On the day the global financial systems melted down, a mate who is a chief information officer at a bank called me with gallows humour in
"I'm sunk," he said. "We were massively into weird equities. You'll
see us get dissolved on the news tonight. My super has spent the last
year going backwards faster than the Top Gear team testing a
Lamborghini's reverse gear and if anyone on the planet so much as
thinks about turning on an electrical appliance ever again, the carbon
they make will put the house under a metre of water in 2025, anyway.
"What am I going to do, Simon?" he asked, switching from dark humour
to deep despair. "I don't reckon I'll have a job a week from now. The
whole industry's in meltdown. The way banking is going, no one's sure
if the business will be complex enough to need computers next month."
At this point I felt it necessary to administer the telephonic equivalent of a robust slap.
"Mate," I said. "This is the best possible time to be a CIO. We can
get through this easy."
He didn't understand why, so I explained. "The way to understand the
whole sub-prime thing is to think about it as virtualisation gone
wrong," I started.
"Some clever spivs on Wall Street obviously had a look at what we're
all doing in IT and said to themselves that a bunch of poor people
with no jobs and no chance of repaying a loan were - when you think of
them as actual physical people in physical houses - a rather nasty
"So instead of managing them one at a time, which is basically social
work, they bundled them all up and abstracted them as a logical
collection of debt instead of a million examples of heartbreak."
The problem, I explained, is that virtualisation is unusually susceptible to the Law of Unintended Consequences. CIOs know this, because their network teams are screaming about just how uncomfortable
routers get when they are suddenly asked to deal with five real computers one minute and 20 logical machines the next. CIOs therefore know all too well that pretending something isn't happening won't stop
it from happening, making my friend ideally placed to slap the spivs around and tell them what's what.
My friend understood this but wanted to know more about why CIOs could thrive.
"Have you had vendors ask you to renegotiate licences?" I asked. My friend had.
"When you think about it," I continued, "software is just zeros and
ones. So half of software is, literally, nothing. Yet vendors are now
asking us to pay more for nothing, even though it's being used on
computers that don't actually exist, other than as logical constructs.
Is banking any more complicated than that? Were the guys that cobbled
together sub-prime securities dealing with tougher abstractions than
"I know you've beaten back the vendors on this one. You saw through
the rotten deal of the same amount of nothing for more money and
knocked the extra licence on the head. That makes us CIOs smarter than
the finance guys - we know real value when we see it.
"The other reason we'll do all right is that we understand how to make
things unbreakable. Every banker under the sun knows that if things
get really bad, there's a bail-out waiting to happen. The government
knows it, too - that's why central banks exist. IT has never had that
luxury. Either we build fabulously redundant systems or we don't have
a job. Right now, we're the experts in building things that can't
break and the processes that go with them. We know how to layer the
safeguards and get the processes right.
"So who do you think the CEO wants the CFO to talk to now? The spivs?
Or the guys that build unbreakable stuff?"
By now my friend was buoyed, and even got into the spirit of things.
"I can make this work!" he exalted. "You know how everyone says we
should let generation Y do whatever the hell they want at work? I'm
going to suggest that the kid who founded Facebook should be our new
"He's made a stack of that weird virtual cash that got us into this
mess in the first place and clearly a bank needs someone who
understands almost-money inside out.
"And only the CIO knows enough about Facebook even to come up with a
great suggestion like that!"
My mate's bank was duly socialised the next day. It's now a division of Google
dedicated to auctioning off repossessed houses and selling ads on the
electronic wallpaper the company insists on installing upon every
Welcome to the new economy!
Fairfax Business Media
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