The alarming supremacy of techies
Software is the universal basis of economy and society in our times. In his column in Germany’s leading business magazine “Manager Magazin” Johannes Bohnet describes how software secretly determines our lives and how we can gain back sovereignty over software.
In today’s digital age, software is the foundation on which our economy and meanwhile also our society are based. We tend to realize this, when once again a software error has jeopardized the economic existence of a company or when millions of people are affected in their daily lives.
A striking example of how software processes penetrate companies to the core, was the critical incident at Knight Capital, a US financial service provider. After a failed software update, the solid, multi-billion dollar company was forced almost into bankruptcy by its own fully automated commercial software systems. The systems executed transactions via faulty algorithms and losses incurred in the microsecond clock. Each minute $10 million were sent up in smoke. After 40 minutes and a loss of $400 million the power supply had to be desperately turned off.
Also, we as a society depend in a critical manner on functioning software. And dependence has dramatically increased in recent years since the “internet of things” has made more and more technical devices exchange information digitally, from heatings over garage doors up to the fridge. In 2002, we were able to witness how people in five US states and in parts of Canada had to live without electricity for several days due to a software error at an American energy supplier.
Another example of how our society is permeated by software, was shown by the NSA scandal. You no longer have to observe individuals as in earlier times. Nowadays, it is sufficient to install detectors in the software foundation to tap most intimate details of millions of people in a very simple manner – information such as motion profiles or communication with friends and business partners. Software is therefore an issue that political leaders and corporate decision makers should have in mind and (ideally) under control in terms of risk management.
The reasons that drove us into this software dependency, are the obvious economic benefits of software-based business process automation. No car manufacturer would want to dismiss today’s efficiency and control the lever on the machine again by hand. No insurance company could afford to calculate rates manually again.
The obtained efficiency in core business, however, has its corporate price. The IT budget of companies of any industry is growing steadily. Indeed, in recent years and decades huge software systems tailored to the business processes were built. If you were to print the source code of an average regional energy supplier, this would result in a paper stack height of a skyscraper with 15 floors. In order to handle the complexity of these systems in any organization of any industry, a large number of software developers is employed.
Regularly, new business requirements must be programmed into these systems on a daily basis. Concerning magnitude: The German GD Informatik Services GmbH of Generali Insurance Group has a work force of 1,100 employees. The Swiss bank UBS employs no less than 7,000 software developers. The trend is on the rise, as the demand for developers shows. Professor Dieter Kempf, President of the industry association BITKOM, notes in the latest IT job market study that Germany currently has an unmet need of 30,000 software developers. Around 88 percent of all surveyed CIOs expressed as their biggest challenge being able to attract good employees and commit them on a long-term basis.
The increasing strategic and existential importance of software in business has led to a change in leadership organization in recent years. The topic of software is no longer considered a subordinate theme, but is considered as increasingly relevant to board level. This is an important step forward because the software landscape can only be run and managed sustainable and cost-effective when obsolete, over the years highly complex grown software systems are being replaced by modern systems.
But for these, from a risk perspective urgently needed modernization measures, budgets are required in a dimension over which only the board can decide. It is not enough when the “engineer” notices the technical risk, but does not have the money to improve the situation. A company can only get a grip on compliance, governance, quality and cost aspects when software is perceived and treated as an issue of top-level management.
The great difficulty is, however: Software is abstract. It has no physical form. It is not tangible and not visible. How should a CIO make fact-based decisions when both the software foundation as well as the daily work of many programmers are invisible? A way out of this management dilemma is recently being proved by new big data and visual analytics methods that produce understandable visual representations of the abstract code landscape.
The hope is to make software so comprehensible that even non-technical managers can establish their decision making processes about software based on an objective fact base. With every day that becomes more important.
In his column on manager-magazin.de Johannes Bohnet describes the hidden interactions between economically relevant events and the software matrix which pervade businesses and the society as a whole.