Don’t let anyone ever again say IT does not matter.
When the Bradford & Bingley bank shocked the City yesterday by pulling its rights issue, the Financial Times stated bluntly that “hopelessly antiquated information technology” played a key part.
The bank went from telling the world that it was trading in line with expectations on 14 May when it launched the rights issue, to notifying its board that all was not well just nine days later.
It took a further 11 days for B&B to admit to the city that it had been hammered by the downturn in the housing market and to pull the rights issue.
It is given as read that no British bank would be so stupid as to deliberately tell a bare faced lie to the financial institutions it hoped to raise millions of pounds from, so B&B’s troubles can only be put down to lack of visibility of what was really going on with its business.
That can only mean its accounting and business intelligence systems didn’t do the job. Whose fault that is, we will eventually find out.
It is a safe bet that there are other major UK financial services companies whose systems are as flaky as those at B&B, and it might not take a rights issue to expose them.
If a financial services organisation cannot do its books in a satisfactory manner, what chance has it of dealing with the numerous compliance issues it faces? What chance has it of monitoring money laundering activities? How can it do meaningful risk analysis?
Organisations that adopt a box ticking exercise to these issues risk coming badly and expensively unstuck.
Bradford & Bingley, coming on the back of the Soc Gen scandal should serve as a stark warning.
Perhaps there is something else to be learnt from the situation at B&B.
We are constantly being told that IT is becoming a commodity. Is that how it was viewed at B&B, where IT was outsourced in 1998 and the contract was renewed with the incumbent in 2003?
Did it lead to complacency? People with far greater knowledge of IT at B&B than me say it did.
Whatever the merits of outsourcing in general, out of sight, out of mind, is not good for IT or the rest of the organisation.
If anyone where you work moans about the cost of IT or tries to put you down as merely a techie, or insists that IT is simply a service function, tell them about Bradford & Bingley.
IT, working with and for and organisation, can transform it.
Conversely, IT, when undervalued, can cripple any business.