Page 14 - enterpriseinnovation.net

upfrontThe world financial picture may be differentby the time you’re finished reading thiseditorial.It was certainly different several weeks ago.Then major US investment banks crashed andburned, sparking sheets of flame across worldwidefinancial industries. The extent of the scorchmarksis ongoing, but at least the run on Bank ofEast Asia was short-lived.The initial rumors of problems at BEA werespread by text-messaging. While bank runs recurthroughout history (no one was spreading rumorsvia mobile phones during the Hang Lung Bankrun in 1982), the text-messages alleged that BEAwas hiding balance-sheet exposureto AIG and Lehman Brothers.Imagine all the BEA-doomsayerssending Twitter “tweets” (microblogentries)instead. Worse or better?BEA, unsurprisingly, failed to fail.And the cops are investigating thesource of these erroneous text messages(yes, the HKP has a TechnologyCrime Prevention Unit and it will beinteresting to see what they turn up).More lasting effects will manifestas companies cancel events and corporate sponsorships.But I’m wondering: how many HongKong enterprises will postpone upgrades to theirIT infrastructure, or even replacement of creakylegacy systems?Financial insecurity creates problems acrossthe spectrum. The spectacular failure of large institutionsreinforces pre-existing doubts, and createsnew doubts. Credibility of analysts plummets(more than a few said Lehman/AIG were rocksolidjust before they tanked).Affected firms sack employees, vacate offices,and cancel company trips and events. Affectedinvestors cut back on luxuries, and with currentairfare prices, that trip to Bali may have to be postponed.Affected consumers across the globe willtrim their spending, which will in turn affect supplychains and bottom lines across the manufacturingwonderland that is the Pearl River Delta.I’m no economist. But you don’t have to be aweatherman to tell which way the Signal 9 wind isblowing. We’re in for choppy times ahead.Fortunately, Hong Kong is a place where fiscalconservatism is not only praised, but practiced.Hong Kong banks let customers “hard-wire” theircredit cards to their bank account, debiting 100%of the monthly bill from the savings account, withoutthe customer paying a penny of interest. Thispractice epitomizes the fiscal common-sense thatdiscourages unreasonable leveraging of debt. Theinvestment banks that failed in New York didn’ttake deposits from retail customers—the bigFunny moneybanks in Hong Kong not only take deposits, but afew even issue the HKSAR’s currency.Still, the waves will be frothy. Computerworld’sPatrick Thibodeau recently wrote that the federaltakeover of Fannie Mae last month resulted in severalupper management changes at the mortgagefinancing firm, including the exit of its CIO. RahulMerchant, who’d joined Fannie Mae in 2006 fromMerrill Lynch (where he was head of global businesstechnology).At a mortgage-industry technology conference inFebruary, Merchant alluded to the financial problemsnow manifesting in the Bush administration’sUS$700 billion bailout of the financial services sector.That cost is in addition to the potential$200 billion cost of rescuingFannie Mae and its mortgage rivalFreddie Mac, and the $85 billion thatthe government is paying to buy majorityownership of insurer AIG.Merchant said at the conferencethat IT organizations will need tofocus on “improving credit risk managementby providing more preciseand timely business information,including early warning reports andimproved credit loss metrics,” according to a summaryof his remarks prepared by Fannie Mae.IT is a big operation at Fannie Mae, which isformally known as the Federal National MortgageAssociation. As CIO, Merchant had managementresponsibility for more than one-third of the company’stotal workforce of about 6,000 people. In aseparate statement, Fannie Mae said its technologyand operations business unit will now reportto Michael Williams, its COO.It’s ironic that during the Asian financial crisis of1997-98, US politicians cautioned against governments“interfering” in private financial marketswith stimulus packages. But hopefully no HongKong CIOs will see their jobs “insourced” to theirCOOs. While we at CWHK have seen plenty ofbusiness/IT alignment over the past few years, wefeel CIOs are essential to enterprises—technologyprocesses have become too complex for criticaltech decisions to by made by executives withoutcritical tech experience.Then again, we doubt any Hong Kong enterpriseshave engaged in quite as much “creativemortgage-math” as Fannie Mae.Stefan HammondEditorshammond@questexasia.comhttp://www.cw.com.hkComputerworld Hong Kong is published by Questex Asia Ltd, 501Cambridge House, Taikoo Place, 979 King’s Road, Quarry Bay, HongKong.EDITORIALEDITOR-IN-CHIEF Chee Sing Chan cchan@questexasia.comEDITOR Stefan Hammond shammond@questexasia.comSENIOR REPORTER Teresa Leung tleung@questexasia.comCONTRIBUTING WRITERS Ross Milburn, Jason KruppSALESASSOCIATE PUBLISHER Simon Yeung syeung@questexasia.comACCOUNT DIRECTOR Connie Yip cyip@questexasia.comMARKETING & SALES Donna Hon dhon@questexasia.comSUPPORTING EXECUTIVEART DIRECTOR Eric Lam elam@questexasia.comPRODUCTION & Agnes Ng ang@questexasia.comDESIGN MANAGERCIRCULATION & John Lam jlam@questexasia.comDISTRIBUTION DIRECTORASSISTANT CIRCULATION Allie Mok amok@questexasia.comMANAGERGENERAL MANAGER/ Jonathan Bigelow jbigelow@questexasia.comDEPUTY MANAGING DIRECTORHR & ADMIN MANAGER Rebecca Ip rip@questexasia.comBUSINESS MANAGER Eunice Chan echan@questexasia.comComputerworld Hong Kong is published monthly. Allmaterial is Copyright 2008 by Questex Media Group,Inc. Reproduction is strictly forbidden without writtenpermission.Sales and Custom Publishing Enquiries: E-mail canbe sent to Sales@cw.com.hkComputerworld Hong Kong is circulated to IT, computingand internet companies and other private andpublic companies who use IT and computing. It is editedfor IT professionals, engineers, and senior managersresponsible for design, installation, marketingand maintenance of IT systems and networks. Freesubscription offer valid in Hong Kong only. To subscribe,go to www.cw.com.hk.Computerworld Hong Kong (ISSN 1023-4934) is published eleventimes yearly by Questex Asia Ltd. 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