Community
Whilst perhaps not at the top of the list of Executive priorities for action, the effects on a company of a large-scale software failure can be both wide ranging and devastating. In illustrating this point, two recent examples come to mind:
- on 30th May 2017, The Guardian reported that “British Airway’s owner losses £170 million in value after IT meltdown - IAG shares fell 4% as airline’s reputation is dented after IT failure stranded 75,000 people”. In addition to the hit to the share price, the software failure was also expected to cost the airline £150 million in compensation.
- at the end of April 2018, 1.9 million TSB customers experienced severe problems following the attempted migration of their accounts to the Proteo4UK system of Banco Sabadell. This caused Sabadell’s share price to fall by more than 4%, a loss in value of £330 million. In addition, the bank was expected to lose many customers and its income line suffer around £50 million costs from waived overdraft fees and increased current account interest rates. Further, the UK’s Financial Conduct Authority (FCA) announced that they’d be launching an inquiry into the failure.
These examples show the significant damage a software failure can cause a company involving areas such as:
The ill-effects of the above are of course heightened through social media whereby any issues with bank systems are immediately highlighted and discussed by customers as well as financial journalists on Twitter, Facebook etc. The days in which a bank’s Press Office could seek to control and manage the communication of IT and service failure have long passed.
Whilst the causes software failure may well differ widely from case to case - British Airways Check-in and operating system failures were due to human error and the TSB melt-down by what IBM reported as a badly managed migration – their likelihood can only be reduced and their ill-effects mitigated through strategies focused on business assurance. The development and implementation of business assurance tools such as AI-based performance monitoring and automated systems testing, may appear expensive in the short-term. But a business case could surely be created based on the avoidance of the wide-ranging damages detailed above.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Sonali Patil Cloud Solution Architect at TCS
20 December
Retired Member
Andrew Ducker Payments Consulting at Icon Solutions
19 December
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