Over the past 18 months or so the number of high-profile software failures in our sector have been numerous; Tokyo Stock Exchange, RBS, ICAP, BATS, Knight, LCH Clearnet to name but a few! Only last week a system reconfiguration at CBOE resulted in the suspension of trading for several hours.

Despite the enormous financial and reputational impact of these failures, the continuing trend begs the question; what can be done differently to restore confidence?

In this age of austerity, there is no doubt that regulation, platform complexity, under-investment in legacy systems and market pressure to deliver new products are all influencing factors, but they are not completely to blame.

Organisations regularly test and support critical systems with the view that ‘it will be alright on the night’. Ultimately, the leading factors are poor controls and inadequate software testing prior to a 'go-live' decision.

With the number of headline-grabbing issues on the increase, many FS organisations need to change the way they view quality. It is not simply a case of investing in and upgrading software test capabilities, it means improving the overall level of rigor with which software is delivered. The application of engineering techniques to the service sector has long been discussed, with many citing that the two areas are fundamentally different. However, it is precisely these engineering practices and the associated cultural mindset that hold the key to FS organisations managing their technological risk and improving the services they offer.

In the last few years, NASA has enhanced its approach to testing mission-critical systems with great success by introducing an Independent Verification and Validation (IV&V) facility. It is responsible for monitoring and assuring all mission-critical software used by NASA. This is done by continually assessing the software being built and maintained; with the main focus on the definition and design of software. 70% of software bugs that cause IT failures are introduced in these early stages.

The cost of using this type of model compared to the overall savings is negligible, given early prevention of software bugs costs up to 100 times less. For every pound NASA spends they can save up to £100.00. There are clearly lessons our sector can learn from NASA...

Simply put, financial institutions could do far more to minimise the likelihood and impact of ‘mission-critical’ (making money…?) failure by looking to other industries, becoming more innovative and adopting a NASA mindset; however far-fetched that may sound!