Fail

Monday, September 1st, 2008

IT Departments Need To Hire From Outside To Avoid Business Stalls
A business stall can hit a company / IT department at any time. There can be many reasons for what causes a stall including having a premium product or abandoning a good market segment too early as a company goes looking for greener grass. If that was all that could happen to a company, that would surly be enough. However, there is one more key contributor that can cause an otherwise successful company to lose forward momentum and go into a tailspin: they run out of talent.

In this day of IT layoffs and downsizings, it doesn’t seem possible that a firm could run out of the IT talent that they need. However, it’s having a lack of IT leaders and their associated staff who have the necessary IT capabilities and interpersonal skills that are so desperately needed in order to execute the company’s strategy.

We’re not talking about not having enough SQL knowledgeable programmers here. Rather what we are discussing is a lack of specific required capabilities that are needed by the firm. These capabilities can include such things as the ability to sell complex IT solutions, or perhaps some special skill in marketing IT solutions to a given market segment. This lack of talent becomes most glaring when it occurs at the executive level within the company.

How Do Talent Shortages Happen? It turns out that most internal shortfalls in skills are a result of a company’s too strict adherance to a “promote from within” policy. What’s interesting about this is that this situation is most often seen in company’s that are lauded for their strong sense of corporate culture. This internal promotion policy serves the company poorly when the company’s business environment presents it with a novel challenge or when their competition suddenly increases.

What Role Does Experience Play? A big one it turns out. Rapidly developing events in a company’s market place require the company to quickly respond by modifying how it does business. Having a narrow set of experiences in the executive suite means that the company’s ability to quickly respond to such changes can be severely limited.

So What’s The Solution? Quick question – does your IT department have any program in place to formally monitor the balance between both company lifers vs. those who have been brought in from the outside both in the executive team and lower on down the management ladder? It’s the outsiders who are going to bring in fresh approaches and perspectives. Even if the firm does bring in outsiders, does it incorporate them into the company? Studies show that between 35%-40% of senior executives don’t make it past their first 18 months. The correct way to solve this problem is to set up a formal IT department policy that states that HR will work to ensure that there is a mix of management. A good suggestion for a mix ratio that seems to work is to ensure that there is between 10% – 30% of management that is from the outside.

Where does your IT department’s management talent come from – inside or outside? Does your company actively hire from the outside? How long do new senior managers seem to last? Why do they leave? Leave a comment and let me know what you think.

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Posted in business, ceo, CIO, leadership, leadership training | 5 Comments »

Fighting IT’s "The Grass Is Greener" Syndrome

Thursday, August 28th, 2008

When an IT department lets a business leave its core market to seek higher profits, the company can stall.
Businesses and IT departments can be going along just fine when all of a sudden, the business goes into what is called a “stall”. Just like being in an airplane that goes into a stall, this is by no means a good thing! When a business goes into a stall, more often than not it won’t recover. The most dangerous part about a stall is that you don’t see them coming – everything is fine until it isn’t. We’ve talked about some different causes of stalls including having a premium product; however, there’s another reason and the IT department plays a big role in this one.

Most companies have a small set of products or markets that they currently serve. If the company is successful, then they are probably doing a good job. The IT department has probably become optimized to support both the products and the teams that are serving these markets. All is good. Then the “… grass is greener on the other side of the fence…” syndrome strikes senior management and they decide to take the company in a new direction in order to pursue more profitable markets. Of course what this means is that you need to abandon the core markets that are currently serving you so well. By doing this you won’t be able to exploit any future growth that occurs in your existing markets.

Now lets be honest here, these kinds of right hand turns made by businesses rarely show up all that dramatically – at first. Instead they have a habit of sneaking in from the sides as purchases of other companies or top down mandated growth initiatives in brand new areas of business that seem to have nothing to do with the company’s current customers, or products, or partners (can anyone say “Ebay buys Skype?”).

If you are looking for proof that this kind of abandonment of successful markets still goes on in today’s modern business environment, just open the paper and see all of the articles that are talking about public companies being bought out by private equity firms. Clearly something went terribly wrong and outsiders were able to step in. In almost every case when this kind of takeover happens, the new owners of the firm will implement a strategy for returning to what originally made the company successful and growing the core again.

Why do companies and their IT departments make these mistakes? There are two primary reasons. The first is that the company mistakenly believes that their core market(s) has become saturated. This belief is due in part to the information that the senior management is receiving from the IT department. It’s the CIO’s responsibility to evaluate the data that his/her department is producing and understand what it is saying. Just because it looks like a market is all tapped out, does not necessarily mean that it is so. Instead, this is when the CIO needs to work closely with the marketing team to find different ways to measure the market.

The second cause of a firm leaving a successful market is because they feel that there are operational impediments in their core business model. This happens when senior management just despairs of being able to solve business problems that are currently confronting the company. Instead of trying to solve them, they instead decide to move to other markets which won’t have the same problems. Once again, the CIO and the IT department play a big role in this decision. There should be no business problems that the IT department can’t help the rest of the company come to grips with. Whether it’s tracking sales and who is buying products more closely or collecting data on how the competition is doing, the IT department can help to create solutions to almost any business problem.

Leaving a successful market is never a good idea. IT staff should be on the alert whenever they start to hear the word “mature” being used to describe the company’s business situation. IT has a role to play in making sure that the company sticks with markets and customers that will serve it for a long time.

Have you ever worked for a firm that left it’s successful market in search of greener pastures? How did this all turn out in the end? Has a IT department in which you worked ever been able to stop a company from making a bad business direction decision? Leave a comment and let me know what you think.

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Posted in business, business opportunity, CIO, leadership, new profit | 3 Comments »

A New CIO Job: Panning For Legal Gold

Monday, August 25th, 2008

A CIO who prepares for legal lawsuits before they happen is valuable indeed
One of the worst things that can happen to a modern company is to for it to get sued. Here in the 21st Century more often than not, lawsuits require that the firm being sued produce electronic documents early on in the whole messy legal process. Good examples of how tricky this can get are the White house’s attempt to retrieve firing emails, Intel’s fight with AMD, and Morgan Stanley’s issues with the SEC. As the Morgan Stanley case shows, if a firm can’t produce the email and electronic records that are asked for it can end up costing the company a lot ($10M in the case of Morgan Stanley). What does all of this legal stuff have to do with a CIO?

Michael Lunch is the CEO of Autonomy Corp. and he does a good job of describing how the search for electronic documents is currently done:

“The old-fashioned way of doing this was having a lot of lawyers doing a lot of simple things, you would literally have lawyers reading though things saying ‘there was chicken for lunch.’ You don’t need lawyers to know that it’s a lunch menu.”

Ouch – what kind of hourly rate does a firm have to pay to have lawyers read old email? This is exactly the type of situation that begs for the IT department to step in and lend a hand. Recognizing that this is an issue, the good folks at HP, Xerox, and IBM are getting ready to jump in and offer products and services.

This new reality of living in an electronic document lawsuit-happy world opens a unique door of opportunity for forward thinking CIOs. When a firm gets sued, everything has to shut down as it relates to documents while the requested material is searched for. If an enterprising CIO had already set up a system to track and categorize the firm’s electronic records, email included, then a lawsuit’s requests could be easily handled. Being able to produce the requested material the next day instead of weeks or months later and being able to do it for much less than a roomful of lawyers would cost would enhance the CIO’s standing among the company’s senior management.

Careful – there’s a right way and a wrong way to go about doing this. The wrong way is the classic IT way: I don’t need anyone else, I (and my department) can do this all by ourselves. Discovery of records as a part of a legal proceeding is really the domain of the company’s legal department. This is clearly a case where the IT team needs to work WITH the legal department. Since any sort of automated search process will be taking cash out of the pockets of outside law firms who traditionally supply the human resources to do information searches, the CIO is going to need to have the full support of his in-house legal team. The moment the lawsuit is filed, the outside firms will be whispering into the CEO’s ear that he/she really needs their pricey assistance. Without the support of the in-house legal team any IT created solution will be discarded in favor of going with a “sure thing”.

Having a solution in place before it is needed is the key to ensuring that the IT team looks good. If a CIO is running around after the event trying to find a solution, then expensive mistakes are going to be made. Finally we have found one area where a CIO can once and for all show the company the true value of the IT department.

Have you ever worked at a company that got hit with a lawsuit that required electronic documents to be produced? How did it go – was it quickly and easily handled or was it an ongoing nightmare? Did this event have any lasting impact on how the firm handled and tracked its electronic documents? Leave a comment and let me know what you think…

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Posted in business, business alignment, ceo, CIO, document discovery, it strategy, lawsuit | 4 Comments »

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