RBS must realise it's just an IT biz with a banking licence
Expert drills into what it'll take to prevent another bank technology fiasco
So. How can they stop that meltdown from happening again?
An ex-RBS worker told us that he feared that during the clear-up, the banking giant would plaster on more processes and more "risk management". And that seems to be what Stephen Hester has in mind - that's what he told the MPs, anyway:
The investigation will address the effectiveness of our risk management systems, including the identification of low probability/high impact events and their mitigation. It will also assess contingency planning and business resilience i.e. whether other systems within RBS Group are at risk of similar incidents.
But risk management at RBS is already unwieldy, and may in fact have contributed to the crisis, the former employee argued: "If you want to focus on the real problem that caused this it is the overly restrictive change control, as counter-intuitive as that may seem."
Our contact said in a move unrelated to the massive cock-up in July, RBS "management added another two layers of change control" - which are effective another rulebook of procedures to ensure updates to a system are formally agreed and rolled out as planned.
"I like to think I've been around the block, and I can safely say that the change management in RBS is the most complex I have ever come across - so much so I believe it is counter-productive," the source said.
That dissatisfaction with bundles of red tape was echoed by two other RBS workers who spoke to The Reg. Of course change management is an essential part of developing and maintaining an IT system, but an unwieldy rules designed by people not fully aware of the technical hurdles nor with an appreciation that the system is based on "quirky" mainframes of yore, combined with lower-skilled employees and bosses who weren't listening, seems to have created a situation where a problem, when it occurred, ballooned out of control.
Can they spare some change?
A spokesman for RBS told The Reg in response to our findings: "We're carrying out a full and detailed investigation into the causes of the incident. We plan to share the findings of this and will be happy to comment further once this is published."
Banks will need to rethink the position of IT in their businesses, said Chan: "They can get it right, it's when they apply the squeeze in the wrong place that we get these problems."
And in the case of overhauling banking systems it may take someone with bottle, a lot of money and some serious longterm thinking: as a banking expert suggested, it would be like changing all four engines on a airplane mid-flight. ®
Mr Chan, has in my opinion, hit the proverbial nail on the head.
The middle layer of management never seems to get mentioned, it isn't Mr Hester that is choosing to take risks by de-skilling the workforce but it will be his targets that are causing the problem. Required reduction in IT costs = Management finding an easy fix = ship the development off to a cheaper country whilst retaining their own jobs/salary/bonus.
It is the middle management layer that has failed. They chose not to listen, they ploughed ahead with changes and it has cost the company dearly. Given the culture at RBS, no one questions their boss above project manager level. If you did then the end of year rating system was used as a big stick.
I have said it before but the outcome of any review will be "more control". It wont point the finger of blame at any management strategy, it will be just an extra layer of change control that slows the development process down even further.
> trend towards pigeonholing folk
> And it's not just a culture issue: there's a trend towards pigeonholing folk into particular roles
> within a process, ensuring that they do one or two things well and need not worry about the
> rest of the machine.
Ain't that the truth... I was recently told by a line manager "we don't need people like you who understand everything any more". Well, next time the proverbial hits the fan I almost certainly won't be there (hence icon - would you given a hint like that) and I wonder how well they'll get on...
CM is a communications tool. It works if it puts the change plans in front of people who are technically and institutionally able to challenge them. It works better if those people include the ones who will have to fix what goes wrong. What can't work is a lovely paper trail with all the manager's signatures.
Re: Good article
The tech staff in Edinburgh are competent and know what needs doing (at least, they were a few years back) but the middle managers are handcuffed by terror of the VPs. Any question or criticism of those above you is a serious CLM.
Many of the technical staff are contractors who have little vested interest in the job beyond this weeks pay cheque. (Admittedly, a very generous one.) I asked a colleague why so many critical systems ran on failure-prone, support-intensive MS Windows systems. He replied with a shrug "We get paid by the hour."
Re: "A (retail) bank's business is Risk Management."
"3) A retail bank has no reason to put any of its customers money at risk."
Rubbish. A retail bank takes in customer deposits at one rate and lends them out at a higher rate, the difference being their profit. Even if we ignore the fact that they "create" money by lending out more than they have on deposit there is always going to be a risk involved in lending out.