Update old systems to cope with the pressures of today

Robust back-office systems are crucial these days, says Peter Gotham, principal at MacIntyre Hudson

Peter Gotham
Peter Gotham

Back in the 1980s, when I was at college, the use of information technology in business was new - and the London Stock Exchange was very excited by the possibilities of its use for clever front-of-office transaction and client work.

Then the Taurus system fell over because insufficient effort had been invested in the back-office support systems.

We still regularly see instances in which support systems are taken for granted. For instance, fast forward to 2012 and RBS left many of us unable to use our own money when its systems froze. We are led to understand that the reason for this might be that parts of the underlying systems are about 10 years old.

Our sector, quite properly, concentrates on delivery of the 'mission', rather than on a financial bottom line - but traditionally this can mean that finance and administration matters are taken for granted. In fact, support or administration costs are often portrayed as a bad thing.

When added to what appears to be a common tendency, even in a commercial environment, to undervalue routine administration functions, this can easily expose charities to significant risk of failing to deliver services, and certainly makes it difficult to approach strategically the challenges the voluntary sector is facing at the moment.

The sector has changed out of all recognition from when I joined it. Particularly over the past 10 years, an increasing professionalism has been developing in the finance function. This has applied both to the sector and to its funders, which now have much clearer expectations about delivery against specifications.

The continuing movement to measure outputs and outcomes, and even to consider impact, puts increasing pressure on charities to have robust back-office systems. In many areas the sector is now held to as high a standard as major commercial companies or central government - albeit, the cynic might say, that the penalties for failure to meet these standards are heavier 'here' than 'there'.

In some ways we could, I suppose, argue that this investment by the sector came just in time to enable the most organised of us to ride out some of the financial storm we are facing. And one good aspect of the current changes and challenges is that the finance function is now generally much more integrated with general management.

However, everything is reliant on good data management and too many organisations still surprise me and my audit colleagues with their willingness to rely on year-end accounting and audit processes to fully understand their finances. Some aspects of end-of-year reports are not rocket science, but simple common-sense housekeeping. However, the resultant information shortfall makes planning, and therefore sometimes survival, a much more flaky process than it need be.

Turning back to the wider world, I am just hoping that over the next few weeks some of the old systems used for London's transport network do not fail under the pressure they will suffer as we host the Olympics.

Peter Gotham is a principal at MacIntyre Hudson

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