Free-market economics don’t work in the IT industry, so adjust your behaviour accordingly, advises John Tate.

Approaching the halfway point of 2014 I thought I’d take a look at how IT is developing this year.

However, I have been somewhat distracted as I am helping a for-profit business get off the ground. I’ve worked with the people involved to put a business plan together and approached a number of organisations to help with funding.

The owners have personally stumped up a decent amount of cash and have been willing to put nearly a million pounds’ worth of house security on the line for a £50,000 loan.

But it has been a devil of a job to get any funding, despite universal praise for the quality of the plan.

Customer comes last

The first set of banks we spoke to talked up their interest in supporting small businesses. However, when push came to shove, none were willing to make any loans. After more contacts we eventually found a bank willing to lend the money. The process of then completing the application and actually getting access to the funds was a nightmare.

Incompetent individuals who just didn’t care, and stupid processes, dragged the whole thing out for three months.

Talking to a wide range of contacts it is obvious that serious lending to SMEs is just not happening.

Writing this gives me a sense of déjà vu, as I have experienced similar problems with banks on a number of occasions over the last 20 years. Is this ever going to change and, if so, what is needed to make it happen?

My university degree was in economics. One of the things I learned – even at left-wing Sussex – was that the ‘free market’ would sort out this type of issue: where there is demand, supply will come along; where there is poor service, competition will drive change; in the long term the market will deliver.

But perhaps the free market doesn’t always work? It definitely doesn’t seem to be working in the banking world, and perhaps the same applies with IT?

When I first started working in IT the Windows operating system was just coming to prominence. While early users benefited from new PC applications – how would we ever manage without the spreadsheet, for instance – the IT industry got into a pattern of over-promising and under-delivering.

Users became hugely frustrated by reliability and performance issues. What they thought they had purchased was often not delivered, and project after project went way over budget and rarely delivered the anticipated benefits.

So where are we today, in mid-2014? Sadly, the situation is much the same.

The cloud is being hyped to extraordinary heights; mobile-technology and big-data vendors are frantically looking for problems to fit their own solution; IT is still horribly insecure, complex and expensive to manage, and new IT projects continue to go awry.

Don’t get me wrong – much like banks, the IT industry actually delivers a lot of benefit. But in too many areas it simply isn’t responding to what users need.

Learning to live with it

I don’t actually think things are going to change in the foreseeable future – so we need to get real and learn to live with it. Here are four practical suggestions:

• Accept that IT is never going to be 100 per cent secure, and manage this risk. Ultimately, do not put things on a computer if you cannot afford to be hacked;
• Take time to talk to others in the charity sector about their real experiences with IT – both the technology and the process of managing change. This will help build a more realistic picture of what is happening with a new area of IT and how to make sure you effectively manage your implementation;
• Don’t believe suppliers. While some do tell the truth, too many don’t. It is the customer who decides what to spend money on – you need to take full ownership of the purchasing decision; and
• Put together your own education programme for your colleagues on what IT can really deliver to your organisation and the issues you need to tackle to implement real change. Better you inform your team, than leave it to an industry supplier.

John Tate is a business consultant, IT adviser to CFG and a visiting lecturer at Cass Business School.