When the Business Fails, De-Integration Becomes the Problem

Loraine Lawson

There are some things you just know you have to do when it comes to running a global IT organization. For instance, you know you need centrally-managed systems as much as possible or you'll run into problems, particularly with your data. In this case, integration isn't so much a nice-to-have as a critical business requirement.

 

But what happens when the rules change and everything falls apart? What happens when you have to dismantle this integrated system, and yet still retain the data?

 

It's an unusual question because it's an unusual situation. So you can see why KPMG China, the Hong Kong liquidators for Lehman Bros., was a bit overwhelmed by the task of taking possession of all data from the Lehman systems for the Hong Kong parties. Oh, yeah, and they only had two weeks to do it-while bits and pieces of the Lehman Bros. IT infrastructure were being sold and turned off overnight.

 

Suddenly, all those best practices we talk about with data and integration-including confidentially requirements, security, and a global view of data - became major challenges, as they tried to separate the systems by entity and country.

 

The task fell to Henry Shek, a partner at KPMG China who led the technology and data team that had to preserve critical data for eight Lehman Hong Kong entities. Shek shares the challenges of this de-integration project in a recent Forbes column. At one point, he explains that the IT systems was so integrated, so well designed, employees could log in worldwide and access information as if they were in their home office:

It had advanced technology operations with a good understanding of IT risks. It is therefore impossible to decouple an infrastructure of this scale and sophistication with the click of a button. How many organizations structure themselves with a possible bankruptcy in mind? IT strategies tend to be aligned with an organization's business strategy. As most organizations only strategize for future expansion plans, IT systems tend to also be developed along these lines. They are not designed to be pulled apart.

One of the changes emerging out of this experience was that all the liquidators involved were exploring the idea of a "global close," which he Shek describes as having "defined requirements for the financial close numbers," as well as agreeing on a common set of data and dates.

 

To be honest, there's not much of a "moral to the story" here. What would there be? Plan your IT systems so that they're integrated for global business, but also so they're ready to be disassembled? No, the only possible lesson here is that you can't just abandon your systems when the business fails. Still, it's a fascinating, even somewhat sad, look at the dissolution of an impressively integrated global IT infrastructure.



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