IT Vendors Increasingly Liable For Product Failures By 2015

Concern about high-profile IT failures could force governments to tighten the regulation of IT services and products to an unprecedented level and make vendors more liable according to technology analysts.

In the report, Childhood Ends: The Signs Are Clearer, IT analyst Gartner predicts that an increasing number of IT security incidents both with public services and private systems could force the government to more tightly regulate technology and make manufacturers more liable for failures.

“Three years ago Gartner published research predicting that either catastrophe from IT failure, or a continuing history of lower-level failures would provoke either a governmental regulation or industry self-regulation of IT products and services in the US by 2015 and in the European Union by 2015 to 2018,” said Richard Hunter, vice president and distinguished analyst at Gartner. “Although the exact date of arrival for regulation is difficult to predict, we believe that, in recent months, the tempo and intensity of the indications of such an event have increased.

To illustrate exactly what it means by increasing regulation, Gartner cited the example of US healthcare providers asking for IT providers to be held financially accountable for the failure of technology projects.

” Healthcare industry representatives have asked the Obama administration to hold software vendors liable for failures resulting from implementation of administrative software mandated by the US federal government by 2014,” the analyst said in a statement. “Elsewhere, corporate customers are filing litigation against their IT providers with greater frequency.”

Hunter added that the economic downturn, combined with increasing proficiency of hackers and criminal gangs targetting IT could put more pressure on law-makers to hold IT providers accountable for their products and services.

“As a result of the economic crisis, the social environment is considerably less trusting and secure. The public is wary of cascading risks and would seem to be supportive of legislation and litigation aimed at reducing those risks, including those posed by IT.”

What impact this increased regulation could have on corporate users of IT is not completely clear but according to Gartner, IT professionals should begin preparing as soon as possible.

“Corporate technology users are likely to benefit from regulation in terms of clearly understanding the functions and features they buy but should be aware that they cannot outsource regulatory compliance,” Gartner stated. “They should consider whether the liabilities applied to vendors will apply to them as well, and consider whether the enterprise is prepared to manage its processes to regulatory requirements.”