The ways federal technology projects can get into trouble appear limitless. What we encounter most frequently are projects where the contractor lacks the management and technical capabilities to do a good job. A well-known example of this from the 1980s was PRC's struggle to manage the patent automation project.

Sometimes, projects are undone because of congressional meddling. For example, in the 1990s, the IRS's massive tax modernization program was derailed by Congress on two occasions, just as it was developing a head of steam. Occasionally, Federal projects are undone because the federal buyer devolves nearly all management authority and oversight to the contractor. Problems along this line arose in the 1990s and early 2000s when federal agencies implemented a Lead Systems Integrator approach to managing major programs, e.g., the Coast Guard's Deepwater program. More recently, the GAO reports that a major source of schedule slippage and cost overruns on Defense projects is DoD's propensity to launch these projects before the underlying technologies have achieved a measure of stability.

The Washington Post has just reported another way that federal projects can encounter troubles. In an article appearing on May 19, the Post states that major delays in processing paper-based copyright applications have arisen at the Copyright Office after implementing an automated approach to processing applications. What used to be a six-month process for processing paper-based applications has turned into an eighteen-month process. The new system was launched in July 2008, the result of a $52 million project.

The Post identifies two primary sources of problems. One is that the automation solution developed by the agency and its contractor is not so automated: applicants are still permitted to submit paper-based applications (about 45% of all applications). Problems arise, however, when these are manually converted to electronic format. A second identified source of problems is the inadequate training offered to employees to handle the new system.

In this case, the project problem has less to do with meeting project time and cost targets, and more to do with developing solutions that lead to superior performance.

David Christopher, associate chief operating officer at the Copyright Office, notes that the system will experience a major upgrade this year. This may help alleviate problems ... or it may give Murphy a second chance to implement his fearsome law.

IT has always been a risk-filled enterprise. That's because software development is a first-of-a-kind undertaking. Programmers write programs to make software and hardware systems function in new ways. Often, the novelty of the development effort is small, requiring minor adjustments to existing programs. In this case, development risk is generally low. To the extent that the programming entails exploring truly new territory, then development risk goes up.

Programmers and systems analysts have been aware of this aspect of development risk for decades. However, in an intriguing 2007 book, titled The Black Swans, Nassim Nicholas Taleb suggests that with our single-minded focus on the traditional perspective on development risk, we are ignoring a category of risk whose consequences can be devastating -- what he calls the black swans.

The idea of black swans arose among English philosophers in their discussion of David Hume's problem of induction. The induction problem holds that even if you observe 1,000 white swans, you cannot say with certainty that the next swan you encounter will be white. (As a matter of fact, black swans were unknown until their discovery in Australia in 1790.)

Taleb uses black swans as a metaphor for totally unanticipated high-impact events. DoD managers know them as unk-unks, i.e., unknown-unknowns. He points out that when you look at problems individuals, organizations, and societies face from a historical perspective, those with greatest consequences are the total surprises. The 9/11 attacks and the global financial crisis of 2008 are recent examples.

When applied to IT undertakings, we find that in certain respects, IT efforts are well-prepared to deal with black swan events, while in others they are not. They are well-prepared in the sense that all capable IT organizations have established disaster-recovery plans to deal with catastrophic challenges to their operations. By having cool, warm, and/or hot back-up sites, IT enterprises are able to handle disasters that bring down their data processing and communication capabilities. Thus they are able to handle the consequences of power outages, earthquakes, fires, hurricanes, and other natural disasters. As the 9/11 attacks showed, they can even withstand horrific terrorist onslaughts.

However, in the day-to-day pursuit of IT projects, IT organizations do not generally equip themselves to deal with black swan events. Their risk management efforts are largely directed at catching problems through testing and resolving them by fixing bugs. Seldom do they explicitly take into account broader forces that can jeopardize IT projects, e.g., funding cutbacks, changes of management, technology changes that render their solutions obsolete, and other things of this ilk. These are the forces that are likely to produce black swans in IT. The fact that most IT projects gain funding support only after project champions promise to do ten months of work in six months, and promise to deliver more functionality than is possible to deliver, increases the negative impacts that black swan events can have on IT enterprises and their projects.

These are uncertain times. For the first time since the turmoil of the Great Depression, Americans recognize that when bad things happen, things do not always turn out for the best. It behooves all organizations -- including IT shops -- to recognize that even though black swans are rare-occurrence events that are not predictable, they need to be taken seriously. What may have been viewed as recoverable setbacks one or two years ago, may yield catastrophic consequences today.

Three years after the crash of the stock market in 1929, the US banking system collapsed (1933). Congress determined that the mixing of commercial banking and investment banking contributed to conditions that led to the cataclysm. Consequently, in 1933 Congress passed the Glass-Steagall Act to build a wall between these two realms of financial activity. The motivation was to maintain the integrity of depository institutions by shielding them from risky ventures associated with investment banking.

In the 1980s, commercial banks increasingly began taking riskier initiatives, while investment banks ventured into commercial banking-like activities. It was time to re-visit Glass-Steagall to see if it was still relevant fifty years after its passage. To this end, in 1987 William D. Jackson of the Congressional Research Service wrote a seven-page analysis that should be must reading for policy makers and concerned citizens alike. In its simplicity and adherence to fundamentals, this paper shows that you don’t need a PhD in finance to anticipate the consequences of regulatory policy.

Following is a direct quote from Jackson’s paper, where he describes the dangers of repealing Glass-Stegall:

The week of 15 September 2008 saw the near-collapse of the U.S. financial system. It is clear that the economic problems we are currently encountering are tied to attempts to deregulate financial markets that began in the 1990s.

Since the Reagan Revolution of the 1980s, it has been an article of faith among political conservatives that with deregulation, market forces take over, and the Invisible Hand automatically yields efficient markets. From this perspective, deregulated companies have no choice but to behave efficiently because the market forces them to do so. Shape up or die.

What do the following items have in common?

• Bill Gates retires as chief executive officer of Microsoft in July 2008 in order to spend time working on the Bill and Melinda Gates Foundation, with an endowment of about $35 billion.

• Warren Buffet pledges some $31 billion of his fortune to the Bill and Melinda Gates Foundation.

• Peter Senge, world renowned for his influential book, The Fifth Discipline, is dedicating his brain power to exploring social responsibility. In a recent book, he points out that individuals businesses are implementing creative solutions to establish a sustainable world.

• In defiance of the opposition of the oppressive and incompetent national government, locals in Myanmar Link">organized food distribution and relief efforts for victims of the May 2008 Tsunami, which killed some 140,000 people

• Thousands of volunteers from all parts of China rushed to Sichuan to Link">organize relief efforts in the aftermath of the earthquake that killed some 85,000 people.

• In America, volunteerism is growing dramatically and steadily.

• After President George W. Bush blocked funding for most embryonic stem cell research, private companies and state governments moved to fill the funding gap.

What these items have in common is that they show that some efforts traditionally assumed by the welfare state are being taken over by individuals, businesses and states operating independently of the federal government.