The loss is revealed in the accounts of the Chartered Institute of Management Accountants (Cima) whose president, Bruce Epsley, says that 2001 was financially a difficult year as a result of exceptional costs, arising partly from the halting of a "major IT project".
But Anthony Prince, an independent consultant brought in by Cima to advise on the project's future, said the organisation had learnt that "business requirements are moving faster than bespoke IT systems development can cope with the pace of change".
In future it will buy off-the-shelf packages and, if necessary, adjust its business procedures to suit the packages rather than build tailor-made systems, Prince said.
The institute was founded in 1919 to "provide the range of information needed to plan and manage modern business". Its current literature says members "combine financial and business best practice with information management skills" and so are "ideally equipped to create value".
The write-off on the project for an integrated business information system was described by one member as an "appalling waste of money". The member, who requested anonymity, said, "Any number of IT consultants within the membership could have advised [Cima] that an all-embracing bespoke system would have been too risky."
Although the institute's accounts include £1.6m of exceptional costs, Prince said the write-off will, in practice, be less because some of the hardware is being re-used. Cima has also completed, documented and archived the software in case it can be re-used.
When the project began Cima believed that its business and processes were unique and that only a bespoke development would suit. It has since learnt that packaged software will meet changing requirements with less risk of failure. "Every company thinks they are operating in a niche market. But it's the branding that is unique," said Prince.