News Feature

Michael Schrage on the Downside of Auditing Applications

By Michael Schrage

June 15, 2003 — CIO — A recent mainstream business publication had a nifty piece about how cost-conscious companies now aggressively use computerized travel booking services to make sure their road warriors fly coach and don’t surreptitiously upgrade their budget hotel rooms from double beds to suites. One proud CIO boasts that his travel and expense auditing software saves his professional services company bundles. Hurrah.

This bean counter’s bonanza ties in quite neatly with yet another powerful IT trend in the "surveillance economy" that CIOs now oversee: the use of expert systems and scoring algorithms to scan expense reports for all those hidden vicuna coats, covert bottles of Veuve Clicquot champagne and Vegas-based blackjack bets. With more and more corporate transactions going network, a company’s ability to cheaply and thoroughly audit itself leaps by orders of magnitude. As team players, CIOs are ready, willing and able to work with internal auditors to craft "exceptions spotting" software and collaborate with those department heads looking for easy ways to flag inappropriate or wasteful financial behavior. The sheer lethargic lousiness of the economy makes CIOs compelling partners for any and all executives who declare themselves cost conscious.

Nothing wrong with that. Organizations are absolutely entitled to manage their expenses as they see fit. They’re even free to assume their employees are all thieves until proven otherwise. If verification is more cost-effective than trust, then go where you get the most bang for your buck. That’s the American way, no?

Those bottom-line behaviors aren’t irrational. I’m even comfortable with the assertion that real-time cash management surveillance is essential to running a business well. But what’s so appalling about this proliferation of auditing apps is that they’re all about sticks. Sure, we can craft networks that can catch embezzlers, moochers and travel policy violators but what about apps that are as much designed to reward as to punish? Where are the carrots?

This is not a plea for corporate compassion. Rather, it is a request for CIOs and their colleagues to recognize reality instead of treating it like a marginal nuisance. There’s an undeniable logic in the idea that we should turn intranets into dragnets. And yes, we are fools to ignore the value of networks as tools to enhance and ensure compliance in the corporation.

However, we are both fools and knaves if we invest the bulk of our ingenuity figuring out better ways to pound nails into our sticks at the cost of figuring out creative ways to plant carrots. We betray our understanding and respect for human nature by not coming up with as many ways to reward our people for clever use of the networks as we do ways to trap them. I think CIOs are guilty of taking the path of least resistance here. They leap to pluck the low-hanging fruit while ignoring equally inexpensive opportunities to make employees feel empowered and productive.