Ponzi Scheme Run on Legacy Machine!

Fortune magazine ran a comprehensive article on the Madoff affair. Find it here. It was interesting as it is related to my post on computer systems being the real reason for the current financial collapse around the world.

The piece that made me smile was this:

"The IBM server, for instance, an AS/400 that dated from the 1980s, was so old that some data had to be keyed in by hand, yet Madoff refused to replace it. The ­machine -- which has been autopsied by the government -- was the nerve center of the fraud. The thousands of pages of statements printed out from it showed trades that were never made. "

There we go - the ponzi scheme was the ultimate tribute to the shortcomings of legacy systems. It conjures up images of fingers hovering over keys with dread wondering what may happen next. It's just a shame that the outcome seems to have affected so many people...but that's off subject.

What it does highlight is the widely held misnomer that IT is an enabling technology in a business. If managed well and funded properly there is no doubt that this is the case, but generally that is a long way away from what actually happens.

What does happen with IT systems is that they are usually so expensive to install and maintain that it is assumed by management that they are a long term investment. Once they are in they are in! The only problem with this view is that the systems then entrench the business rules and processes that are within them and they become fixed.

Worse, and this is the problem that most "legacy systems" have is that this knowledge becomes lost after implementation. 10 years on nobody really knows what's going on.

I'm being frivolous with the Maddof system but it is a logical extension of what is happening in banks, insurance companies, airlines and government departments around the world.

I wonder how many of these organisations have had stalled "legacy system replacement projects" canned once the budget estimations start looking silly.

So how is this going to be fixed? I'm not sure, sorry, but what worries me is that the only path these companies will eventually have is to be marginalised by competitors who don't have those systems.

The airline industry is probably the greatest example of this at the moment, the old airlines using their aging mainframe systems - all of which assume that their most important asset is a seat on a plane - are slowly being eclipsed by the young guns who are built on moving customers through airports.

Legacy IT systems are our curse and a manifestation of what is fundamentally wrong with our industry rather than an embarrassing mishap.