Opinion and Return on Technology and Technology

ALTOM: 2010 meltdowns, missteps and breaches ... oh my

December 18, 2010

Welcome to the annual Christmas snafu edition of this column. This year’s crop of meltdowns, missteps and breaches reminds us once again that technology is a fickle friend and unreliable ally.

For an opening example, the Japan Aerospace Exploration Agency was rather embarrassed when earlier this month its $30 million Akatsuki space probe overshot the planet Venus and just kept going.

Closer to home, New York-based Chase’s online banking website suffered a very public outage earlier this year, when some 16 million online banking customers found themselves out of luck accessing their accounts, although they could still queue up at ATMs, which continued to work. The site went down on a Monday evening and wasn’t functional again until early Wednesday morning. Speculation was rife that the site had been hacked, but industry insiders claim it probably was caused by a collapse of outdated systems.

2010 wasn’t kind to other financial institutions, either. In November, National Australia Bank experienced a self-described “glitch” that took down all its ATMs and left millions of customers scrambling for cash. The glitch didn’t just cause lockups, but actually erased a huge number of transactions.

In May, the New York Stock Exchange had what it called a “flash crash,” when prices plunged nearly 10 percent due to a complicated and chaotic delay in reporting stock prices, relative to other exchanges. The result was that different exchanges were reporting different prices for the same stocks, which brought turmoil and the loss of millions of dollars.

Also in the financial sector, New York-based Citigroup recently printed up around 600,000 bill envelopes that, among other things, featured the recipient’s Social Security number on the outside. Pennsylvania-based Lincoln National Financial Securities admitted that it did its bit for unintentional transparency by leaving more than 1 million customer records “exposed” through its computer systems.

I tell my students not to let their software do their thinking for them, but people never learn. Avaya, a New Jersey telecommunications equipment company, hired Anthony Armatys in 2002, but he never showed up for work, having changed his mind. The payroll system didn’t catch up for six years, and he continued to receive his salary all that time. Only his attempt to pull money out of his 401(k) tipped off the company, which finally investigated. He has to pay back nearly a half-million dollars, and probably spend some time in jail.

Portable data-storage devices continue to cause heartburn for companies worldwide. Why sensitive data is ever permitted outside a closed and secure firewall is beyond me, but it happens with depressing regularity. In March, Minnesota-based Education Credit Management Corp. told the world that a “portable media device” had been stolen that held addresses, dates of birth, and Social Security numbers for some 3.3 million students, which represent around 5 percent of all students with federal loans, a total of $9 million in loans.

AvMed Health Plans had two laptops purloined that together held over a million personal records of insurance customers. The Florida company insists that only the cleaning crew had keys to the office, where the laptops were lifted. More than 200,000 records of Army reservists marched away when the military contractor Virginia-based Serco Inc. had three laptops stolen from its offices, one of which had a compact disc loaded with the personal data.

Chicago-based Millennium Medical Management Resources, which does billing for physicians, had a portable hard drive stolen last February with (yes, you guessed it) nearly 200,000 personal records. New York-based Affinity Health Plan contributed another potential half-million records that may have escaped its offices on a hard drive inside a leased copier.

Social networking site Twitter is known for its fragility, and even makes a joke of it, showing its famous “fail whale” when the system is backed up. But a few months ago, the site was hit with a hack that caused hordes of users to be sent off to other sites when they got their tweets, including pornography sites. A 17-year-old user from Australia is taking credit for discovering and demonstrating the security breach, although there is some doubt about his account.

And, finally, some of the worst meltdowns appear when governments try to streamline big operations with software. Indiana and IBM are still sparring in court over the attempt to implement a system for Indiana Family and Social Services Administration, to the tune of tens of millions of dollars. Colorado has similar problems. In 2002, Colorado wanted to scrap its six old computer systems used for dispensing welfare benefits, but when the system was finally rolled out, it was a catastrophe, miscalculating benefits and causing state employees to devise manual workarounds for years. Even after $200 million in initial costs, the system still doesn’t have many fans, although reportedly it’s improving.

That’s it for this year. Here’s hoping all your snafus in 2011 are little ones.•

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Altom is a consultant specializing in pairing businesses with appropriate technology. His column appears every other week. He can be reached at taltom@ibj.com

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