Archive for the ‘crisis’ Category

Wachovia Can’t Modify Loans: Is This Another CIO Failure?

Wednesday, November 18th, 2009
Image Credit Wachovia's Mortgage Systems Are Falling Down On The Job

Wachovia's Mortgage Systems Are Falling Down On The Job

Hmm, let me try and remember how this is supposed to go: the IT department exists to serve the rest of the company. If the department is doing its job, then the company should be able to operate smoothly and be able to outperform its competition, right? Over at Wachovia (purchased by Wells Fargo awhile ago) the IT systems are dropping the ball and people are in danger of losing their homes. Sounds like Avid Modjtabai, Executive Vice President, Technology and Operations, for Wells Fargo & Company, has got some explaining to do…

The Problem With Adjustable Rate Loans

This tale of woe starts back in the go-go days of the 1990’s when Wachovia, like just about every other bank, started handing out home loans like candy. They offered them to just about anyone who asked for them no matter if they could really afford them or not.

A lot of folks opted to get what are called Adjustable Rate Mortgages (ARMs) . These little babies are great when interest rates are low; however, when there is a global recession and interest rates start to go up, those monthly loan payments can quickly get out of hand. The Obama administration has realized that a lot people are in a bad way, and they’ve made a lot of cash available to banks so that they can convert ARMs to fixed rate mortgages (with a non-changing monthly payment).

If you want to change your loan, all you should have to do is go to your bank and work out a deal with them. Unless your loan is with Wachovia – then things get a bit more complicated.

Marchall Exkblad over at the Wall Street Journal has discovered that a computer glitch in Wachovia’s IT systems is preventing people from being able to modify their ARM loans. Avid Modjtabai, I think that you may have a problem on your hands.

The Problem With Wachovia’s Loan Software

It turns out that Wachovia has been forced to “recode” its computer system. They are saying that this is because of “some of the tweaks to the program” that the U.S. government made. What’s interesting about this excuse is that Wachovia customers have been attempting to get their loans adjusted since June (that’s roughly four months if you’re counting).

In Wachovia’s defense, they are saying that it’s hard to modify existing loans under the government’s guidelines for the $75B foreclosure-prevention plan. Umm, I’m cool with that, but the now-parent company Wells Fargo has been able to modify 11% of their loans in the time that Wachovia has been able to modify only 2% of theirs. What gives?

What The CIO Should Have Done

Once again, let’s review: the IT department and its systems exist to help the company do more and do it quicker. Over at Wachovia, that clearly is not happening right now. What should have been done?

Let’s assume that Ms. Modjtabai got handed a bill of goods back in October of 2008 when Wells Fargo agreed to buy Wachovia. She probably had no way of knowing what state Wachovia’s loan processing software was in when the purchase went down.

The problem comes after that deal was closed. A CIO in this situation needs to eliminate as many unknowns as possible. This means that the first thing that should have been done was a top to bottom audit of Wachovia’s systems: what did they have and what did each system do?

We all know that every unique system that you have to support is going to end up costing you a lot of IT budget that could be better spent on something else. That means that Wells Fargo should have used the results of the audit to create a plan for moving the Wachovia business activities over to Wells Fargo’s existing systems.

I’m not naïve enough to think that this would be easy to do, but in the end that is the job of the CIO – to simplify IT and create a path to move forward. The evidence seems to show that the Wells Fargo and Wachoiva mortgage processing systems are still separate. Whether due to poor design or financial neglect, Wachovia’s systems have not been able to keep up with changes in the market. At the end of the day, that’s the CIO’s job to solve.

What All Of This Means For You

When you become CIO, you need to realize that “the company” is a very fluid thing indeed. What the company looks like one day is not what it will be looking like down the road.

When your company purchases another company you will suddenly be responsible for the IT systems and staff that come along with that company. What you don’t know can kill your IT career.

The moment that the purchase deal closes, you need to be jumping in there with your IT team and turning over every rock in order to find out what you are now in charge of. This has to lead to a plan to merge the IT systems of both companies. You don’t necessarily have to keep the systems that the buying company is using, but you do need to minimize the number of systems that you will be left with.

Nobody ever said that being a CIO was going to be easy – the Wachovia loan processing software bug is just another example that a CIO’s job is never done.

Do you think that the Wachovia loan processing problem is the fault of the Wells Fargo CIO?

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What We’ll Be Talking About Next Time

We all dream of the day that we will get the nod to become CIO — finally we will have arrived. Or will we have? When you are CIO, things are going be different and that’s because you won’t just be the CIO, you’ll also be the company’s Strategic Execution Officer.

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Posted in crisis | 3 Comments »

Microsoft CIO Sidekick’s T-Mobile Users

Monday, November 16th, 2009
Image Credit
T-Mobile Sidekick Users Are Feeling A Sense Of (Data) Loss

T-Mobile Sidekick Users Are Feeling A Sense Of (Data) Loss

So this story should probably be filed in the “it should have never happened” drawer: Microsoft has lost the information that T-Mobile users of the Sidekick mobile phone entrusted them to store for them. Wait a minute, isn’t this the grand and glorious 21st Century in which data loss like this is never supposed to happen any more? How did Microsoft’s CIO let the ball get dropped like this?

Oops, Your Data’s Gone

Before we spend too much time going after Tony Scott, let’s take a moment and do what they do on CSI: take a look at the crime scene.

For the better part of a week T-Mobile subscribers who use the Sidekick mobile device have been having problems, lots of problems. Specifically, they have been having trouble getting access to their personal information. This has included contact lists, calendar data, photos, etc. Where was all of this data being stored? Why on Microsoft servers of course.

T-Mobile is now reporting that they have been able to restore the ability of the Sidekick to go online, they are also telling their users that they may not be able to recover their personal data. The exact phrase that was used was that the data “almost certainly” had been lost.

How Is This Microsoft CIO’s Fault?

At the end of the day, the ultimate responsibility for this lost of countless users’ personal data has to rest of the shoulders of Microsoft’s CIO, Tony Scott. I suspect that that job is a great job until something like this happens. Microsoft got into the business of hosting T-Mobile Sidekick user’s personal data when they bought the company Danger, Inc. back in early 2008.

Microsoft has broken the unwritten rule that hosted data must never be lost or destroyed – when we store things in the cloud, we are trusting the firm doing the storing to make sure that nothing bad happens.

What Does All Of This Mean For You

First off, if you use T-Mobile’s Sidekick device I’d suggest that you start backing up your personal data locally. Secondly, it’s pretty clear that the Danger, Inc. servers that Microsoft took ownership somehow got overlooked in the grand scheme of things.

Every CIO has to have a program in place that lays out step-by-step what the firm needs to do when they purchase another firm – the best example of a company that does this very well is Cisco. I can understand that the Danger, Inc. purchase happened before Tony Scott came on board; however, that is no excuse.

A CIO has to realize that he / she probably doesn’t have everything under control when they take the helm of the IT department. This means that a full audit of all servers being managed and just who is using them has to be one of the first things that a new CIO does.

Yes, Tony will probably survive this data loss disaster and yes, T-Mobile Sidekick users will probably continue to use the devices. However, there could be trust ramifications for the Cloud computing service called Azure that Microsoft is starting up – would you trust them with your data now?

Editor Update: Some Sidekick Data To Be Saved

In all fairness to Microsoft, I must report that on Friday, 10/16/09, Microsoft reported that they had been able to recover some of the lost Sidekick data. I can just imagine the mad scramble and expensive disk recovery resources that were involved in making this happen.

Congratulations to Microsoft for doing the right thing after the fact. Even given this “save”, it’s the CIO’s responsibility to make sure that things like this never happen in the first place.

What is the first thing that Microsoft’s CIO should have done when he realized that they had lost T-Mobile user’s data?

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What We’ll Be Talking About Next Time

Over at Wachovia (purchased by Wells Fargo awhile ago) the IT systems are dropping the ball and people are in danger of losing their homes. Sounds like Avid Modjtabai, Executive Vice President, Technology and Operations, for Wells Fargo & Company, has got some explaining to do…

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HP Can’t Pay Its Salespeople – Another CIO Failure?

Monday, September 14th, 2009

HP's Sales People Have Not Been Getting Paid On Time <p> <div xmlns:cc="http://creativecommons.org/ns#" about="http://www.flickr.com/photos/pixieclipx/308927905/"><a rel="cc:attributionURL" href=Being a salesperson is a hard job. More often than not they live from quarter to quarter and if you don’t make your numbers, then you end up getting shown to the door. Hewlett-Packard is a huge IT products and services company that lives and dies by the actions of its sales teams. Making sure that the sales teams get paid should be a simple task right? Think again…

The Problem With Pay At HP

HP’s CIO Randy Mott has a problem on his hands. Within HP, payments for the HP’s business-technology group sales teams are handled by a software application called Omega (which is sorta funny when you think about the fact that Omega is the last letter in the Greek alphabet – it sure doesn’t seem to have the last word on calculating pay).

Omega has been around for a long time. It was born back at Digital Equipment Corporation (anyone remember DEC?), got picked up and used by Compaq Computer Corporation, and then finally found its way into HP. It must either be a well designed program to have had that long of a life or else it’s so dang complex that nobody is willing to tinker with it.

The problem with Omega is that it is struggling to deal with HP’s growing amounts of sales data. It was never originally designed to deal with this much volume. What’s happening is that Omega is now malfunctioning. Some HP salespersons are not getting paid on time – they are ending up waiting up to seven months to get paid!

Fixing The Omega Problem

HP is aware of the problem and they’ve tried unsuccessfully to fix it. As a stopgap measure, HP has been automatically paying its salespeople 60% – 70% of what they should be getting for meeting their sales quotas. One suspects that this is being done in order to allow employees to meet house payments and keep food on the table.

In the past HP has tried to fix Omega by adding new software that was intended to smooth out the flow of sales data. However, back in November of 2008 when HP closed its books for the year, they discovered that some of the data in Omega was both incorrect and incomplete. Clearly the band-aid approach to dealing with the problem had not worked.

What Should HP Do?

The Wall Street Journal is reporting that at a HP sales meeting in 2008, one of HP’s senior vice presidents of sales, Randy Runk, got up on stage and promised the sales teams that they would all be paid on time. Clearly that is not happening.

As CIO, Randy Mott (are all HP senior executives named Randy?) is responsible for fixing this problem – he’s already let it go on for far too long. Let’s say what HP is clearly not willing to say themselves: Omega’s time has come and gone and it must be replaced.

Mott needs to do two things immediately: he needs to campaign to have all HP sales reps who’s compensation is handled by Omega to be automatically paid at the level that they would be if they met their sales quotas. This should continue until the Omega issue is resolved. Any bonus will be calculated and paid with interest once the Omega issue has been resolved. Doing this will calm the sales forces and prevent them from leaving en-mass.

Next, Mott needs to start building a new replacement system for Omega. Why this has not been started already is beyond me. You would think that when HP took a look at the 6,500 that they were using and decided to slim it down to just a mere 1,500 systems, that Omega replacement would have been identified as being a high priority.

Based on the age of the Omega application, I’m willing to bet that its a single monolithic solution. Clearly a modular design is called for. I’m also willing to bet that HP doesn’t have a clear idea of all of the things that Omega does. No problem, if Mott and his IT team sits down with HP’s finance team they can come up with system requirements that may be much simpler than the twisted requirements that Omega now implements.

Final Thoughts

Randy Mott has been doing some amazing things at HP. However, somehow the way that he’s been prioritizing what his IT teams need to be working on skipped over the Omega problem. Clearly the prioritization of IT projects needs to be re-looked at.

Mott needs to take immediate steps to resolve the problems that this IT issue has created and then he needs to fix the problem once and for all by creating a replacement solution for the out-of-date and overworked Omega system. If he can do this quickly, then he will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

Innovation, innovation, innovation – everyone wants it, but nobody seems know know how to get and keep it. CIOs are under a lot of pressure to do more with less these days and being able to nurture an environment of innovation sure would help. The trick is HOW to do this…

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PayPal Outage Points To CIO Failure

Wednesday, September 2nd, 2009
Paypal's CIO Hasn't Been Doing His Job Correctly

Paypal's CIO Hasn't Been Doing His Job Correctly

The basic job of a CIO is to ensure that a company’s IT infrastructure operates smoothly and allows the company to conduct business. On Monday, August 3, 2009, PayPal’s CIO failed at this most basic of jobs.

A quick check of PayPal’s senior management structure reveals that they don’t have a CIO position (which in of itself is rather amazing), but Ryan D. Downs is their Senior Vice President, Worldwide Operations and so he’s their de facto CIO. What went wrong Ryan?

The Facts Behind The Failure

On Monday, August 3rd, Paypal experienced a world-wide outage that affected all of their customer facing systems. The effect of this outage is that millions of Paypal’s customers who rely on them to approve and complete financial transactions were unable to do so. This was a long outage – it started at 1:30 pm EST and lasted to until at least 6:30 pm EST.

Paypal is attributing this outage to “internal” issues.

Paypal is a huge business. In the most recent quarter, Paypal handled $16.7B in customer online commerce transactions. In the past the company has stated that they normally handle $2,000 in online transactions every second. Just in case you are doing the math, this means that this outage prevented at least $36M worth of business from happening.

What The CIO Did Wrong

I have no magic insights into what went wrong at Paypal, but it’s pretty easy to make a guess. Back in 2005, customers got shut out of Paypal for about 5 days when a software update went very, very wrong. I’m willing to bet that some sort of update process got away from them once again. This is just sloppy IT work.

This is exactly the type of basic “blocking & tackling” that CIOs have to get taken care of as part of building a solid IT foundation. Clearly this has not been done at Paypal.

The reason that this is such a scandal is that its happened at Paypal before. Once a problem is known, the CIO needs to step in and make sure that it will never happen again. We’re not just talking about establishing a fail-safe update process, but also making whatever changes are needed to the Paypal infrastructure in order to make sure that problems like this can’t ripple throughout the system.

Additionally, creating a process for rolling back changes is critical. If a bad change slips though the system and starts to go into production, you need to have the ability to get the system back to the way that it used to be.

Final Thoughts

Major outages like this reflect badly on all CIOs. There should be no reason that a outage like this should be allowed to happen especially since Paypal has had problems like this in the past. Paypal can’t claim that they didn’t have enough funding to prevent this problem – they are the fastest growing part of the eBay corporation.

In the end it all comes down to planning. Finding the time to gather the right people to run through “what if” scenarios and then following through with the recommendations that come out of these meetings is what every CIO needs to do. If Ryan takes the time to do this, then he will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

Hewlett-Packard is a huge IT products and services company that lives and dies by the actions of its sales teams. Making sure that the sales teams get paid should be a simple task right? Think again…

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IT Judgment Calls: How To Make Good Ones

Sunday, June 22nd, 2008

How IT Leaders Can Make Better Judgment Calls

Warren Bennis is a smart guy (professor of business administration and chairman of the leadership Institute at the University of Southern California). He’s cranked out a book called Judgment: How Winning Leaders Make Great Calls and it has a few ideas that really relate to today’s IT leadership environment.

It turns out that the ability to make good judgment calls when you are a CIO or tech manager is very important (surprise!) because of the impact on others that all of your decisions make. When do these IT leaders get called on to make judgment calls? Warrne identified of the most common three areas: people, strategy, and what to do in a crises. We see the impacts of people judgments around us at work every day. Technically gifted folks who get put into a management role for which they are poorly suited, great team leaders who get bumped up and become Directors, etc. The successes in choosing the right people for the right job get reflected on the company’s bottom line. The mistakes can cause lots of damage and are expensive to replace and to repair.

Strategy judgments are the big ones that can make or break a career. In today’s hyperactive IT environment speed is often prized over accuracy. Warren brings up a great IT example in his book: Intel. Many folks don’t realize this, but Intel got its start in manufacturing and selling memory chips. When the prices in this market started eroding and the Japanese manufacturers started coming on strong, Intel had to make a judgment call: stay in the memory chip business or move on to something else? Gordon Moore and Andy Grove made the decision to move on (to CPUs) and the rest, as they say, is history. Good judgment call.

Finally, the ability to make good judgment calls in in middle of a crisis. Once again Intel serves as a good IT example. Back in 1994, as Intel was releasing the latest version of their x86 chip line it was discovered that under certain circumstances it would return the incorrect answer from a math operation. Initially Intel took the IT road in its response: it did some math and stated that the average user would only see an error once every 27,000 years. However, that didn’t sit well with most of their customers and eventually Intel had to offer to refund/replace the defective chips. This initial response was a very, very poor judgment call on Intel’s part.

So what can IT leaders do to make better judgment calls? Warren suggests that we work on improving four areas of our knowledge that are critical to making good judgment calls: self-knowledge, social-network knowledge, organizational knowledge, and stakeholder knowledge. Hmm, sure sounds like aligning the IT organization with the rest of the business would go a long way to making this a reality!

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Posted in Intel, business strategy, crisis, judgment call, people | 2 Comments »