Select Committee on Education and Skills Minutes of Evidence


Examination of Witnesses (Questions 560-579)

12 JANUARY 2005

MR LESLIE STRETCH AND MR DAVID BEAGLE

  Q560 Jonathan Shaw: So when you received the phone call or letter to say the plug is being pulled, was that a shock, was that a bolt out of the blue?

  Mr Stretch: Towards the termination point it started to become clear that there were those issues. It was not a bolt out of the blue, but our day-to-day discussions with the chief executive and the chairman were really focused on delivery and revisions to the system.

  Q561 Jonathan Shaw: Can you just tell us towards the end when things were becoming bleak what were the messages that you were receiving that made you reach that sort of conclusion? Was there an inevitability that you are describing?

  Mr Stretch: No, there was not an inevitability and in these things there is never an inevitability until you see in black and white the notice of termination. Even when Robson Rhodes became involved to oversee the company we explored many different avenues in order to give continued life to the venture and indeed those discussions are not over because we are agreeing a way forward on the platform with HEFCE where UK education will benefit. So it is really when you see it in black and white that it crystallises it for us. Until then you have to continue running the business venture. I presume that is what the board were doing and we had to continue with the delivery activities and the change control issues that came up and we continued to do that after the appointment of Robson Rhodes.

  Q562 Jonathan Shaw: We know that you are in discussions with HEFCE about the future of the platform?

  Mr Stretch: Yes.

  Q563 Jonathan Shaw: We know that there are commercial issues which you would not want to disclose at this time, and we understand that, but £14 million of public funds has been used to develop this platform. Without, if you can, divulging commercially sensitive information, which we appreciate, can you clarify what you think is going to be done with this learning platform?

  Mr Stretch: There are a number of options at the moment. We have a working platform and it has substantial value. The intellectual property of the platform has substantial value in our view. Our objective—and we are almost there with an agreement on a memorandum of understanding with HEFCE—is to see that the system has a life and benefits are delivered back to UK education, not just higher education. In high-level, broad strokes that is the plan at the moment.

  Q564 Jonathan Shaw: You said that the intellectual property has got a substantial value. Who is the ownership of that intellectual property with?

  Mr Stretch: The intellectual property is assigned to the system in component form so there are self-contained modules. The majority of the intellectual property is owned by Sun Microsystems UK Ltd.

  Q565 Jonathan Shaw: Right, and the rest is owned by?

  Mr Stretch: HEFCE, I guess.

  Mr Beagle: HEFCE. It remains with HEFCE, we believe.

  Q566 Jonathan Shaw: Can you give us a percentage?

  Mr Stretch: I cannot give a percentage.

  Mr Beagle: No.

  Q567 Jonathan Shaw: Okay, well what is going to happen to that intellectual property? Are you keeping it or are you going to give it to HEFCE? Given that it is £14 million that was paid out by the taxpayer to develop the intellectual property, where is it going now?

  Mr Stretch: David is involved in the memorandum of understanding so he could answer.

  Mr Beagle: We are quite involved in these commercial discussions and so some of them are commercially in confidence, but our main aim is to make the ability to use the platform available to UK education in general at no charge, so where the IPR actually rests is, in our view, not the most important thing, it is how we make the benefits of all that effort available to UK education for the universities, schools, FE colleges, what have you, and what we are trying to discuss with HEFCE is how we make the platform (as is) available to them either in total or in individual modules for them to use.

  Q568 Jonathan Shaw: Do you think that this saga has damaged opportunities for global e-learning? Is this issue reverberating around the world? We like to flatter ourselves and think that people are watching. Maybe that is not right.

  Mr Stretch: Not yet.

  Q569 Jonathan Shaw: Not yet! Right.

  Mr Beagle: I think it is true to say that there was a great deal of interest in the e-University project from around the world while it was on-going and there were a number of places which were interested in taking the platform as and when it became available. Particularly universities abroad were very envious of UK universities and having that sort of project and that sort of investment in making the next big leap in e-learning and so there is disappointment that it has come to where it has but there is still a lot of interest in what can be got out of this.

  Q570 Jonathan Shaw: Do you think that this project is retrievable? Do you think that if there is a will that this project could be put back on road?

  Mr Stretch: Absolutely, and that is our intention. I think that the opportunity is there. The market size is well documented and the opportunity is well documented, particularly in the commercial sector where there are some very innovative aspects to the working system that is delivered, and we have a system that is delivered there that we can get to work on immediately, so I think it is. I think it needs very detailed analysis on how we take it forward.

  Q571 Chairman: Mr Stretch, just to pull you out on that a bit. I am hearing two voices really. One is that you are an entrepreneur, you are one of the most successful companies in your field, with a high reputation. Many of us on this Committee admire much of the work you do. You are saying here is a damn good project, no-one should have pulled the plug on it, it is a great commercial opportunity out there, world conditions are changing in its favour. As an entrepreneur I would have thought your company might have said, "The government has got cold feet, why don't we take over and run it. We have got all this money from the taxpayer to subsidise this thing." Why did you not see this as a commercial venture and run with it yourself as a unique entrepreneurial opportunity?

  Mr Stretch: The short answer is we still see that today and in the closing stages when Robson Rhodes were involved we discussed a number of different options. I feel that we ran out of time to explore those more fully. We have learnt a great many lessons about the governance, about the key parameters around the business venture, and we do not want to throw the baby out with the bath water. It is a very good working system and it has a lot of value. There is definitely a vehicle that can take this forward so that is an on-going situation.

  Q572 Chairman: So here you have a platform which you say is unique and a really good thing. You have got all the UK universities with a pound share and a commitment. Even going on in that partnership alone and running at some point the systems with UK university—forget HEFCE and the British Government—(a) why have you not done that and (b) why have you not attracted one single pound or dollar of commercial partnership money in the whole of this venture? It started off that it was not going to be Sun Microsystems' money and UK universities' money and HEFCE money and government money, it was going to be attracting other private investors, if it is so good why has there not been a pound of investment from anyone else?

  Mr Stretch: That second part of the question is pretty hard for me to answer, given that clearly halfway through the relationship we became a supplier, as I have said, in terms of delivering the system. At no point was I tasked with participating in investor relations for the business, participating in fund-raising—at no point did that come up—and we did not take the initiative because we were focused on the day-to-day running. I do not feel that if we had raised that initiative it would have necessarily been welcomed, not for any bad reasons—it just did not come up—but we are now forced into a position where we want to bring life to the platform so we have to look at those options and there is some commercial sensitivity around what those might be.

  Q573 Chairman: Are you telling me that there is now still a potential of you with other commercial partners and the UK universities, breathing life into this project?

  Mr Stretch: I think there has to be.

  Q574 Chairman: As a commercial venture?

  Mr Stretch: Yes.

  Chairman: We have not heard that from anyone else, but thank you for that.

  Q575 Valerie Davey: One of the criticisms of this venture is that it has been so service and delivery driven that the content of what you are delivering did not get the scrutiny in those early stages that it should have done. I had not realised until some of the more recent information you sent us that you have actually got an education involvement and background. I have two questions. First of all, you have analysed in part the difference of what this venture was going to deliver as compared to a single university. Were you at all involved in the content of what was being delivered? Secondly, if you are now thinking that there is life in this for the future, will you be more critical or more involved in what you actually deliver as well as the platform to deliver it?

  Mr Stretch: I could answer the last part of the question, then I will ask David Beagle to take the details. There is certainly life in the platform. There is no life in the venture; that is over. There is definitely life in the platform.

  Q576 Chairman: I am sorry you seem to be going back on what you said to me. There is no life in the venture?

  Mr Stretch: The venture is over, is it not? There is no more UK e-University?

  Q577 Chairman: I thought you were just saying you could breathe life into it with a partnership between the British universities, your platform and other commercial sponsors to do exactly the same thing?

  Mr Stretch: I think technically it is a fresh start. The only thing that is left is the working platform.

  Q578 Chairman: And the relationship with universities, and the course presumably?

  Mr Stretch: Yes, but there is no UK e-University. Yes, I agree.

  Q579 Chairman: Everything is there except the old management, is it not?

  Mr Stretch: Yes.


 
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