Technical Glitches Can Cost You Big Time

Sometimes a little upfront planning and testing can prevent a much costlier situation for IT and the business.

Sometimes, pre-planning literally pays off. It’s a lesson that Nasdaq learned in the wake of its horrific issues around the Facebook IPO.  It wasn’t only embarrassing, it proved costly too because Nasdaq recently announced a $62 million plan to compensate customers hurt by the launch issues — and it’s still not clear if that will be enough.

According to the Wall Street Journal’s Deal Journal, the compensation has been proposed by the company to help off-set issues during the first day of the Facebook IPO when “Nasdaq couldn’t figure out who owned Facebook shares for hours.” Ouch.

What’s not clear is if it’s enough to satisfy angry brokers who were left waiting during that first fateful day of the IPO offering. In the Deal Journal article, Nasdaq CEO Robert Greifeld made clear this is a voluntary number, and it’s worth noting that Nasdaq originally proposed a $40 million figure in June, but was met with cries of outrage that it wasn’t enough to cover their losses.

So it’s not even clear if the current number will be enough, and it is still entirely possible it will be left to the parties to work out a final figure in court when someone files a lawsuit.

Any way you look at this, it’s an ugly situation for Nasdaq and it’s one that extensive pre-launch testing might have prevented. There used to be an ad for oil with the tagline, “You can pay me now or you can pay me later” with the implication being you can invest in a little prevention up front or suffer a far more expensive outcome later.

Of course, it’s hard to know if this was a preventable situation, but judging from the comments in a Computerworld round-up, it sounds like Nasdaq simply wasn’t prepared, and if that’s the case, it may take more than a voluntary compensation plan to make this go away.

You may recall a post we wrote here in May called Network Breaches Can Hit Your Wallet and your reputation. In that article, I wrote about a data breach that compromised the personal information of 800,000 individuals and ended up costing a Massachusetts hospital $750,000 as a result. It’s just another case where some up-front planning might have prevented what became a very expensive issue.

And it’s a lesson that every IT pro should be mindful of because glitches can be costly on several levels. If your company web site is down, it could be costing you sales or potential customers might have missed you. If your site is slow, people could leave. If your system is insecure or glitchy and it has a negative impact on your customers, they could grow angry and look elsewhere or they could even sue.

So don’t be penny wise and pound foolish. Make the necessary investments in your security and reliability and ensure that your systems are running smoothly before somethng bad happens because you can pay now, or you can pay a lot more later. Just ask Nasdaq, which might not have even seen the final bill yet.

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