BBC IT project to save £17.9m cost it £38.2m net
Slow handclaps for Siemens shambles
MPs have given the BBC a kicking over its Digital Media Initiative, a technology development programme that was meant to deliver a "benefit" of £17.9m but ended up costing it a net £38.2m.
The Public Accounts Committee hauled the Beeb over the coals, questioning why the project was handed to Siemens in 2008 without tendering, and then simply shifted back in house when the outsourcing giant failed to meet a succession of project milestones.
Unsurprisingly the project was one of the underpinnings to the Beeb's shifting of much of its operations from West London to Salford. It is designed to allow staffers to "develop, create share and manage" content from their desktops. It has to be in place before the move to Salford can take place.
The Beeb originally expected the plan to cost £81.7m, but deliver benefits of £99.6m, a net benefit of £17.9m. However, costs will now be £133.6m, with benefits of £95.4m - or in other words, a net cost of £38.2m.
After hearing from the Beeb, MPs decided: "The contract with Siemens transferred too much financial risk to the contractor, such that the BBC felt unable to intervene proactively in the development of the Programme until it was too late.
"The contract was terminated and the Programme taken in-house, but by then the BBC had suffered two years of delay and lost £26 million in benefits as a result."
MPs notes that the BBC subsequently "found £26 million of efficiencies within BBC Divisions, and negotiated £24.5 million of new efficiencies in the Siemens Framework Contract".
With dramatic understatement, the MPS "questioned whether these savings could and should have been identified earlier".
The MPs make a range of conclusions and recommendations. However, given that virtually any Reg reader would be able to draw the same themselves, we won't bore you here.
Still, the BBC's director of Future, Media and Technology, told the committee that the organisation had realised the importance of:
- A senior leader who has a track record of successful delivery of large, complex software development projects
- Clear roles and responsibilities
- Cooperation between, and integration of, the various functions on a project, including development, deployment and support
- Clear and effective project governance with the appropriate representation on each group or board from across the project, business and suppliers.
So, £38.2m for a four bullet-point lesson on project management. Bargain.
The report adds: "We welcome the BBC's success to date in developing this technology [inhouse] and look to the BBC to share lessons with the wider public sector."
Interestingly, the report notes that "The Comptroller and Auditor General told us that he did not have full and unfettered access to all the information he required to carry out his review, delaying the start of his work. This is not satisfactory.
"We expect the BBC and BBC Trust to ensure that full access is given promptly in the future."
We contacted the BBC's press office, and got an out of office reply. ®
They are muppets. To resolve the issues remaining, they have hired oodles of PA Consuliting consultants at £1000s each per day. Who's in control ? PA Consulting - watch for enormous Land & Expand bonuses for the consultants who have brought in more consultants...
BBC Management should be disciplied / fired.
Proves the point that Outsourcing isn't about saving money.
1) moving the costs to a diiferent part of the balance sheet to make the bottom line look better this year; and
2) having someone to blame (and therefore take to court) when it all goes wrong.
Long live the Accountants and the Lawyers!!!
not another one surely!
Another “successful” outsourcing project. I’ve seen 2-3 big ones during my career in the City, all of them big failures, with the provider trying to milk as much as possible out of the contract and almost nothing gets done, politics, bickering etc. I am not surprised at all.
I disagree, (in this case it was obviously crap) but in general and in the right cases outsourcing does save money. Those cases are where there are economies of scale to be made.
For example does it make sense that a company hire the developers and build and maintain their own payroll system, or turn the job over to a company that specialises in that? If that outsourced company is running payroll for 10 companies each with 10,000 employees then it is spreading the same development and maintenance costs over 100,000 employees. Those costs don't significantly increase with the number of employees served.
However what often happens with outsourcing is that companies want something specialist and custom built rather than just fit for purpose. Add to that, they are usually crap at actually specifying exactly what they actually want. In this case you have outsourced to a company that does not understand your business and has to make a profit on a system that can't be used by anyone else. This equals additional costs on getting it right and additional costs to cover 100% of the profit margin.
Where you want a custom system you should use internals to lead the development and maintain the system and backfill with outsourced contractors during the implementation phase.
"So, £38.2m for a four bullet-point lesson on project management. Bargain."
Still cheap training compared to what the government pays for the same lesson, over and over again...