As we pull out of the recent financial crisis, there’s been no shortage of finger-pointing as to who’s to blame — banks, Wall Street, the Fed, the regulator, Fannie and Freddie, to name a few. But one IT industry expert says the blame should be boiled down to ineffective information technology.

My colleague here at the ZDNet blogging community, Andrew Nusca, reports on a conversation he just had with Sudhakar Ram, chairman and co-founder of Mastek, who pins the blame for the recent economic meltdown on “aging, overly-complicated IT systems.”

The original trigger of the crisis, the subprime mortgage debacle, came about because there wasn’t an effective way in existing risk management systems to trace the origin of home loans, many of which got parsed up and embedded into other financial systems, Ram says: “The risk-management systems need an overhaul. The risks associated with derivatives, all of them are based on a series of assumptions… Almost 30 to 40 percent of critical decision-making systems are actually Excel spreadsheets, in large organizations… Everyone has their own small reality.”

The solution, Ram says, is move to greater service orientation of these systems. That way, decision-makers can still rely on the processes and information supported by legacy systems, while easing into a gradual migration to next-generation technology: “The thing that we’ve found [is that] the new SOA approach actually helps with a gradual transformation. The approach we have taken with legacy programs is to put in an SOA layer and a front end that can work with multiple back ends – a complete SOA-enabled platform.”

That’s because it’s too risky to attempt to rip and replace these legacy systems, he points out. SOA offers a way to retain the original business logic embedded in these systems, since “nobody knows what is inside. These systems have been put in place and the people who knew what they were supposed to do are all dead or retired.”

An enterprise architecture approach to these problems is the key, he adds. Establish a five-year roadmap for systems, and migrate on an incremental basis. SOA approaches will ease that migration.

Reference: Zdnet.com