Opinion

Cold comforts

Finance | John Tate | 24 Nov 2008

How can IT help in a recession, wonders John Tate.

As we reach the end of 2008 there is a cold wind blowing. The R word is much talked about. Icelandic Banks going bust, fears of a reduction in donations and reduced retail sales are generating a heavy depression and there is talk of a prolonged freeze. Yawn, yawn, yawn. Yet another article on the financial turmoil I hear you say and anyway, you have better things to think about than IT at the moment. But keep on reading. Maybe there is something interesting to come out of this potential crisis and some things IT can do to help you through the cold period?

IT budgets typically account for between 3 and 6 per cent of a charity's annual income and can be considerably more if there is an investment in an IT-related project. Is there money to save out of your IT budget or ways you can invest to help you cope better with the challenges ahead?

Benchmarking in the US with corporates has suggested that there can be a factor of three difference in IT expenditure as a percentage of revenue. So a world class IT system can cost organisation say 2-3 per cent of income and a less well-run operation 6-9 per cent. Where does your organisation sit on this scale? If at the top end, is there something you can do to reduce IT costs? Spending on staff often accounts for a substantial proportion of the budget. Can this be reduced? If you are a large charity you may have an internal team doing a lot of in-house development. Do you need bespoke software?

In terms of providing IT support to your users how much does this cost per desktop? How does this compare with similar organi-sations to yourselves? Are there ways you can streamline your operation? Do you make significant use of external consultants? This can be an expensive resource and you may make significant savings by building up your in-house team. Commercial organisations including banks are in many cases reducing their own IT headcount and there and some excellent candidates out there in the market. Some are keen to get out of the commercial rat race and work in the voluntary sector.

If you have the budget for a significant new IT project is now the time to spend this money? What is the expected payback period and how confident are you that you will reap the anticipated benefits? Do you have the time to effectively manage this project? Bearing in mind that 75 per cent upwards of significant IT projects fail to deliver the anticipated benefit the R word can weed out projects that you should not touch with a bargepole.

Cost saving is often pretty depressing and, unless you are in crisis, may not get the required attention and support of your chief executive and senior management team to make the change happen effectively. Management resource is often in short supply in times of turmoil. If you are going to cut costs don't cut too many corners. Make sure your infrastructure is secure and that you have reliable support for users.

So if your focus is not on driving out cost can IT deliver more to your organisation? What are the skill levels of your users? Can the IT department help increase the effective use of your technology? In house training on commonly used applications can deliver real productivity gains in a short space of time. Are there some niche IT projects that can make use of your current infrastructure and give you a quick return? Will web conference calls reduce travel time and cost? Would a web-based reporting tool integrated with your finance/CRM system give you an insight into your organisation that will help you though the challenges ahead? Are there development opportunities with your web site to increase revenue, for example via online donations? Can you enhance the use of your CRM system to make your fundraising operation more effective?

If you are struggling with some of these issues you are not alone. One of the strengths of the voluntary sector is people's willing-ness to share and collaborate with others. If you want to find a space to work with other charities I would advise you to visit www.igloobuilding.org. With all the snow that the depression will bring this could provide a cheap working environment.

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Who's Who: John Tate