See things clearly

Good governance starts with data flow

Last week I read a great article by Cynthia Rettig, 'Can Market Regulation Keep Pace with Technology?'  In it she expresses her concerns about the speed of technological change in the finance industry.  She quotes the CEO of Interactive Brokers, Thomas Peterffly, who says,

What we have today is a complete mess.  Over the last 10 years, technology delivered great benefits, but in the last year or so, it is not so good.  There is more room for the games people play.

Financial regulators certainly have their work cut out for them trying to police an industry where, in my view, 'all it takes to cause chaos...is for a single data feed somewhere in the complex matrix to be compromised or to stop flowing for some time.' [more]  Especially when there is next to zero clarity about precisely how money (data) interacts with people, process and technology when it flows through the financial system. [more]


In the UK, the US and elsewhere, 'lead experts' and legislators may recommend or attempt to enforce change in finance, and that is a laudable aim.  But one has to ask: when nobody really understands how a system works how can the system be properly regulated?


Understanding how the so-called 'cloud' works is something that governments, regulators and industry bodies are also trying to do.  For example, the US National Institute of Standards and Technology reports that in cloud computing 'security challenges' are 'formidable'.  And the EU wants to get involved in three areas associated with cloud: the legal framework; technical and commercial fundamentals; and technical standardisation.   


Fundamentally, like finance, 'cloud providers' are in the business of moving electronic data from one place to another, whilst trying to make a profit in doing so.  Again, understanding how these flows of data interact with people, process and technology should be critical to minimising risk and maximising profit!


However, unlike the Oil & Gas industry, for example, that basic business clarity doesn't yet exist in the 'cloud'.  Which helps explain why bodies like the Cloud Industry Forum (CIF), are trying to increase 'transparency, capability and accountability' amongst 'cloud providers'.  So as far as business-critical data goes, at the moment, 'you pays your money and you takes your chances'.


Can anything be learned from the process industries? [more]


The International Association of Oil & Gas Producers works to promote 'safe, responsible, and sustainable operations'.  The aims of the member companies include


  • continuous improvement in HSE, security, engineering and operations
  • alignment with relevant national and international industry associations
  • establishing common ground to promote co-operation, consistency and effectiveness 
  • to develop and disseminate best practice in HSE, security, engineering and operations


Companies can co-operate in this manner because they have a very granular understanding of how they work individually, and how the industry works as a whole, to manage and make profits on flows of product.  Spend a few seconds studying page 2 of this pdf, and you will see what I mean. 


In the next few years a large amount of time and money is going to be spent by regulators, government and industry trying to make sense of some of today's IT-reliant interconnected business systems. 


But to me the danger is that, without the 'big picture' of how each business works, and without clarity about how these businesses interact (connected by flows of data), attempts at regulation may be doomed from the start.  Non-process industries have never 'joined-the-dots' properly to see clearly how everything in the business is put together to make things work.


IT exists for one reason: to manage the flow of data between business assets. [more]  I believe this is the core principle upon which today's businesses should be built.   By taking this approach business CAN join-the-dots [more], and begin to attain the granular levels of understanding that have been present in the process industries for decades.


Cynthia Rettig concludes her article by saying,

What it seems we are learning is that, with so many complex technologies in play, we just may not know what's going to go wrong next - or why.

The OBASHI Methodology [foreword] and OBASHI software provide the best chance businesses have to answer those kinds of questions.


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