Communications - July 2012

The reductionism behind today’s software-
engineering methods breaks down in the face
of systems complexity.

BY ian sommeRViLLe, DaVe CLiFF, RaDu CaLinesCu,
Justin Keen, tim KeLLY, maRta KWiatKo WsKa,
John mCDeRmiD, anD RiChaRD PaiGe
Large-scale
Complex
it systems

on The Af Ternoon of May 6, 2010, the U.S. equity markets experienced an extraordinary upheaval. Over approximately 10 minutes, the Dow Jones Industrial Average dropped more than 600 points, representing the disappearance of approximately $800 billion of market value. The share price of several blue-chip

multinational companies fluctuated dramatically; shares that had been at tens of dollars plummeted to a penny in some cases and rocketed to values over $100,000 per share in others. As suddenly as this market downturn oc-

key insights

Coalitions of systems, in which the system elements are managed and owned independently, pose challenging new problems for systems engineering. When the fundamental basis of engineering—reductionism—breaks down, incremental improvements to current engineering techniques are unable to address the challenges of developing, integrating, and deploying large-scale complex it systems. Developing complex systems requires a socio-technical perspective involving human, organizational, social, and political factors, as well as technical factors.

curred, it reversed, so over the next few minutes most of the loss was recovered and share prices returned to levels close to what they had been before the crash.

This event came to be known as the “Flash Crash,” and, in the inquiry report published six months later, 7 the trigger event was identified as a single block sale of $4.1 billion of futures contracts executed with uncommon urgency on behalf of a fund-management company. That sale began a complex pattern of interactions between the high-frequency algorithmic trading systems (algos) that buy and sell blocks of financial instruments on incredibly short timescales.