Andrea Di Maio
VP Distinguished Analyst
12 years at Gartner
25 years IT industry
Andrea Di Maio is a vice president and distinguished analyst in Gartner Research, where he focuses on the public sector, with particular reference to e-government strategies, Web 2.0, the business value of IT, open-source software… Read Full Bio
by Andrea Di Maio | February 1, 2012 | 5 Comments
The UK Government Digital Service created by Minister Maude under the leadership of Mike Bracken (ex-Guardian) just released a much-awaited beta version of its new unified web site for public sector, at www.gov.uk.
This is still far from being a full replacement of the current government portal Directgov, but gives a pretty good idea of how things will develop. At face value, it doesn’t look better than many other government web sites, although it is said to provide more effective search capabilities. It provides categories to browse from, popular terms or services and then, for each category, a mixture of information people may be looking for and some services. The style of interaction does not look dissimilar from many other web sites, and it does not even provide the ability for people to tailor it to their needs (like redbridge i does for instance).
But the beauty of Gov.uk is supposed to be under the hood. As a review on the FT Tech blog puts it
Early testing on 2,000 people by civil servants cut by a third the time it took people to find information or complete a task. In some cases, dozens of pages have been whittled down to a multiple-choice process to guide users to their particular destination
If this is confirmed, it is well worth a suboptimal (at least for now) user interface. Also, what is being praised is the unusual development style, which is definitely closer to a start-up or one of the tech giants in Silicon Valley rather than a traditional government institution. The profile and resume of most developers in nothing like the usual government IT person.
There is an excellent review provided by Alex Howard, who also hints to the technology used. One thing that is missing though .- and this also pointed out in Alex’ article – is a clear path to making sure services and information on the new site can be used by multiple intermediaries.
There seems to be an inherent contradiction. On the one hand the UK government is pushing for open data and working to gov.uk as a platform. On the other hand the effort so far seems to be focused on making sure that people only use it. But wasn’t this Directgov’s initial idea? And hasn’t time proven that – especially with evolution toward web 2.0 and social media – people want to be in control of the channel and application they use to interact and transact with government?
UK politicians and government executives keep talking about citizen-centricity, and yet they seem to miss what it really means.
Case in point: In the e-government space, the UK government said many times that intermediaries are important.
The first intermediary policy that I ever saw in the world came actually from the UK in 2003. It was assuming (well before the term web 2.0 was invented) that people may wish to choose a different entity than a government organization to conduct government business (e.g. an insurance for health care, a bank for tax returns, an association for applying for school, and so forth). However their portal development strategy did not really apply that policy.
More recently (in 2007) they have been at the forefront of what would become the government 2.0 movement, and when I met Directgov executive two years ago I was told they were planning to support intermediaries and not act as the only point of contact. And yet, there has not been any visible development. A little over a year ago a Directgov review confirmed the ambiguity between being a service wholesaler or a retailer
Now, with the government pursuing more savings, there is an even greater momentum to close down existing government web sites and consolidate everything into a single web site of sort, which I assume is what gov.uk is the beta version of today.
So, what happened to the idea that people may get greater value from choosing a more natural contact point to interact with government? If there is value in allowing organizations to leverage open data to create dashboards and applications, why shouldn’t it be the same for services and information hosted by gov.uk? Why should I use it to know my council tax (this is one of the services they provide), if I’d rather use my council web site more frequently?
I am pretty sure that the techies at the GDS will tell that the gov.uk architectures supports it, that they just have to define the API, and that as everything is open source and cloud-based, it is almost a “piece of cake” (well, of course they would be more cautious, but as they are young and cool I have no doubt they would pull it out).
The problem is that this is not just a technical issue. It is a design issue. It is about asking yourself from the outset “is my web site the best way to deliver this service to a citizen? And, if not, how do I figure out the best channels and engage them?”. From what I read, there has been a lot of user involvement in designing the site: but I am not aware that there has been much effort invested into looking at a broader set of use cases and options.
So, what is Gov.uk going to become, when it grows up? A platform or yet another government single-point-of-contact?
Category: Europe and IT e-government open government data Tags: Directgov, UK government
by Andrea Di Maio | January 30, 2012 | 3 Comments
The last blow to the open government cause in the US federal government just came from the resignation of Aneesh Chopra as the US Government CTO and one of the driving forces behind the 2009 Open Government Directive. Last yeat his deputy, Beth Noveck left, followed a few months later by the US federal CIO Vivek Kundra. With Aneesh leaving, none of the minds behind the directive is left in office. Officially, this does not mean anything: Beth has been replaced by Chris Vein and Vivek by Steven VanRoekel, and there has been no word so far about winding down open government activities.
Open government supporters insist that the movement is alive and kicking, but it is fair to say that, if it is a revolution, it is going very slow and is testing the patience of those who are fighting with shrinking budgets and financial sustainability issues in government organizations around the world.
Taking a look at the open government plans published by US federal agencies, and the related dashboard, it is quite apparent that most plans have not been updated since their first version, and there is very little information about progress and what has been accomplished.
Of course there is still a lot enthusiasm elsewhere, and every week there are new jurisdictions joining the race to openness, but how long will that enthusiasm be maintained before open government delivers on its promise?
There is still a chance for open government to prove its value, before being marginalized, and it is to create a clear connection with problems that jurisdiction and agencies need to solve. This implies that open government must be redirected from simply increasing transparency to fighting crime and tax evasion, improving health and education, reducing the cost of government. And that open government experts do no longer limit themselves to enabling the wisdom of the crowd and the creativity of application developers, but take ownership of how open data can and will solve specific problems, and be accountable for those solutions.
But this is a completely different ball game, isn’t it?.
Category: open government data web 2.0 in government Tags: Aneesh Chopra, government 2.0
by Andrea Di Maio | January 30, 2012 | 1 Comment
Last Saturday a group of concerned and web-savvy Italian citizens met in Rome to give birth to a new political party (named “Insieme Italia”, i.e. “Italia Together”). The new party aims at “building shared strategies and actions to get out of the social and economic crisis that besiege the country”
Associates have to accept a code of ethics that stipulates their independence from existing political parties and other concerns that might distract them from defending collective interests. Transparency and participation are said to be at the core of the new party to make sure ideas and plans are developed collegially.
Interestingly enough, the party’s brand new web site and Facebook page do not carry any information about the background for this idea, who the actual promoters and current roles are, nor is there any evidence yet that this information will be released any time soon.
Although this is a small example, it says a lot about the difference between preaching and adopting transparency. While some caution in embracing full transparency by established organizations is understandable (as they try to understand the potential disrupting impact on the mission, operation and structure), such caution is much more surprising in a brand new entity that claims its difference from previous ways of doing politics and centers its messaging around participation.
Transparency is a great tool, but comes with a high price: the loss of control. If our clients, citizens, voters see through our walls as in a glass house, so that they can tell us what is wrong, what to change and who to change, are we ready to take their advice? Are we ready to disrupt our plans? Are we ready to step aside?
The common wisdom is that social media is disruptive only for traditional organizations. The reality is it can disrupt each and every one of us. Are we willing to listen?
UPDATE: Less than 48 hours after its creation the Facebook page of the newly formed party “Insieme Italia” has removed the ability for Facebook users to post comments, and allows only posts from the administrator, claiming that this measure was requested by Facebook Inc. Here goes transparency.
Category: Uncategorized Tags: Italy, politics
by Andrea Di Maio | January 24, 2012 | 2 Comments
The US General Services Administration offers a 12-week course for government professionals to master social media. The program looks quite comprehensive, with a good mixture of theory and practice.
Weeks 1–2: Communities Off Line and On: Why do we form social networks? What forms do social networks take? How do we manage social networks to increase the possibility of positive outcomes?
Weeks 3–4: Information as Online Currency: What is information? How does it function online? How can it be managed in an age where every possible viewpoint is expressed and reinforced online? Can we ever achieve consensus?
Weeks 5–6: From Information to Action: How do we encourage participation through social media?
Weeks 7–12: The Capacities and Limits of Social Media: What can be achieved through social media—with regard to collaboration, transparency, and citizen participation—and what are the limitations and even perils that social media must confront?
Most likely, by the end of this course, attendees will have a fair understanding of potential and challenges of social media. I just wonder whether they will be given the right perspective and the course will be courageous enough to explore the employee-centric view of social media, according to which social media succeed in delivering business value if they deliver personal value to each and every individual who is supposed to be engaged.
One reason for caution is the target audience, which is supposed to be composed by government professionals who
-
- Aspire to positions with a heavy social media component;
- Are given responsibility for an office’s social media strategy, activities, or training,
- Are new to social media and want a deep and thorough understanding of the tools; and/or
These are profoundly different audiences, which will use social media in very different ways. According to the common wisdom, the former two categories overlap. People who are excited about social media do see its use in communications and citizen engagement. But the most important category is the last one, i.e. everybody else: people who have no aspiration to make a career out of social media, but may find value in using it as personal working tools to become more effective and efficient at what they do (assuming their primary role is not communication).
It would be best to run separate courses, because the first two categories should look at the corporate use of social media, while the latter would focus on employee-centricity, BYO (bring your own) device and/or community. Of course there is some common ground for the basics, but 12 weeks are a too long a time not to make a clear distinction between different audiences.
So, while the initiative deserves much praise, let’s hope that its execution does not fall pray of the conventional corporate-centric approach.
Category: social networks in government web 2.0 in government Tags: government 2.0
by Andrea Di Maio | January 18, 2012 | 1 Comment
I recently pointed out that there has been a number of high-profile government IT executives holding whole-of-government positions who have moved out of government. One of them was Vivek Kundra, the former US Federal CIO, who accepted a position at Harvard, while others moved to vendors who are quite active in the cloud enablement or provision market (such as VMWare and Cisco). Now also Vivek has moved to a cloud vendor, i.e. salesforce.com, as executive VP of emerging markets.
The move of IT executives across industry sectors and from IT providers to IT users is a sign of healthy job market dynamics. In all these cases, though, one remains with the fundamental question about what this gifted individuals would have accomplished, had they stayed in their position a bit longer than the high-level strategy definition phase. A cynical reading is that their move came after they crated an interest and a high-level framework for cloud adoption but before being involved in any actual vendor selection process, which could have made any such move more difficult or certainly target of criticism.
I hope they will convey to their new employers a clearer view of what public sector customers need and expect. Saleforce.com is quite an interesting case, as they have not launched any “government cloud”, unlike many other large players like Google, Microsoft, IBM and – more recently – Amazon. This has not made them any less successful in terms of government references so far, so it will be interesting to watch whether Vivek will be salesforce’s evangelist for the use of public cloud in government, or will be the government’s evangelist inside salesforce to make them change attitude toward a government cloud.
Personally, I’d like the former over the latter, as I believe that the full value of cloud computing can be realized only on a public cloud scale.
Category: cloud Tags: salesforce.com, Vivek Kundra
by Andrea Di Maio | January 9, 2012 | 11 Comments
During the Christmas break I have been reading “The Social Organization”, an excellent book written by two distinguished colleagues of mine, Anthony Bradley and Mark McDonald, which looks at how organizations in different industry sectors can take advantage from social media more strategically than many do today. The book leverages a lot of Gartner research collected over the years and brings many of its points to life through multiple examples of how companies have been succeeding as well as failing in using social media.
The book makes a great point about the different nature of social media endeavors, recognizing that some of them are top-down while others are bottom-up. It does provide useful advice about how to better plan for top-down initiatives to make them more successful, and how to create an environment that better aligns bottom-up initiatives to corporate objectives.
I would recommend reading this book to anybody who is struggling with articulating the full value of social media and wants to have a comprehensive view of what it takes to make it an effective corporate tool today.
However there is an important question that the book, in my humble opinion, leaves unanswered: what is the right balance between top-down, corporate-driven activities, and bottom-up, personal activities?
The center of the book is the enterprise and how social media can create value for the enterprise: Anthony and Mark did a great job at describing how the principles that support community building and mass collaboration relate to management principles, and how managers need to be more guides than managers.
But little is said about the critical link between the personal purpose and the corporate purpose, despite their invitation to ask the question “what’s in it for participants?”, as a key point to assess whether a community purpose is sufficiently magnetic to keep individuals together.
I believe that the future of social organizations will be one where the organization recognizes the power of the individual and accepts that individuals – be they customers or employees – will always see themselves, rather than their organization, at the center of a community or a collaboration endeavor. Communities will not be sustainable because they are cool or well designed or well managed: of course all these elements will play an important role, but the key ingredient will be to make community building and participation a tool for individuals to succeed in their personal endeavors.
For all those who are not convinced with this position, just think about the fact that social media still is a relatively new phenomenon. People using it will be moving from one job to another, from one organization to another, over the years, and the links they establish, their social networks, the communities they participate in, will be part of their personal assets. Next time they move into a new job, they will assume (and not just expect) that those assets will be available to them and that they will be both exploiting and further developing them during their jobs.
Nobody really knows how future, community-empowered workers who are used to play across organizational boundaries will fit into any current or foreseeable organizational structure where management principles can be successfully applied.
I am sure that some of us do realize the inherent conflict (I do think we need a stronger word than “dynamics”) between individuals and organizations, be they commercial corporations or government agencies, that social media can fuel. However we prefer not to stretch our imagination and discover even greater social media risks for organizations than those they already face today. We do so because adding more risks to the plate would paralyze the initiatives that many organizations are piloting to better understand and get value from social media.
Books like “The Social Organization” help articulate a mid-term roadmap, plan and execute successful project, but do not try to capture the longer-term future. A future where the very concept of organization as we know it might be subsumed by different ways in which individuals decide to self-organize around particular purposes. A future where what we call “enterprise” today may just live the short space of a fortnight and then be dismantled, A future where entire middle management layers may be replaced by technology and behaviors that allow communities to self-discipline.
Personally, I have no crystal ball. But I bet that the best way to figure out how that future might look like is to think more about the “social individual” than about the “social organization”.
Category: social networks in government Tags: social media
by Andrea Di Maio | December 27, 2011 | 4 Comments
For the third year in a row, here is my (absolutely personal) top ten in the area of government 2.0 and government innovation in general. This ranking is my own, and – as such – totally arbitrary.
I am sure I am missing great things that happened in many corners of the world, and I could actually make it longer. My choice is based on topics, issues, individuals, jurisdictions that have “animated” my life as an analyst, through multiple interactions, dealing with several questions about them, and agreeing or disagreeing with what they are doing.
As usual, my thanks go to all professionals who, in different roles and capacity, inside or outside government, work relentlessly to help transform the public sector with (or notwithstanding) technology innovation. Their contribution has been essential to help governments around the world face their huge challenges and better prepare to deal with an often uncertain, and certainly even more challenging future.
As usual, the list is in reverse order, from number ten to number one.
10. Vendors trying to help with government clouds
With the US federal and several other governments hugely interested in cloud computing, several vendors have made significant inroads to meet government requirements for security and data sovereignty. Although most vendors tend to overuse the term “cloud” as an umbrella for a number of different services and delivery models, they have been listening more carefully and responding to their government clients’ needs. Examples include the development of specific federal clouds by Google, Microsoft, IBM and more recently Amazon; the issuance of IaaS blanket purchase agreements by GSA; the role of the vendor association Intellect in helping the UK government shape its own cloud strategy. While there is still room for improvement, things seem to be moving in the right direction.
9. Cloud Security research by the European Network & Information Security Agency
Largely ignored by clients outside Europe (as witnessed by the number of clients who had never heard about it), ENISA’s “Security and Resilience in Governmental Clouds” is one of the few substantial contributions that the European institutions and agencies have provided to the cause of greater use of cloud computing by government organizations. Very thorough, it provides a great list of criteria for anybody who wants to look beyond the surface of compliance issues, and to something a bit more international than what FISMA and FedRAMP give in the US.
8. How Queensland used social media to face the floods in January
This has been mentioned by many as one of the best examples of good government use of social media where this has often associated to riots and revolutions. Several state agencies opened access to social media to their employees, and started using platforms like Twitter and Facebook to reach out to the community affected by massive floods. Some of those uses have been exemplary and have gained the Queensland State Police, amongst others, accolades and awards. This great case also showed us how social media can serve a tactical purpose to face an immediate need, but may be difficult to sustain over time.
7. The many UK strategies
After a pause to let the new coalition government settle, the UK Cabinet Office did issue a Government ICT strategy in March, followed by a shared services vision and then a stream of documents about the implementation of the ICT strategy, covering cloud computing, end-user devices and more. These documents show that the idea of having foundational partners, i.e. IT leaders in large departments, in charge for different parts of the strategy is working. On the downside, though, some leadership changes in the Cabinet office, with executives moving to the private sector, may leave some void at crucial implementation time.
6. Alex Howard: great gov 2.0 blogger
Alex and I are often on the opposite side of the fence when it comes to debating open government. He is an enthusiast, although, being a reporter, he does not like this term. Actually, I mean this in a positive sense, as opposed to my analyst cynicism that makes me look at many open government endeavors as politically motivated, déjà vu, or “me-too”. I have often enjoyed comparing notes with him and certainly like the breadth and depth of his government 2.0 coverage. Probably if he were not working for O’Reilly, he could come to terms with the weaknesses in the “government-as-a-platform” approach: despite this, he is one of the most balanced bloggers I have been reading on this and related themes.
5. The US Federal CIOs: change and continuity
This year has seen the change in federal IT leadership with Vivek Kundra moving to Harvard and Steve Van Roekel taking his place. Vivek has been one of the most controversial and innovative figures in federal IT, dividing experts between enthusiastic supporters and dismissive critics. The former liked his very different approach, driven by transparency and the willingness to push change in various areas. The latter complained about his lack of experience with federal environment and processes and even accused him of caring mostly about self-promotion. Reality, as usual, is in the middle: he certainly was visionary for the federal environment and triggered some significant change; however he did not put enough emphasis on the sustainability of his many initiatives. Steven’s main challenge is to accomplish something that helps build political capital in a re-election year: he is doing so by building upon what Vivek did, rather than immediately looking at something else in order to impose his personal vision.
4. Australia: down under and down to Earth
During 2011 Australia published both its draft ICT strategy and its cloud strategy. While not perfect, these documents are very sensible and do not try to impose blanket approaches to all agencies. This has been much welcome in between a stream of more compulsory measures, from the shared service approach in Canada to Cloud First in the US. It is always refreshing to discuss about these topics with people at AGIMO:I do wish them to keep a stronger drive than what they did with the outcome of the government 2.0 taskforce, which made number 2 in my top ten in 2009 but apparently had little impact so far.
3. GSA: keeping their drive with tighter budgets
The tighter federal budget in 2011 has taken resources away from some of the innovative programs that the US General Services Administration have been leading under the Obama administration. Nevertheless they have kept advancing their agenda on both USA.gov and on cloud computing. On the latter, despite a change in leadership, they have finally published the blanket purchase agreement for IaaS, pushed a call for tender on email services through a GAO protest, progressed the complex FedRAMP initiative, while transitioning themselves to a new cloud-based email service. This is a group of talented and highly-motivated professionals who epitomize the great government employees that made number 1 in my top ten last year.
2. Women in IT: leading with grace
I have written in the past about how women get social media better than men do, and how I have had the pleasure to meet great female IT-savvy politicians and IT executives. The list goes on and on. Behind many of the successful achievements that I have been tracking there is a woman. People like Linda Cureton (NASA CIO and author of the excellent “The Leadership Muse”), Ann Steward (Australian federal CIO), Mechthild Rohen (Head of eGovernment program at the European Commission), Claudia de Andrade de Wit (CIO of the City of Amsterdam), Stela Mocan (Director of the eGovernment Center in Moldova) and many many others are all great examples: we’d better watch out!
1. New Zealand: the best social media guidelines so far
Analysts can’t help find little drawbacks even in the best product or strategy. That’s why I was so happy to find the social media guidelines from the New Zealand government: this is close to an almost perfect document (of course it’s not, analysts are impossible to please) and certainly one that I recommend to many to read. It is a great blend of common sense and actionable advice, and can be easily tailored to different contexts. The authors said they were heavily inspired by a document prepared by people in the UK government: however it does not look like the UK published one yet, so, while some kudos go to the unknown British employees who inspired this, the merit is all for our distant friends in the Pacific.
Thank you all for reading my blog through 2011. Let me wish you, your families and friends a Happy New Year.
10. Vendors trying to help
To watch in 2012
- SSC Canada
- FedRAMP impact
Category: IT management e-government public value of IT web 2.0 in government Tags: Australia, government 2.0, GSA, New Zealand, US federal CIO
by Andrea Di Maio | December 21, 2011 | 1 Comment
A couple of years ago, when interest in cloud computing was starting in the public sector, I wrote a note about Shared Services in Government: Obscured by the Cloud? (client access required, any reference to the Pink Floyd’s album is unintentional, although it may reveal some of the author’s musical tastes).
The note stated that
While government agencies and departments are looking at shared services as a way to reduce costs and increase efficiency, some of the potentially shareable services will be supported by cloud-based solutions
and that
While not suggesting that government organizations that are currently engaged in devising a shared-service agreement among themselves are doomed, it is important to understand where the cloud will impact government shared services and where it will not and when.
providing advice about which types of shared services were likely to be challenged (or “obscured”) by cloud-based services, which ones would have a chance to provide sustainable value, and which ones would be an intermediate step toward more centralized services (where the difference between shared and centralized is that in the former clients do have a say by participating in the governance process, while in the latter they are just clients).
This being said, it does not look like governments have been taking much notice. There are quite a few shared service initiatives (or strategies) that focus on IT infrastructure services, which that are presumably seen as a commodity by most prospective clients. Examples include the Canadian initiative to consolidate a whole-of-government infrastructure and run it as a centralized service, or the more recent US federal “Shared First” strategy (a Gartner research note is being prepared), which is looking at commodity IT services as easy wins for shared services, despite some of them being already targeted through an earlier “Cloud First” initiative.
On the other hand, according to NextGov, the US Congress is directing the Department of Defense to use commercial cloud computing services rather than those provided by the Defense Information Systems Agency (DISA).
As stated in the congressional record dated December 12, 2011:
Not later than April 1, 2012, the Chief Information Officer of the Department shall submit to the congressional defense committees a performance plan for a reduction in the resources required for data centers and information systems technologies Department-wide [including] Migration of Defense data and government-provided services from Department owned and operated data centers to cloud computing services generally available within the private sector that provide a better capability at a lower cost with the same or greater degree of security
I assume this will be subject to negotiation and interpretation, but exemplifies quite well the potential – or, better, the actual – conflict between cloud computing and shared services.
Anybody who is familiar with the complexity of government IT (and very much so in the defense environment) knows quite well that migrating to any cloud solution, and even more so when commercially provided, requires much more than turning a key and pulling a plug. But the real question here is whether shared services at an infrastructure, commodiity level have a sufficiently long shelf life to allow the expected returns on the investment to materialize: in fact, also getting the shared service levels and governance mechanisms right is far from trivial.
The race between shared services and cloud will be interesting to watch, as shared service providers move up the value chain (from infrastructure to applications) and commercial cloud-based offerings mature along that same value chain. What is important is not to be obsessed with either, but to create fair conditions for departments and agencies to procure the service they need at the best value for money from the most appropriate service provider.
Category: cloud shared services in government Tags:
by Andrea Di Maio | December 20, 2011 | Comments Off
On December 13 Fast Company’s blogger Hana Schank posted about the New York’s Digital Deficiency, providing some evidence that open data application contests, which are being used big time and with some media coverage in NY, do not work as well as many claim. Alex Howard, one of the most prolific and accurate bloggers when it comes to open data and “government as a platform” acknowledged Hana’s points but provided counterevidence that this approach can work, mentioning the success in Chicago.
I do not think either of them is wrong.
Hana underlines a well-known problem with some open government endeavors, which is the lack of focus. Sometimes people confuses the means with the end, and application contests deliver technically interesting results that turn into a modest citizen uptake.
On the other hand, Alex highlights that by embedding sustainability as a key concept in an open government plan (as Chicago did in his opinion), it is easier to achieve successful use of open data that sticks, rather waning after the initial excitement.
I tend to err on the side of cynicism when it comes to open government. It may be the case that, like in other great examples of use of social media in government, its value will become evident when facing a major crisis, an emergency or a problem that cannot be solved otherwise. But, lacking any of that (which would be a blessing) we certainly need to take it out of the hands of enthusiastic pioneers, application developers and “open anything” geeks, and turn it into a tool that the average government managers can understand and utilize. This implies that open government may have to become more inward-looking, aimed at solving internal and bureaucratic problems rather than making citizen happy and saving lives. As I have been saying for quite some time now, selfishness may be the best way to make open government stick.
Category: open government data web 2.0 in government Tags: government 2.0, open data
by Andrea Di Maio | December 19, 2011 | 1 Comment
In previous posts, research notes and press releases both I and my colleague David Furlonger have been warning our clients about the need for CIOs and IT leaders to start preparing for the consequences of a euro crisis.
Understandably many people are in denial about the possibility that the euro breaks up, or that their country leaves what looked like a safe haven just a few years ago. EU treaties that included detailed provisions to join the euro and were supposed to reign on the fiscal rigor of countries that proved to be much more profligate than they could afford do not contain anything to deal with an orderly (or less orderly) exit of one or more member states from the eurozone.
As a consequence, while people do understand that a euro meltdown or a major change in the eurozone would have a critical impact on their business, they assign such a low probability to these events that they feel they do not need to prepare.
However there are good reasons to prepare even if the euro stays the same, perhaps with changed rules that favor a greater integration of fiscal policies across the eurozone. Last week, for the first time, the IMF managing director has used the word that many have in mind but are afraid to pronounce: depression. As reported by the Deutsche Welle
“The world economic outlook at the moment is not particularly rosy – it is quite gloomy,” she said, warning that failure to act collectively could lead to protectionism and isolation reminiscent of the 1930s depression.
“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating”
Looking at the stream of news from the last few months, what she says makes a lot of sense. A depression would have on many businesses and government agencies in and outside the eurozone and impact that is comparable to a euro meltdown. However the difference between the previous depression and a possible future one is embedded in something else she said:
As European leaders work to resolve their “monumental” challenges, the impatience of financial markets is a problem, Lagarde conceded. She cautioned that democratic processes often make quick fixes difficult, saying that the collision of market expectations with political reality must be resolved.
The speed at which highly computerized financial markets react to the unchanged pace of policy is where the key problem lies. Democratic processes, like any human process, simply cannot keep pace with automated processes.
As I highlighted in a previous post, IT has some major responsibilities for the situation we are facing. Irrespective of whether this will create or not a backlash against the IT industry similar to what we are seeing with the banking industry, IT professionals in all enterprises should start planning both professionally and personally for what the current situation could morph into.
Those who work in countries that are most directly exposed to the euro crisis should not be dismissive or remain in denial, but leverage this crisis in order to prepare themselves for major shocks that may hit their business and country even if the euro stays pretty much as it is today.
Let us know what you think by filling our simple euro survey questionnaire and register for our free webinar.
Category: Europe and IT IT management Tags: euro crisis
