Memorandum submitted by Bisnode
As a dissemination agent for Companies House
data, we feel our input could be very useful to you. We have assessed
Companies House legal position, which is important for our own
operation, and found several problems with the grey area Companies
House is operating in. Especially, the installation of the new
IT system has proven to put users of Companies House information
who receive data via a dissemination agent into difficulty.
Bisnode is a Europe-wide group of business information
companies with a turnover of £300 million, that provides
business information to nine of the Top 10 Accountancy firms (based
on the Accountancy Age Top 50 accountancy firms 2006) in the UK,
and 16 of the Top 30 Law Firms in the UK. We also provide information
to the leading investment and retail banks and insurers in the
UK. We acquired considerable knowledge about re-use of public
sector information in Europe, and appreciate the unique situation
UK Government bodies are in. However, our concern is that the
customers that receive information via re-users and dissemination
agent do not appear on the focus of Companies House as much as
the customers supplied directly. This is a re-use of PSI issue,
but it is mainly an issue of creating a two-class society that
harms the effective and innovative dissemination of Companies
House information.
THE IT SYSTEM—DEFICITS
IN THE
PROJECT MANAGEMENT
Companies House has been extremely focused on
providing information directly via its own dissemination channels,
such as Web Check and Companies House Direct. Thereby, Companies
House has lost its focus on the other users of the information,
which are mainly the bigger players within UK PLC. These customers
prefer using innovative services of Dissemination Agents (DAs)
who are able to provide a better service, structure the information
better and add additional information not usually available with
Companies House. However, Companies House regards DAs as competitors,
and withholds valuable information. Also, in development projects
Companies House appears to focus strongly onto its own dissemination
operation.
Because of insufficient communication with DAs,
who are experienced in handling and disseminating data the following
problems have occurred:
(a) DAs have not yet been given technical specifications.
(b) There was no visible project management—we
did not see any Project Plans, Status Reports etc.
(c) There was very limited communication and
consultation—we had only one Bulk Users meeting in 2007.
This resulted in the following problems:
(a) There was insufficient time given to complete
User Acceptance Testing on the bulk data files produced from CHIPS.
(b) The testing was limited to a only one or
two files per bulk output.
(c) Again, there was no visible project management,
or user sign-off confirmation that tests completed satisfactorily.
(d) The User Acceptance Testing schedules for
data delivery provided by CH have been repeatedly missed.
Also, the final product will be considerably
worse than the product delivered under the old infrastructure.
Especially, the data will be delivered considerably later to the
DAs than previously. While Companies House Direct receives access
to the information virtually immediately, DAs have not been offered
any solution—and did not have a say in developing a solution—that
could help the DAs customers to receive current reliable information,
or at least be informed when more current information is available.
— Before the new CHIPS system was implemented,
bulk data files delivered between 12.00 am and 02.00 am.
— After the system comes into place,
bulk data files are being delivered between 05.00 am and 07.00
am.
The impact of this will be that our clients
will receive the data later.
DAs take a huge amount of responsibility from
Companies House. Usually, the contracts are directly with the
agent who promises a certain degree of currency and accuracy of
the data. Companies House' decision to delay delivery and the
lack in communication with regards to improvement methods make
it harder for the DA to fulfil such long-term promises to the
customers. Companies House internal decision to deliver information
via its own website quicker adds competitive pressure onto the
DA. Companies House seems to be oblivious to the fact that a monopoly
supplier ought not to behave like this.
DAs could have helped Companies House with the
management of the project—to the advantage of all parties.
Regular friendly meetings could have helped both sides to learn
from each others experiences and to build a system that is advantageous
for all customers—even those who buy via the DAs. Most dissemination
agents have great experience with projects like this, and could
have helped Companies House to avoid the biggest mistakes.
Also, the commercial knowledge dissemination
agents gave could have helped improving the database structure
and the processes. The lack in communication results now in an
overprized system that basically offers less than it used to.
Although Companies House promises that the new database is more
flexible, there is little prove of that. Dissemination agents
would like to have a better understanding of the system with the
view to communicate about speeding up delivery to the dissemination
agents, and possibly working with Companies House on improving
the format and delivery mechanism. For example, it might be possible
to add additional metadata to the information given to DAs.
Overall, there needs to be communication with
DAs in the planning and execution of IT projects. Dissemination
agents are not average customers, but are supporting Companies
House with in its dissemination activities. Thereby, DAs relieve
burden off Companies House, by providing help lines, helping customers
to integrate the information into the customer's database and
providing training in how to use the information.
GENERAL PROBLEM
WITH DEVELOPMENT
OF NEW
PRODUCTS
Companies House believes that no products outside
the statutory duty are being produced. Yet, Companies House has
a sizable Policy and Planning Department—according to the
last known figure from 2005 this Department employs around 40
people.
However, in reality, there are considerable
non-statutory products: For example, the monitoring service has
been marketed and is offered as a commercial service: Customers
can monitor filing of a huge number of companies. The justification
given for this service is fraud prevention, but the fact that
so many companies can be monitored, and the marketing spin show
clearly that the product is a commercial product, designed to
compete with products also offered by DAs as added value.
If Companies House accepted that some products
offered are non-statutory, the organisation would have to charge
market rate for the services. That would put the organisation
at the same competitive footing as any competitor, and the quality
of the service would determine the uptake, as well as earning
additional money to reduce the costs for filings. However, Companies
House is keen to reduce the prices for dissemination of all sorts
further to increase market share. Therefore, Companies House is
keen to end the legal limbo in which many of the products exist,
and add the products to the fees order, which is being passed
by parliament as a statutory instrument—thereby declaring
the products officially as statutory. Although Companies House
is required to have a "Framework Document" by law, no
such document exists. There is a draft Framework Document. However,
parliament is neither supplied with the accounting information
(although members have asked for it) nor information about the
public interest case for adding another product to the list of
statutory products. The committee has to make the decision virtually
blindfolded, and decide on a price that might not have any bearing
into real costs. At this time, Companies House maintains that
the decision on which products are to be included in this list
has not yet been made. Also, there is no communication with dissemination
agents on which products are going to be supplied at which price—information
that is utterly important for a commercial supplier.
COMPANIES HOUSE
IS NOT
ACCOUNTABLE ENOUGH
Following on, the accounts of Companies House
do not separate the non-statutory products out. The price for
non-statutory products is—in contravention to treasury guidelines—far
below market value, and the service is not—in contravention
to the accounting principles for public bodies—separated
out in the accounts. In fact, Companies House maintains there
is not a single non-statutory product. Not even parliament is
allowed a closer look into Companies House accounts: The document
explaining the accounting method for Companies House has been
withheld from members of parliament before.
There is no way of guessing for DAs which product
will be added to the list of products. DAs have been surprised
by the sudden adding of the monitoring service to the product
list. Similarly, Companies House imitated the way DAs arrange
documents, and the way they are being displayed on Companies House
website. There is a fear that Companies House will imitate other
data products, and offer more customised—but underpriced—solutions
onto the market.
Since the majority of the database costs are
currently being borne by UK economy that files information with
Companies House, there is a fear that the development of such
products is not being charged correctly—at the output side
of the database. Similarly, the costs for the new CHIPS system,
which are supposed to benefit the output side, are probably not
being attributed to that side but shared among the entire costs
of Companies House and divided according to headcount and space
used. But: Since the output side is automatic by nature, that
will be very low.
However, the public cannot be sure about this—the
accounts only allow for interpretation.
UNFAIR COMPETITION
WITH THE
PRIVATE MARKET
Besides the questions regarding statutory duty,
accounting irregularities and the lack of accountability, Companies
House is very successful with entering a competitive market. Companies
House maintains that there are no market share targets, but there
is a clearly defined intention to distribute more information
to the users—directly, and not via DAs. The purpose of this
strategy is unclear, because the services the Dissemination Agents
are providing to the economy are well respected and generally
very good. Companies House has I never been able to provide as
specialised services to the market as dissemination agents. It
is understandable that Companies House is concerned that the information
reaches the right recipient—that is the purpose of the organisation.
But there is increased focus on Companies House
to provide the service themselves without recognising the work
done by dissemination agents, by reducing the price for the information
in a completely unaccountable environment. Re-users and DAs make
the information useful to many users. Companies House' drive to
increase market share harms this effective supply of information
to the right sources by only considering their own distribution
side for developments, imitating commercial services offered by
DAs and by decreasing the price for non-statutory services (eg
monitoring—despite this being called "statutory")
below the level a commercial service could offer the service.
Companies House thereby finances the expensive database with income
from filings (which has a high headcount within Companies House
operations) and attributes minimal costs to the output side. This
pushes the costs for dissemination far below the level any commercial
operation could sell a service for.
Although Companies House has a different legal
background, we therefore would be happy if Companies House follows
the recommendation parliament has given to the Ordnance Survey:
— Clearly define the statutory duty.
Charge market rate for non-statutory products.
— Be open and accessible about the
accounts and the charging mechanism. Allocate costs where they
belong, not where they would cause less political harm.
— And first of all: Communicate with
DAs, involve them in project planning and open up the specifications
of developments and database infrastructure to DAs and re-users.
20 March 2008
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