The objective of the data we use and trust on

julio 23, 2011

I’ve just finished viewing the film “Inside Job”, I’m not a financial man, just a technician, but like most of you i’m interested on knowing truth about what really happen at 2008 crisis, the big one, we are still carrying out.

Basically, during the film, we are exposed to know that crisis were conducted by asumption of risk made from entitys, banks, investors. That risk finally is rated from a external point of view from a scale from AAA, at their highest value, to D, as you can see at Just 3 entities, Moody’s, Standard & Poors, and Fitch have the global responsability to make a objective ratio of risk of credit funds that live at financial world.

All banks that crashed at september 2008 were rated as a triple A, AAA, days before. Merryll Linch, AIG, Leehman Brothers, were rated with a AAA highest value and that was significant because investors were still making decisions based in this ratio. But how objective was this ratio and was is the responsability of making a bad ratio based in assumptions, financial conflicts, or even external, even statal, presure?

During the film you can see that Ratings Companies when where asked about the objective of the data they generated, lawyers in their names answered “The data allways was our point of view” meaning that the data perhaps was not as objective as customers or others thought. That is the question of this post: the data is not objective or the data is objective as is from my point of view or interest.

I said before i am not a financial man, just a technician, a database administrator, a programmer. During my career i have developed many database systems using different languages, databases, operating systems but there is a common requisite exposed from all my customers: the reliability of the data they managed. That is the most important factor of a system. A system that store information must be as reliability as possible because business decisions are made based on the objective of the data they store.

Recently at my office, in a regular meeting where we were analysing POS data from our shops, a manager of one of them asked to me “Is 100% percent sure that the data you are showing to us is true?” Wow i thought at that moment. What a question!. Let’s go make a bracket to explain our system.

I am responsible to build the most accurate database system to hold data from a net of 20+ hospitality shops that are connected by a vpn. Therefore i choiced Oracle as our database, VMware ESXi as our host operating system, Linux as our guest system, Delphi 7 as language, Oracle APEX as web framework. All data is sent from pos systems to backoffice using vpn every night and at pos we still use Interbase 7.1, a 2003 year version of the acclaimed database. We have checks that confirm that all data at pos are sended to backoffice where we can analisys them. If you are an IT man like me you probably would be agree on me that the system i have described before is not a bad one.

Returning to the question of the manager “Are you 100% percent sure of the accuracy of the data?” Well, i trust on Oracle, sure. I’ve been using Oracle APEX from 2005 year and i think it is the best web framework now, still for years. I trust on Interbase and i think all the transactions are made at every pos are well registered. But can i answer that question with yes? obviously not because it is asking about 100% and in IT world that is a ratio we never reach. Anyone can reach a 100% ratio of stability, accuracy, neither Oracle nor IBM. Of course they are next to a 99.999% of stability, fidelity, availability in the systems they build.

When you, as CEO of a company, decide to buy an Oracle Exadata system, spenting a very important percent of your IT budget you are nearly 100% sure that you are doing the correct thing because it is one of the better investment you can make. A system like Oracle Exadata can manage a very large numbers of clients making transactions from their remote offices. Banks, Insurance Agencys, Manufacturers trust on the reliability of the data a Oracle Exadata machine manages and stores.

The return of investment is appreciated when CEO assistant, Mr. Statistical Data, is presented at a regular monthly meeting. Everyone like to see that amusing graphical and colored data that represents the fiability and growth of the company. At that meetings are maden a lot of decisions based on reliability of data. None of present people even can make a question similar to “Is it real?” because all of them know they use an Oracle Exadata machine to generate those graphics. Obviously they trust on the data they receive from IT departament because it is real at nearly 100%.

Returning to financial world, were decisions are maden day by day based on the ratio generated at entities like Standard & Poors, Moody’s, etc. Where money change from ones hands to others, just thinking the ones that the others can certainly will return it because that ratio says that. But finally what really happened was that others could not return money to lenders. Lenders then asked to ratio entities about accuracy of the data of risk they generated and the answer was “it was just our opinion”.

A question to financial men, would you like that a company like Oracle, IBM, Microsoft, HP, etc. when were asked about the objective of the data their systems manage and conducted your company to crash because it was not real, they answered “the data you manage is just a point of view of the database, not real”?

All financial world use Oracle Database, the only thing they can trust on.



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