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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