Software Companies Have Been Down This Path - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Software Companies Have Been Down This Path

With Enron, Tyco, and WorldCom making news by their questionable, if not fraudulent, management and accounting practices, it's ironic that some IT suppliers, whose products are designed to help companies manage their finances, can look at today's headlines and say, "Been there. Done that." Just ask Computer Associates, Informix, Microsoft, and MicroStrategy.

MicroStrategy is just now climbing out of the hole it found itself in two years ago, when its auditors discovered that the business-intelligence software developer had overstated revenue for 1998 and 1999. The company blamed its problems on evolving accounting-revenue recognition standards for the software industry, which are sand traps particular to software because of the nature of the product and how it's sold.

Database vendor Informix never fully recovered from the tailspin it went into in 1997 after it was discovered that the company had overstated revenue by $278 million for sales that were never completed. The Securities and Exchange Commission recently spanked Microsoft for accounting violations in which it misstated its income. And Computer Associates' accounting practices are under scrutiny by the Department of Justice and the SEC, which are investigating whether CA wrongly booked more than $500 million in sales in 1998 and 1999.

It takes more than technology to get the right information to directors, executives, and stockholders-it takes ethical principles to produce the correct information in the first place. That's a big part of this mess, says Michael Hoffman, executive director of the Center For Business Ethics at Bentley College in Waltham, Mass. "A lot of this is due to the falsification of information we relied on to make decisions."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

News
Becoming a Self-Taught Cybersecurity Pro
Jessica Davis, Senior Editor, Enterprise Apps,  6/9/2021
News
Ancestry's DevOps Strategy to Control Its CI/CD Pipeline
Joao-Pierre S. Ruth, Senior Writer,  6/4/2021
Slideshows
IT Leadership: 10 Ways to Unleash Enterprise Innovation
Lisa Morgan, Freelance Writer,  6/8/2021
Register for InformationWeek Newsletters
Video
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll