The Biggest Organisational IT Failures in History

Jon Cowling 11-Feb-2016 10:54:44

The Biggest Organisational IT Failures in History

If there's anything that we understand at DSP, it's the importance of uptime. However, over the years there have been some prime examples of massive organisations enduring some costly downtime!

Every year billions of pounds are spent on IT solutions, by businesses and individual consumers alike. Many consumers are obsessed with having the latest and greatest software in their lives.

Businesses are no different, allocating large proportions of their budgets to improve their systems, streamline their output and future-proof their infrastructure. But what happens when it all goes wrong? Let’s take a look at some of the biggest IT failures in history, and the consequences when IT lets you down.

Brokerage Knight Capital

Sometimes a company can take a huge financial hit through no fault of its own. Brokerage Knight Capital suffered a loss of an incredible $440 million when an automatic trading computer glitch struck in 2012. Due to an incorrect algorithm, the software automatically bought stocks in the firm and then resold them seconds later at a lower price.

The fault went unnoticed for 45 minutes, every second costing the company more, and ranks as one of the largest stock market IT failures in history. Another high profile stock exchange incident saw NASDAQ hit with a $10 million fine for a technical fault that affected the flotation of Facebook, also in 2012.

The fault is said to have been down to the popularity of the offering, with NASDAQ’s systems becoming overwhelmed with the sheer volume of trading requests in what was an otherwise successful stock exchange for the social media giant.


IT glitches are not uncommon in the financial services sector. In the UK in 2013 the RBS banking group, including subsidiary Natwest, suffered a technical failure resulting in a large proportion of their 24 million customers being unable to use their debit and credit cards. The systems error, which lasted around three hours, caused RBS chief executive Ross McEwan to admit that they had been under investing in systems for decades.

This was the most recent in string of incidents at the company affecting not only card payments, but also bill paying and transfers, but RBS and Natwest are not the only guilty parties. There have been infamous IT failures at many of the UK’s major banks, indicating that it’s high time for investment in an overhaul of their systems.

Outside of the financial world, software malfunction can also have disastrous consequences. One such example is the embarrassing computer error that lead to a shortage of security personnel at the London Olympic Games. Security Firm G4S, the games’ “official security provider” claimed that their systems had failed to correctly calculate the number of staff they would need to provide for the games and as a result the organising committee Locog had to turn to the military to cover the deficit. The episode was a huge dent to their reputation, caused great embarrassment to the Olympics and it’ estimated that the mistake cost G4S £70 million in compensation.


Google is not without its fair share of tech embarrassment, however. The most notable failures to come out of Mountain View include Google Wave and Google Video. The former was released after great hype at Google’s 2009 I/O conference and was meant to offer a new means of real-time collaboration, incorporating email and instant messaging along with many other tools.

Wave was seen as just too busy by many and after poor adoption numbers it was shut down after just 15 months. Google Video is an interesting example, as it was released at around the same time as, and in direct competition with, the now Google owned YouTube. Only a year later Google accepted that its video upload site couldn’t compete and it instead decided purchase YouTube for $1.65 billion.

It may be a little unfair to call Google Video a failure, as all of its content still exists in YouTube and in reality it was the downloadable video player which was the real failure; nobody needed another video player. Many predicted that the YouTube acquisition would itself be a failure, but the streaming site may now be worth more than 30 times what was originally paid for it.

While the consequences of these tech disasters have varied in magnitude, there was one computer failure that might have changed the face of the planet.

Avoiding War?

In 1983 a software bug in the Soviet Union’s nuclear early warning system twice reported that the U.S. had launched missiles in their direction. Luckily, Lt Col Stanislav Petrov was able to deduce that these were false alarms due to a fault in their IT system and his actions potentially averted nuclear war in the process.

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