PwC slams BBC for failed £100m digital transformation project

PricewaterhouseCoopers (PwC) has heavily criticised the BBC for its failed Digital Media Initiative (DMI), claiming that the organisation showed serious weakness in project management and reporting, as well as a crippling lack of focus on business change.

The BBC cancelled the project in May this year, resulting in the write-down of £100 million worth of assets and the suspension of its chief technology officer, John Linwood.

DMI was set up in 2008 as a complex business transformation programme aimed at changing the way that BBC makes content for its audiences. It intended to improve production efficiency by enabling staff to develop, create, share and manage video and audio content and programming on their desktop.

The BBC Trust commissioned PwC, at a cost of over £250,000, to conduct a comprehensive review of the management and reporting of DMI to ensure lessons could be learned and applied to current and future projects.

Following a failed agreement with Siemens in 2009 to deliver DMI, combined with a belief that the technology required was not commercially available, the BBC decided to bring the project in-house in 2010 and deliver the following:

• A data management system, including a structured format for data, and a catalogue database that listed all archived projects and content

• A digital archive to store all new BBC content

• Production tools

• Common enterprise services underpinning the above

Organisational Strain

PwC note that the failure of the project should be considered against a backdrop of “organisational strain” on the BBC, where it was already undertaking a number of considerable business change projects – including Project North, W1 and the 2012 Olympics.

However, the review found that DMI’s governance structure was "not effective" in dealing with the complexity of the project and as a result was "not fit for purpose". PwC found that the programme lacked an executive steering board which could effectively challenge the progress of DMI against agreed quality, time and cost metrics.

It explained that although the BBC’s CTO, Linwood, attended committee meetings to provide technology expertise, this did not provide sufficient independent technical capabilities to challenge progress on DMI.

PwC also believes that the ‘Technical Quality Group’, which was responsible for ensuring DMI followed best practice in technical delivery and aligned with the business requirements of the BBC, could have implemented stronger design governance principles.

The consultancy firm said: “It is unclear how frequently the Technical Quality Group met, the influence it had on the design and delivery of the technology, or the guidance it sought from a BBC-wife technology strategy body.”

In addition, PwC believes that the governance bodies responsible for the project were not provided with sufficient reporting. It said: “DMI did not provide clear and transparent reporting on progress against plan, cost to complete, or delivery of benefits to enable effective decision-making within the corporate governance structure.”

Too much focus on tech, not enough on business change

The review also found that the focus and priorities of DMI were on technology build, rather than enabling business-wide change at the BBC. It outlines how the success of the project relied on changing and standardising work practices across the BBC as a pre-requisite, which was not carried out.

“DMI reporting focused on technology risks and issues rather than the ability of DMI to drive operational change to business practices in the BBC,” the report said.

“This could have resulted in senior management taking a view that DMI would eventually deliver the anticipated benefits.”

PwC argues that the DMI business case, which was approved in April 2010, was not subject to periodic review and as a result changes in the benefits and costs of the project were being made against an out-dated plan and problems weren’t being reported accurately as a result.

“Had DMI provided an accurate forecast against plan, it should have been clear from delays in delivery, and changes in delivery, and changes to the risk profile, that the conditions requiring re-approval of the business case had been reached,” said PwC.

Insufficient quality assurance

Finally, PwC claims that the BBC implemented the bare minimum with regards to quality assurance – quarterly reporting. It claims that all other assurance activities were “ad-hoc in nature and concentrated on answering specific questions at a point in time”.

“We do not believe this was sufficient to support a programme as complex as DMI as these independent activities did not provide an integrated, on-going view of risk,” it said.

For example, in September 2011 reporting on DMI indicated that successful delivery was in doubt, with major risks or issues apparent in a number of key areas – approximately a year and a half before the project was cancelled.

PwC argues that if corporate governance bodies had been provided a clear view of the status of DMI, it would have been obvious that the required mitigation was not in place. Apart from the quarterly reporting, despite the risk notifications, no other assurance activities were undertaken in 2011.

“In summary, the complexities and a series of missed milestones, combined with weaknesses in DMI governance, risk management and reporting arrangements meant that it took longer than we would have expected for the BBC to reach executive agreement on the future for DMI,” the PwC report concluded.

BBC response

The BBC has issued a statement recognising that it “got this one wrong” and said that it will be taking a number of measures to simplify the organisation and increase personal accountability, following a joint review of governance by the BBC Executive and the BBC Trust.

"While the BBC has a strong history of delivering complex projects such as BBC iPlayer, the digital Olympics or major property moves, we got this one wrong which we regret,” said Dominic Coles, the BBC’s director of operations.

“We know it is vital to spot problems early, which is why we have overhauled how these projects are run to ensure this doesn't happen again."

The BBC will be taking a number of actions, including the following:

• The executive board will be strengthened, with an increase in the number of non-executive directors from four to six

• The overall number of boards in the BBC will be reduced by more than 60 percent, to be replaced with appropriately mandated senior individuals who will be "empowered" to take decisions and be held accountable to those

• A more robust reporting pack including an Integrated Assurance and Approvals Plan covering all major projects will be provided monthly to the board by the BBC’s Project Management Office

• A comprehensive update on all major projects will be submitted every quarter to the BBC Trust

Copyright © 2013 IDG Communications, Inc.

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