The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"The BBC’s Digital Media Initiative was a complete failure. Licence fee payers paid nearly £100 million for this supposedly essential system but got virtually nothing in return.
The main output from the DMI is an archive catalogue and ordering system that is slower and more cumbersome than the 40 year-old system it was designed to replace. It has only 163 regular users and a running cost of £3 million a year, compared to £780,000 a year for the old system.
When my Committee examined the DMI’s progress in February 2011, the BBC told us that the DMI was “an absolutely essential have to have” and that a lot of the BBC’s future was tied up in the successful delivery of the DMI.
The BBC also told us that it was using the DMI to make many programmes and was on track to complete the system in 2011 with no further delays. This turned out not to be the case. In reality the BBC only ever used the DMI to make one programme, called ‘Bang Goes the Theory’.
The BBC was far too complacent about the high risks involved in taking it in-house. No single individual had overall responsibility or accountability for delivering the DMI and achieving the benefits, or took ownership of problems when they arose.
Lack of clearly defined responsibility and accountability meant the Corporation failed to respond to warning signals that the programme was in trouble.
The BBC Trust demonstrated similar complacency in its poor oversight of the Executive’s implementation of the DMI.
Both the BBC Executive and the Trust need to overhaul their approach to managing and implementing major projects so that they properly safeguard licence fee payers’ money.
It is not clear why the BBC failed to share important evidence, a 2010 report from Accenture about the DMI, with my Committee or the National Audit Office when it reported on the DMI’s progress in January 2011, which contributed to our false impression of the progress by DMI. My Committee expects the BBC to be completely transparent in its dealings with us and the NAO and tell us of any potentially significant evidence or facts in a timely way."
Margaret Hodge was speaking as the Committee published its 52nd Report of this Session which, on the basis of evidence from the BBC and the BBC Trust, examined the BBC’s Digital Media Initiative.
Conclusions and recommendations
The Digital Media Initiative was a transformation programme that involved developing new technology for BBC staff to create, share and manage video and audio content and programmes from their desktops. The BBC initially contracted Siemens to build the DMI system. However, the contract was terminated by mutual agreement with effect from July 2009 and the BBC brought the DMI in-house in September 2009.
In February 2011, based on a National Audit Office report, we took evidence from the BBC on its progress with the in-house development of the Programme. Our April 2011 report reflected the assurances the BBC had given us about it being on track to complete the system in 2011 with no further delays. However, the BBC then failed to complete the DMI Programme and in May 2013 cancelled it at a cost to licence fee payers of £98.4 million.
The BBC was far too complacent about the DMI’s troubled history and the very high risks involved in taking it in-house. The DMI was 18 months behind schedule when the BBC took it in-house from Siemens. The BBC did not obtain independent technical assurance for the system design or ensure that the intended users were sufficiently engaged with the Programme. Poor governance meant that these important weaknesses went unchallenged, even when things started to go badly wrong.
Given the gaps in the BBC’s in-house capability, it is in retrospect unclear to us why the BBC ever thought it could complete what Siemens had been unable to deliver.
Recommendation: The BBC should ensure that governance and assurance arrangements match the scale, strategic importance and risk profile of its major programmes and projects.
No single individual had overall responsibility or accountability for delivering the DMI and achieving the benefits, or took ownership of problems when they arose. The BBC did not appoint a senior responsible owner with overall responsibility for the DMI. The BBC’s Chief Technology Officer was responsible for the DMI system but not for achieving the projected benefits across BBC divisions. There were different views amongst those responsible for developing the system and the intended users about the effectiveness of the technology and how engaged business areas were in the Programme. The absence of a senior responsible owner to take responsibility for resolving these different views led to a situation where the DMI Programme team spent years working on a system that did not meet users’ needs.
Recommendation: Projects like the DMI need to be led by an experienced senior responsible owner who has the skills, authority and determination to achieve transformational change, and who sees the project through to successful implementation.
Neither the Executive Board nor the Trust knew enough about the DMI’s progress, which led to Parliament being misinformed. In February 2011, the then Director General told us that the DMI was 'out in the business' and that 'There are many programmes that are already being made with DMI'. In reality, the DMI had been used to make only one programme, called 'Bang Goes the Theory'. While the then Director General assures us that he gave a faithful and accurate account of his understanding of the project at that point in early 2011, he was mistaken and there was confusion within the BBC about what had actually been deployed and used.
Recommendation: In its reporting on major projects, the BBC needs to use clear milestones that give the Executive and the Trust an unambiguous and accurate account of progress and any problems.
Despite the DMI’s importance, the BBC Executive applied insufficient scrutiny and reacted far too slowly to clear signals that the DMI was in trouble. When we examined the DMI’s progress in February 2011, the BBC planned to complete the system in July 2011 and told us that there would be no further delays. This assurance proved to be unfounded as the BBC missed the July deadline. Despite the repeated delays and the DMI’s worsening risk status during 2011, the Executive Board did not discuss the Programme’s future until May 2012. Some individual Executives were aware before then that there were problems but thought that they could resolve them and so did not escalate problems to the Board. The BBC’s project management office increased the DMI’s risk rating to red for the quarter ending December 2011 but this was not reported to the Executive Board until June 2012 or to the Trust until July 2012. The Executive Board then took a year to reach its decision to cancel the DMI, in May 2013.
Recommendation: The BBC Executive should apply more rigorous and timely scrutiny to its major projects to limit potential losses that will ultimately fall on licence fee payers.
The BBC Trust failed to exercise sufficient oversight of the Executive Board’s delivery of the DMI, despite assuring us that it would. The BBC Trust told us in February 2011 that it would continue “worrying the heck” about the DMI until it was delivered but was satisfied that it had the capability to oversee and challenge the Executive. However, the Trust told us that in retrospect it had insufficient technical knowledge to interpret the information that it received about the DMI. The Trust was also slow to react. The Executive told the Trust in September 2011 that the DMI’s risk rating had increased to amber-red. The BBC’s project management office subsequently increased it to red for the period October to December 2011. However, in the seven months from January to July 2012 the BBC Trust neither received nor required a progress update from the BBC on the DMI’s status.
Recommendation: The BBC Trust should set out in response to this report what changes it will make to be more proactive in chasing and challenging the BBC Executive’s performance in delivering major projects, so that it can properly protect the licence fee payers’ interest.
Licence fee payers paid nearly £100 million for a supposedly essential system but got virtually nothing in return. The BBC told us in February 2011 that the DMI was essential to the future of the BBC. However, the main output from the DMI is an archive catalogue and ordering system that is slower and more cumbersome than the 40 year-old system it was designed to replace. It has only 163 regular users and a running cost of £3 million a year, compared to £780,000 a year for the old system. The BBC is already developing plans to replace it. The BBC told us that it still intends to digitalise its production process and, through its ‘end-to-end’ project, is considering how it will create an alternative to the DMI.
Recommendation: The BBC Executive should report back to us on which of its original requirements for the DMI are still essential, how and when it will meet them, and at what cost.
The BBC failed to share important evidence about the DMI with us and the National Audit Office, which contributed to our false impression of the DMI’s progress. The National Audit Office (NAO) recommended in its January 2011 report that the BBC complete an independent technical assessment of the DMI. The BBC told the NAO that it had already commissioned such an assessment. The assessment was carried out by Accenture and was in fact submitted in draft to the BBC in December 2010. The Accenture assessment stated that the elements of the DMI examined were not robust enough for programme-making and that significant remedial work was required. The BBC did not share the draft findings with the NAO prior to publication of the NAO report or inform us of its findings during our hearing in February 2011.
Recommendation: We expect the BBC to be completely transparent in its dealings with us and the NAO and inform us of any potentially significant evidence or facts in a timely way.