See things clearly

Over at the FSClub Blog, Chris Skinner summarises a discussion he had with a senior manager in finance about bank operations.  He writes,

“...most firms struggle with enterprise management.

It is down to the very nature of fragmented structures, legacy systems, merged and acquired operations, that make the enterprise view hard.

Hard but achievable, so why is it not achieved?

A view put forward was that it does not make sense for some to have this view.

It makes you far less accountable if you cannot measure your complete operation, than if you can...

...for some...it means that the CEO cannot hold the COO, CIO and CxO to account...”

Holding IT senior management to account is something in which financial regulators are taking a keen interest.


Following the major computer ‘glitch’ at the Royal Bank of Scotland in June, the Financial Services Authority (FSA) wrote to the UK’s nine largest financial institutions, asking them to ‘detail efforts to prevent a software glitch like the one that hit RBS.’


According to the Financial Times, the letter,

“...also demands the names of senior managers who could be held personally responsible if information technology systems go awry... ‘accountable for dealing with infrastructural issues and/or systems outages and please explain how the Board has satisfied itself that it has management with sufficient expertise’.”

That the regulator of a key industry like finance is increasingly seeking more transparency in IT matters comes as no surprise.


Finance relies on flows of data to perform its activities, yet, as demonstrated by the many glitches the industry has endured in recent years, it does not have sufficient clarity on how that data interacts with the assets of the business, including people, and that includes the staff and third parties.


As a digital world is created, in all industries, but especially in economically critical industries like finance, it is essential that appropriate governance is applied by CxOs in the management of flows of data.  If you business relies on flows of data, but you don’t know how each flow traverses the assets of the business, how can you manage risk?


Governance plays a critical role In key industries like Oil & Gas, or nuclear, where it would be unthinkable to work on the basis that “you cannot measure your complete operation”. Without clarity on flows of petroleum, or electricity, through a plant, assets can go ‘bang’ and things can go wrong in a big way.


Managers in these industries understand precisely how everything is put together to enable flow, and to make the business work.


Everything is documented, from the specification of individual assets that make up the plant, to the procedures used to change a faulty asset.


This means that if there is a disaster, industry and regulators have the best chance of understanding exactly what went wrong with business critical flows, and best practice can be shared within the industry on how to avoid such problems reoccurring.  The industry, as a whole, moves forward.


However, if a manager and/or company, has not worked in accordance with industry standards, procedures or regulations, and negligently caused an interruption in flow, then the manager and/or company will likely end up fighting a court case.


Sooner or later, the IT industry will work in a comparable way.


As said here before

“It will be no surprise if CxOs of a large, established company are prosecuted in the coming years because of an out-of-control IT project.”

The days of senior managers, and companies, hiding serious management errors behind the ‘complexity’ of technology, are drawing to a close.





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