IT Failures

The IT failure in the system upgrade of Royal Bank of Scotland caused massive impact on transactions of their customers and even of customers of other banks. In a report titled “IT Spending in Banking: A Global Perspective” the problem that may lead to this IT failure is pointed out.

The report says:

Of the total investment in IT in 2012, a whopping 77.6% goes to maintenance. European banks are having the most difficulty in reducing their maintenance spending.
Banks will need to spend on new investments, at least partly as a result of needed system upgrades. Frequently, financial institutions are running systems that are too obsolete, too slow, and inflexible. Systems like these are impediments to achieving optimum operational efficiency as well as to developing products.

I find the situation ironic: on one hand many companies rush for some fancy applications and ideas, such as the cloud which is believed to provide more flexibility and productivity, and the SCM which take advantage of social media to get closer to their customers. On the other hand, however, inefficiency in some core business is neglected because those transactions are supported by their traditional systems and they are the maintaining part not where the main investment goes. What they want is transformation of the organizations but some perhaps fail to fully considerate the priorities in both business and IT perspective.

An earlier report from the Standish Group issued in 1995, says the critical factors contribute to the failure or success of an IT project are involving user participation, requirement specification, planning, executive management support, ect.  My understanding is that during these processes, various needs are weighted and balanced on the basis of analysis on how the organization functions to meet its long-term goal. IT is adopted to keep the continuity and robust development of the business as well as its transformation.

In that sense, how could RBS implement the upgrade system before it is fully tested? How could many IT failures are merely regarded as some accidents?