moody's bug in the model and the art of IT management

Moody's recently discovered a software bug. Details of the story are here.

This incident exemplifies the reason why financial services firms need to follow a more rigorous service management approach. Service Validation of the IT Service Management paradigm from ITIL v3 would've helped. However, I am reasonably assured that Moody's IT staff didn't follow it.

The IT departments of US financial services' institutions are more matured when compared to IT departments of other industries in technology and speed-to-market aspect. Yet, they are neither frugal nor disciplined. Some of the reasons are:

• The attrition rate: In an inflationary economy at locations such as NYC, the attrition rate is cause of their miseries but also the reason why they must have a strong process rigor
• Demand for agility: This leads to lack of strict discipline in IT operations. I do not propose that one cannot achieve discipline without agility - one can; it just needs practice and perseverance.
  
• Demand for higher speed-to-market: This leads to lack of thought given to service-strategy as well as service design. As the industry is matured, if someone comes up with a service idea, s/he wants to take it to market ASAP to capture the market share.
  

I am pretty sure there are many other cases such as Moody's that result in losses and may have been absorbed either by the consumer and/or the banks. Time for the banks to think about their money now!