May 17, 2015
During the last couple of weeks, the technological and banking world has been abuzz with news about the downfall of Mt. Gox, a website dedicated...
Estimates have shown that software defects cost the U.S. alone around $60 billion a year.
Mt. Gox Falls Short of Summit
Mt. Gox recently lost a number of bitcoins, valued at $460 million, after extensive hacking that resulted in the theft of around 850,000 bitcoins. This website, formerly owned by Mark Karpeles, has suffered from a history of similar issues. While there is still speculation about whether the inherent issue of the downfall was due to theft, fraud, or mismanagement, it seems pretty clear that a large problem was due to the website itself. In an article by Wired, an anonymous source reported that not only did Mt. Gox not use any version control software, but an even larger issue existed of untested software changes being repeatedly released to the financial services website. If the software had been tested, loopholes in the website may have been found, and the hacking and subsequent bankruptcy of Mt. Gox could have been prevented.
Knight Capital Fades into the Night
In 2012, the Knight Capital Group, a global financial company that participated in electronic execution and sales and trading, was acquired by Getco LLC just two months after Knight released an untested software program into production. This program, designed to fluctuate stock prices in order to verify the behavior of trading algorithms, caused over 150 companies’ stock prices to be misrepresented, and resulted in the loss of $440 million dollars from Knight Capital. Just one day after the incident, Knight Capital’s equity had dropped by 75%. Although the company managed to raise $400 million dollars from investors to try to account for the loss, Knight Capital never recovered from this software blunder.
Tri Valley Growers Withers into Bankruptcy
There’s nothing worse than paying for someone else’s mistake, as can be attested by Tri Valley Growers. This company bought an Enterprise Resource Planning software from Oracle that was meant to integrate Oracle’s own manufacturing software with other management applications that were already possessed by Tri Valley Growers. However, when the time for installing Oracle’s system arrived, it was discovered that not only did the applications fail to integrate properly, but Oracle’s software would not even work on the company’s computer systems. Even after Tri Valley switched to a Unix operating system,
on Oracle’s posit that the software would then operate correctly, Oracle’s program still did not work. It became obvious that Oracle’s assumptions of coherent integration between applications had never even been tested. Even after Tri Valley Growers scrapped the product and sued Oracle for $20 million, Oracle declined to comment about their flagrant negligence. Tri Valley Growers filed for bankruptcy months later.
While these accounts of doomed companies are depressing, it is rewarding to learn from their mistakes before committing them ourselves. Estimates have shown that software defects cost the U.S. alone around $60 billion a year. Because of this huge amount, the technology community is starting to pay more attention to the benefits of properly tested software. The U.S. Bureau of Labor Statistics hypothesizes that job growth for software testers will increase by 22% before the year 2020, leading to increased market and technology stability.
- McMillan, Robert. “The Inside Story of Mt. Gox, Bitcoin’s $460 Million Disaster“, Wired. 03 March 2014.
- Stedman, Craig. “Cooperative sues Oracle over integration debacle”, Computer World. 11 February 2000.
- Jones, Bradley. “The Cost of Bugs. “, Code Guru. 11 November 2012.
- Csorny, Lauren. “Careers in the growing field of information technology services”, US Bureau of Labor Statistics. April 2000.