On the SocGen Debacle

11 February 2008

The fallout of the recent Société Générale debacle has lead to speculation that part of the cause was the rogue trader’s use of Microsoft Excel spreadsheet programming to cover his tracks. Most of SocGen’s reporting and risk management appeared to be based on Excel rather than of enterprise-level applications that are easier to lock-down.

However, in many large, fast-moving organisations, enterprise-level reporting and risk-management systems are either:

  • always six months from deployment on the corporate IT plan - this continued delay means that employees have no confidence in the plans and are reluctant to engage in  a development process that doesn’t deliver;

  • already in place but don’t do exactly what is required, so employees feed the data output into their Excel spreadsheets and carry on as before.

It’s a complicated position to unravel. When replacing an old system, it doesn’t make sense to take a snapshot and then deliver the new system two years down the line. By delivery date, the business needs have changed and some (most?) of the new application will be not be wanted. The resultant rework means that delivery is always a few months away.

Another cause for delay is that old systems often contain many subtle business rules that need to be reproduced on a new system. Uncovering these rules takes longer than anticipated and leads to increased testing time.

It’s a pattern that’s repeated across many large corporate organisations. There are several reasons: jaundiced potential-beneficiaries “who have seen it all before” and “business as usual” receiving the highest business priority from senior management.

One approach we’ve successfully used at Agilier is to build a new system around the old system. New functionality is delivered incrementally by the new system, while the old system continues providing the legacy business-critical functionality. In addition, each release sees some of the legacy functionality moved from the old system to the new system.  From the customers’ point of view, all they are seeing is a gradual introduction of new functionality in addition to the uninterrupted service-as-usual delivered by a combination of new and old systems.

We’ve found the best way to implement this approach is to find a corporate sponsor to support a pilot project. The pilot aims to quickly deliver a small but useful piece functionality to the business. Once this has been demonstrated, credibility and enthusiasm grows.

There are still issues, notably that the interfaces to large commercial systems’ use restricted, proprietary formats and sometimes a lack of skilled developers for implementation. However, if this approach had been used by SocGen to introduce a risk-management and reporting system, it may have mitigated some of its losses.

Success Stories

"Agilier's experience in managing business processes made them an ideal candidate to manage functional integration thereby reducing a significant risk to the business. This involved them working with the workstream leads and developing a high-level integrated businesses process against which we planned our programme."

Chris Davies
Programme Manager, EADS Defence and Communications Systems


"I was extremely happy with the professional and complete way that Agilier performed their work and would not hesitate to use their services again."

Mike Haynes
Senior Project Manager, Cogent Defence and Security Networks


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