More firms in danger of systems meltdown, claims risk expert
MORE than half of Irish companies are now at risk of an Ulster Bank-style systems meltdown because they are operating increasingly complicated IT systems -- but have failed to commit to the additional cost of managing them, a corporate risk expert has claimed.
Cian Blackwell, business risk services partner of Grant Thornton, says most Irish companies have now moved into "the realm of unacceptable risk" with their IT systems, but many are not even aware of the fact.
"Either senior management does not understand the severity of risk of the IT function and is not taking the concerns of IT staff seriously enough, or else technology staff themselves have been ineffective at communicating the true level of risk to senior management.
"Many companies have been increasing the frequency of their patches, or upgrades, to their existing systems as new requirements and functions are needed, often in tandem with a patchwork quilt of many systems operating in parallel.
"Every time you add a function, it increases the complication of the system overall. The more complex the system becomes, the more difficult it is to manage.
"Finally, the more complicated a system gets, the more difficult it becomes to determine the knock-on that a new upgrade might have on other parts of the system."
Mr Blackwell claims for the most part that Irish companies don't take their IT departments seriously enough and often regard them as little more than costly and unproductive burdens on their business.
"In some companies, IT has a far more important role than other departments. In these cases, there is a good argument for putting an IT representation on the board or at senior executive level."
Mr Blackwell believes Ulster Bank was "unlucky" rather than inept. "Based on our experience, I would say that almost every bank in Ireland, and elsewhere for that matter, has come close to a major systems collapse in recent years. It was just a matter of time before this happened."
To prevent a system meltdown, Mr Blackwell advises Irish companies to take three steps by ensuring the following functions are well-resourced and followed:
• Increase the level of general testing and in particular "regression testing" to monitor the indirect effects updates, patches or tweaks might have elsewhere in the system.
• Minimise system changes and delay those which are necessary. "Don't go for the very latest thing possible all the time. Usually those who buy the latest thing end up with the glitches."
• Have a "rollback mechanism" in place. "Being able to reverse changes is a big bonus but it can get complicated when the system change has also altered the system data," Mr Blackwell said.