The BBC's management of its Digital Media Initiative - Public Accounts Committee Contents

2  The in-house delivery of the Programme

10. After the contract with Siemens was terminated the BBC brought the Programme in-house, but did so without testing the value for money of this approach. In February 2009 a review commissioned by the BBC concluded that taking delivery in-house was the highest risk option, yet by July 2009 the BBC had decided this was the only option. The BBC considered that time was a crucial factor, because the move of some BBC operations to Salford depended on the Programme technology being ready by May 2011 and it would take six to nine months to procure a new contractor competitively.[20] The Trust believed the most important thing was getting the Programme back on track.[21]

11. Since bringing the Programme in-house, the BBC has successfully delivered four technology releases and early feedback from users is positive. The Programme is running five months later than the BBC estimated when it took the Programme in-house, but the BBC is on track against its revised schedule to deliver the complete technology for the Programme by summer 2011 and to deliver the technology required for the move to Salford.[22]

12. When it brought the Programme in-house, the BBC adopted a more iterative 'agile' approach to delivery. This involved breaking down technology development into smaller steps and getting quick feedback from users to improve products.[23] The BBC attributed the successful delivery so far both to adopting this 'agile' approach and to having a strong supplier management team. The BBC also emphasised the importance of having the capacity and skills to develop aspects of the Programme in-house and then integrate the software.[24] Under the leadership of its now-departed Director of Future, Media and Technology, it had built up its in-house software development team.[25]

13. We asked the Director of Future, Media and Technology about the lessons learned from the in-house delivery of the Programme. The lessons highlighted included 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; and
  • Clear and effective project governance with the appropriate representation on each group or board from across the project, business and suppliers.[26]

14. The estimated cost of delivery and implementation of the whole Programme to the end of March 2017 is £133.6 million. The increase is largely because of a wider rollout across the BBC than originally approved by the Trust in January 2008, offset by the £27.5 million available to the BBC as a result of the settlement with Siemens.[27] The BBC expects the Programme will end up saving the BBC money and aims to work in partnership with independent commercial companies and other public organisations to get as much value as possible out of its investment.[28]

15. However, the financial case for the Programme has weakened over time. The BBC originally approved the Programme on the basis that it would cost £81.7 million and deliver benefits of £99.6 million, giving a net benefit of £17.9 million. It now forecasts costs of £133.6 million and benefits of £95.4 million - a net cost of £38.2 million.[29]

16. As the estimated costs were higher than the estimated financial benefits, when the Trust approved a revised investment case for the Programme in June 2010, the non-financial benefits expected from the Programme, such as improved creativity and partnership working with other organisations, were a crucial factor in the decision. The Trust therefore pressed for greater clarity on the deliverability of such benefits. It also gave weight to the strategic benefits of the BBC moving more fully into digital technology. The BBC saw the Digital Media Initiative as transforming the way the BBC makes programmes and supporting the forthcoming move to Salford, and considered it essential to the BBC's future rather than a 'nice to have'.[30]

17. The Programme is being delivered by a team within the Future, Media and Technology division. We questioned the BBC on the cost of BBC senior management and on the number of organisational layers, specifically within the Future, Media and Technology division.[31] The BBC told us that it intended to reorganise this division following the recent departure of the Director of Future, Media and Technology. The BBC was also planning to simplify its structure and was reviewing both the number of layers and the way in which different divisions worked together.[32]

18. Over a year ago, the BBC announced its commitment to reducing the salaries for senior managers by 25%, and the number of senior managers by 20%, by the end of 2011. The Trust told us it believed the BBC should have tackled these issues sooner. It acknowledged that the BBC's senior management costs and numbers were a matter of legitimate public concern and assured us that it was committed to seeing the reductions were implemented. As we requested, the BBC subsequently provided a breakdown of the expenses of the 39 senior managers in the Future, Media and Technology division. In addition the Trust told us that from April 2011 the BBC will publish the salaries and expenses for all senior managers earning more than £150,000 a year.[33]

20   Qq 90-94  Back

21   Q 85 Back

22   Qq 1, 93, 95, C&AG's Report, paragraph 13, and Figure 6 Back

23   Qq 1, 93, 95, C&AG's Report, paragraph 3.14  Back

24   Qq 109-110 Back

25   Qq 90, 93-94, 112, 115 Back

26   Ev 24 Back

27   Q 23, C&AG's Report, paragraphs 1, 3.6  Back

28   Qq 1, 12-17, 56 Back

29   C&AG's Report, paragraph 15 and Figure 1  Back

30   Q1, C&AG's Report, paragraphs 3.8, 3.9 and 4.5 Back

31   Qq, 98-106, Ev 17  Back

32   Q 103 Back

33   Qq 103, 118, Ev 17 Back

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© Parliamentary copyright 2011
Prepared 7 April 2011