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Software

Tesco and stock markets show frailty of techutopian case

For many years now, techutopians and their fellow travellers have perpetuated the myth that the answer to pretty well everything lies in binary code. “Software is eating the world,” wrote Marc Andreessen in 2011 and he is quoted approvingly wherever the digirati convene but all too often his argument is misrepresented. Andreessen believed (and still believes, I’m sure) that software is changing pretty much every market it touches, and so it does. But the blithe notion, seemingly widely held within the ICT industry, that software and automation are all-powerful is proven to be fundamentally wrong on a regular basis.

Two headline-winning stories here in the UK this week back will suffice. The first is the hair-raising tale of how an independent “flash crash” trader was able, allegedly, to spark a $500bn crash in the stock market. The second, and another ‘crash’ comes from Tesco, the UK’s largest retailer, announcing a  £6.4bn ($9.6bn) pre-tax loss after a revaluation of assets, an accounting fraud charge and struggling efforts to grow in new markets and geographies.

The stock markets with their risk metrics, governance controls and algorithmic trading, and Tesco with its acclaimed innovations in customer loyalty and business intelligence, are regularly held up as highly sophisticated users of technology. And yet here, their technology systems appear to have failed to provide warning signals - or the organisations that run these systems failed to act on them - leading to fiasco.

When pundits talk about the inexorable rise of automation or machine intelligence superseding the human capacity for decision making, these are examples that need to be added to library of case studies in the small but hugely important counter-claims section. Digital technology can be frail, misleading and even catastrophic unless well managed so let’s be careful and restrain form worshipping these abstract gods.

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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