How the BBC spent £125.9m on digital - and got nothing in return

Last year we reported on the £100 million digital disaster area that was the BBC’s Digital Media Initiative (DMI) - an ambitious scheme to digitise the broadcaster’s video archive which dates back decades.

We got one vital fact wrong - as did everyone. The BBC didn't in fact waste £100 million of public money on a digital debacle.

It did so much better than that and managed to flush £125.9 million down the drain! You could make a lot of Doctor Who and EastEnders for that!

And that's all the more galling given that of that £125.9 million, not one penny piece will be returned as any form of financial benefit to the BBC or to its viewers.

When it began back in 2008, DMI was meant to provide a completely digital platform for BBC programming and archiving, ending the need to store video tape and allowing for clips and complete programmes to be uploaded, downloaded, edited or archived as necessary.

After the project was finally cancelled in May this year – following embarrassing revelations that DMI failed completely to support coverage of Baroness Thatcher’s funeral – the BBC commissioned PricewaterhouseCoopers to conduct an investigation into what had gone wrong at a cost of £250,000 and publish a report.

That reported last month and apportioned blame for blowing £100 million of taxpayers money - the BBC is funded by a compulsory licence fee in the UK, making it effectively a public sector organisation - firmly on bad management and poor governance by BBC executives.

The BBC said that it would learn lessons from this, but declined to specify what those lessons would be until a second report, this time from the National Audit Office (NAO) was published.

That report came out today - and in common with the privately-commissioned PwC ‘mea culpa’ original - it makes for painful reading as it describes a digital transformation programme that was in reality a long, slow car crash of a IT nightmare.

The NAO’s key findings:

• When the BBC took over responsibility for developing the DMI system in July 2009 after canning original contractor Siemens, it had little time left to meet critical internal deadlines.
• The BBC completed the most straightforward of its new technology releases for the DMI but these proved not to be reliable indicators of progress.
• Technical problems and releases not meeting user expectations contributed to repeated extensions to the timetable for completing the system, eroding user confidence and undermining the business case.
• The cultural change aspects of the digital transformation were neglected as the BBC’s management of the DMI focused more on the technological aspects of the programme rather than enabling BBC-wide change.
• Governance arrangements for the DMI programme were inadequate for its scale, complexity and risk.
• The BBC did not appoint a senior responsible owner to act as a single point of accountability and align all elements of the DMI and reporting structures were not fit for purpose.
• The BBC lacked sufficient independent assurance that its design for the DMI was technically sound.
• The BBC was aware that business requirements for the DMI were not adequately defined but did not revisit the original business case to revise it.
• In May 2013 the BBC decided to retain the archive database but close the rest of the DMI programme without examining the technical feasibility or cost of completing the DMI.

The NAO comes to the grim conclusion:

The DMI was a major technology-enabled transformation programme for the BBC. The BBC was too optimistic about its ability to implement it and achieve the benefits.

It did not establish clear requirements for the system or obtain a thorough independent assessment of its technical design as a whole to see whether it was technically sound.

Confusion about the content of technology releases and protracted problems with getting the system to work contributed to a growing gap between technology development and what system users expected.

Amyas Morse, head of the NAO, commented:

"The BBC Executive did not have sufficient grip on its Digital Media Initiative programme. Nor did it commission a thorough independent assessment of the whole system to see whether it was technically sound. If the BBC had better governance and reporting for the programme, it would have recognized the difficulties much earlier than May 2012.”

Diane Coyle, vice president of the BBC’s governing BBC Trust, once again played the ‘lessons learned’ card so common to all public sector organisations after the latest IT-related mess:

“It is essential that the BBC learns from the losses incurred in the DMI project and applies the lessons to running technology projects in future. The NAO’s findings, alongside PwC’s recommendations will help us make sure this happens.

“As we announced last December, we are working with the Executive to strengthen project management and reporting arrangements within a clearer governance system.

"This will ensure that serious problems can be spotted and addressed at an earlier stage.”

In other words: er, we’re not sure what it is that we’ve learned, but we’re pretty sure we’ll come to some kind of a conclusion soon.

While they’re scratching their heads, the BBC management team could do worse than check out the analysis provided by veteran public sector IT watcher Tony Collins who concludes that:

the BBC’s failed £125.9m Digital Media Initiative is a reminder – as in most failed big IT-enabled projects – that the causes have nothing to do with software and everything to do with management and people.

The DMI project is exemplar of all that tends to go wrong in big government IT-enabled projects.

Strong independent oversight and independent reviews that were published would have provided the accountability to counterbalance over-optimism.

But these things never seem to happen.

There are also questions about why the BBC took on the project from Siemens and turned what could have been a success into a financial disaster.

Verdict

Quite simply an utterly lamentable catalog of ineptitude and poor governance with what looks like a wide field of blame to be allocated.

So far the only significant head to roll has been the BBC’s CTO John Linwood who was suspended when the DMI work was canned last May and sacked two months later.

He’s unlikely to be the last scalp though. The Public Accounts Committee (PAC) of the House of Commons has already questioned why Linwood was the only person in the frame.

That's a  question that will almost certainly be aired again when former BBC director-general Mark Thompson gives evidence on the DMI at a Commons committee next month.

This isn’t over by a long chalk. Anyone embarking on a major digital transformation program should keep a close eye on this one - there are a lot of lessons to be learned from the BBC's complete and utter failure.