Will IBM Be Knight Capital's White Knight?

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In response to the August software glitch that resulted in a $440 million trading loss, Knight Capital Group tapped DevOps solutions leader IBM for help in reviewing and assessing the financial firm’s existing software and systems development practices.

CEO Thomas Joyce explained that the outage was caused by a software upgrade. Further investigation determined that the cause of the trading outage was the result of old networking software that was still on the firm’s servers. But what exactly can IBM do to help Knight Capital address and prevent these problems from recurring in the future?

IBM is one of the leading suppliers of DevOps-related tools and processes, including agile process maturity. Knight Capital’s journey to reliable software and systems management must start with software development methodologies, including source code management, build engineering, and release management. This means that the firm needs IBM's help to establish reliable and effective methods for baselining its code so that all releases are fully traceable.

No doubt that IBM will help Knight Capital establish effective automated build procedures to create code that can be reliably deployed and tracked through a software configuration audit. Had these procedures been in place, Knight Capital would have known that old software, that should have been retired, was still sitting dormant on their servers. It is worth noting that the IEEE software configuration management standard specifically mentions the importance of having a procedure to retire unnecessary code that could potentially impact existing application software.

IBM will review what happened and make recommendations on how to prevent these problems in the future. With the SEC set to hold meetings on this topic in the coming weeks and possibly create new regulations to establish effective IT controls, IBM may find that its dance card is getting filled. No matter how big the consulting bill turns out to be, it definitely won't top $440 million.

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Bob Aiello

Bob Aiello is a consultant, a technical editor for CM Crossroads, and the author of Configuration Management Best Practices: Practical Methods that Work in the Real World. Bob has served as the vice chair of the IEEE 828 Standards working group and is a member of the IEEE Software and Systems Engineering Standards Committee (S2ESC) management board.