A friend of mine has been in an epic struggle with his mortgage processor and his experience tells us a lot about the state of IT. It started in October of last year when my friend met with his loan processor (Bank of America) to inquire about a loan modification. The loan is actually owned by Freddie Mac. He turned-in all the required paperwork and followed up with an income statement when requested two weeks later.  The meeting took many hours mainly because all of the original documents were imaged and put into his electronic file. In late December he was told that his modification was completed, given a new mortgage payment and told to wait on the paperwork.

Nothing happened.

Fast forward to September and guess what?  He has had to restart the process three times now. Exactly why the process broke no one can determine. So three times he sent in his tax returns, bank information, income information and forms totaling over 100 pages only to have them disappear, again and again.  Each time the process was a little different but the end result was the same — nothing. Process improvement at work yet no change in outcome.

What’s wrong with this picture?  I see two possibilities: 1) a conspiracy theory in which nobody actually gets loan modifications, and: 2) that the IT systems are broken.  At this point normally I would illustrate a series of events that may or not involve Steve Jobs, reactions to new federal regulations, cost accounting, breaking federal laws, or perhaps even Bill Gates.

But for something entirely different — I vote for IT as the culprit. My guess is they just do not have the IT systems in place to process the applications and then modify the loans while following federal law. B of A may claim to have such systems, they may even think they have such systems, but my friend’s experience involved lots of banker eye-rolling but nobody saying “Well this has never happened before.”

It happens all the time.

And I’d say it sucks to be their customer.

These types of issues have plagued business and it’s customers since IT was an infant in punch cards.  It might be a B of A issue, but more likely it is an issue between B of A and Freddie Mac, with Freddie probably screwing-up yet not really caring enough to fix anything.

The reason this has risen to the top of the pile right now is because I see it as a basic issue at almost every company I visit.  Companies either have it – IT that is – or they don’t.  Some outfits will make it based on duct tape and bailing wired systems. But in the end — often literally the end — this has to be one of the top reasons for failure of any business.