The BBC’s management of its Digital Media Initiative Report by the Comptroller and Auditor General presented to the BBC Trust’s Finance and Compliance Committee, 13 January 2011 DEPartmENT FOR CULTURE, MEdia AND SPOrt The BBC’s management of its Digital Media Initiative Report by the Comptroller and Auditor General presented to the BBC Trust’s Finance and Compliance Committee Presented to Parliament by the Secretary of State for Culture, Olympics, Media and Sport by Command of Her Majesty February 2011 © BBC 2011 The text of this document may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not in a misleading context. The material must be acknowledged as BBC copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought. The BBC’s management of its Digital Media Initiative BBC Trust Response to the National Audit Office Value for Money study ‘The BBC’s management of its Digital Media Initiative’ Background to this study project represents, and delivers, value for money. In view of the importance of As the BBC’s governing body, the BBC this project to the BBC, and the problems Trust acts to get the best out of the BBC that the Trust was aware of concerning its for licence fee payers. In part this means progress, the Trust was keen for this Value ensuring that the BBC continues to provide for Money study to take place to identify excellent value for money. We commission any lessons that could be learned. Value for Money investigations into specific areas of BBC activity to help ensure that The Trust thanks the NAO for undertaking licence fee payers are getting the best this review and for the report’s conclusions possible return on every pound of their and recommendations. licence fee. Each year the Trust commissions a series Our views on the of Value for Money reviews after discussing NAO’s findings its programme with the Comptroller and Auditor General – the head of the National We have considered carefully the NAO’s Audit Office (NAO). The reviews are report and we accept its key findings. undertaken by the NAO or other external The Trust considers that the DMI is a agencies, reporting to the Trust. The cutting edge project that will improve the Trust carefully examines the findings from way the BBC operates, leading to greater each study and requires a full response efficiencies of time, efficiencies of cost and and action plan from the BBC Executive by providing scope to increase creativity. explaining how it will take forward the By its nature, this was always a high risk specific recommendations made. project as there was no “off the shelf” This study, commissioned by the Trust’s technology available. However, we remain Finance & Compliance Committee on convinced that with the Salford Quays behalf of the Trust and undertaken by the and Broadcasting House developments NAO, looked at the BBC’s management coming on line in 2012 it was right that of its Digital Media Initiative (DMI). The we developed the DMI rather than install DMI is a major technology project that is soon-to-be-obsolete technology. The non- intended to deliver efficiencies while also financial benefits of the DMI are significant, improving creativity and productivity. As and the financial benefits of the DMI, while with all significant projects, the Trust is important, are only part of the picture. under an obligation to ensure that the The Trust agrees with the NAO that Similarly, it is encouraging that the NAO the first phase of the project did not has reported significant improvements in proceed according to plan. The BBC the way in which the BBC management has awarded the DMI contract to Siemens, presented the more recent business case, the BBC’s technology framework supplier. particularly in respect of the anticipated Framework agreements are intended to benefits. We acknowledge the NAO’s provide efficiencies, in part by reducing assistance in recommending improvements procurement costs and times. However, to the process of approval in its past with hindsight, the decision to award the studies for the BBC. contract to Siemens did not lead to the planned outcome and resulted in a delay The Trust will now require the BBC of 21 months to the project and hence a Executive to provide a comprehensive delay in the improved working practices. action plan outlining how it intends to implement the NAO’s recommendations. It is difficult to conclude whether a more Where implementation is already in detailed assessment at the time and/or a progress, we will require full details on competitive procurement process would the actions being undertaken. We will also have reduced the risk of this occurrence, require the Executive to consider how as the inherent nature of IT projects these points may have relevance for other means that they are complex and at high BBC projects. risk of cost overruns throughout both the public and private sectors. However, Specific Trust recommendation we accept that a detailed assessment of The NAO makes a specific recommendation procurement decisions is a key area in to the Trust concerning the referral project approval and we will require the thresholds. We consider that the referral BBC management to take note of the NAO thresholds as currently drafted are clear comments in this respect when considering and have worked well to date, ensuring an future business cases. The Trust notes, appropriate balance such that the Trust is however, that the contractual agreement involved in strategic rather than the more with Siemens did protect the BBC from routine operational decisions. However, direct financial loss (although not from loss we note the NAO’s comments that these due to delay). are narrow financial thresholds. We agree that we should review these referral Since bringing the project in-house, criteria in light of the NAO’s comments the Trust has been satisfied with the and consider expanding these to include progress of the project. We note the NAO’s significant changes to the cost-benefit of a recognition that the BBC has now started project. The Trust will consider how best to to deliver the DMI system and that users implement this recommendation. have been positive about the elements delivered. In the context of the DMI being a complex and cutting edge IT project, the Trust considers this is something of which the BBC should be proud. However, there is still some way to go to complete the project and we will be continuing to monitor progress. With specific regard to the decision to continue the project in-house in July 2009, the Trust is mindful of the important division between the Executive’s operational responsibilities and the Trust’s oversight responsibilities. The Executive Board and the Trust were kept informed of the status of the project through oral briefings, and both were satisfied that the BBC Finance Committee (which includes the BBC Director-General, the BBC CFO and the BBC COO) was an appropriate forum in which to take the decision as to how to continue the DMI given that the overall financial cost to the BBC was not increasing and the aims of the project remained as previously stated. However, the proposal to increase the scope of the project was rightly brought before the Trust in mid-2010. Action plan The Trust has discussed the recommendations with the Executive and considered its response, which is published in this document. The Trust is satisfied that the Executive’s proposed actions are an appropriate initial response to the NAO’s findings, but will require the Executive to provide a more detailed action plan for Trust review. Progress against this plan will be reported to the Trust. BBC Trust January 2011 The BBC’s management of its Digital Media Initiative BBC Executive Response to the National Audit Office Value for Money study ‘The BBC’s management of its Digital Media Initiative’ The BBC Executive welcomes this study, l The BBC’s strategy, Putting Quality in which the National Audit Office (NAO) First (including re-investing savings reviewed our management of the Digital in quality content, developing Media Initiative (DMI). partnerships and strengthening digital public space). DMI is a strategic investment in infrastructure, people and production l A ‘networked’ BBC built around processes that aims to support the sustainable centres of production realisation of the BBC’s creative vision in across the UK. the most cost effective manner possible. DMI will seek to transform the way the l A pan-BBC digital archive. BBC makes content for its audiences. It l will create a digital content production An end-to-end digital workflow and a system that enables easy manipulation of solution for managing digital assets content, effective sharing across locations, that would also help establish common desk-top editing and access to the archive. standards in metadata in partnership The project covers hardware, software and with the industry. running costs for eight years and replaces In February 2008, the BBC entered into disparate legacy systems. It will provide a an agreement with Siemens, its strategic foundation not only for content flows across technology partner, for the provision of the BBC, but across the UK-wide sector delivery of the DMI programme. This as a whole. The media industry is moving agreement was a call-off against the towards this way of working and the BBC Technology Framework Contract (TFC) needs to keep pace with current digital which was signed by the BBC and Siemens technology, so investment in technology of in September 2004.