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The BBC’s Bloomer

Hard lessons in digital transformation from the BBC.


With the Digital Media Initiative, the BBC wanted a digital production system for the 21st century, but what it got was a multimillion-pound catastrophe. As the BBC’s new CTO, Matthew Postgate, takes up the reins, Chris Middleton and Stuart Lauchlan explain the lessons of the broadcaster’s strategic mistakes.


ORGANISATIONS SHORTIn Spring 2014, strategists at the BBC were slammed by Parliament’s public spending watchdog, the Public Accounts Committee (PAC), for wasting tens of millions of pounds of licence-fee payers’ money on the aborted Digital Media Initiative (DMI).

Rona Fairhead

Head of the BBC Trust, Rona Fairhead, joins at a tough time for the corporation.

The DMI was an ambitious, centralised plan to digitise the BBC’s archives and allow staff to create, manage, and share rich-media programming from their desktops, generating a hoped-for £100 million in savings and productivity benefits across the organisation.

Within the BBC, it was trumpeted as providing ‘end-to-end digital processes’ and ‘an asset-centric approach’ that would prepare the organisation for an ‘on-demand digital environment’. But with the exception of the archive system, it was abandoned in May 2013 after being developed for four years in house, before which the contract had rested with Siemens – a deal that ended by mutual consent in 2009.

Damning criticism of BBC strategists’ inability to manage and deliver the DMI was made in April 2014 by PAC chair Margaret Hodge. She 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.”

According to a PwC report, total spending on the botched scheme over six years was £125.9 million, with a cost to licence-fee payers of £98.4 million.

The new broom

The BBC’s new chief technology officer, Matthew Postgate, has a background in mobile services and new technology platforms. His task now is to lead both the internal and public-facing aspects of the BBC’s technology operations and to set a new strategic direction for the organisation.

Acting CTO Peter Coles had been covering the role since Spring 2013, when John Linwood left the BBC in high dudgeon in the wake of the DMI’s collapse. But since his dismissal, Linwood had claimed that he was merely the “fall guy” for the collapse of the project. On 7 August 2014, he appeared to be vindicated when an employment tribunal ruled that he had been unfairly dismissed, slamming the Corporation’s “cavalier disregard” for disciplinary procedures.

So what really happened with the DMI, and what are the lessons for any large corporation pushing through organisation-wide change programmes?

Disastrous mistakes

First, the project had no senior responsible owner, according to the PAC, and governance was inadequate for the DMI’s scale, complexity and risk.

Bringing the project back in house left little time for the scheme’s internal management to hit critical deadlines and deliverables, according to a separate report by the National Audit Office (NAO) earlier this year. In addition, managers were “complacent” as the project unravelled.

Selling the CMI

Selling the scheme internally: a strategy that failed.

Furthermore, the BBC seems to have made a mistake that many publicly-accountable organisations make when implementing large technology programmes: the culture-change aspects of digital transformation were neglected as managers focused more on the technology than on its long-term business benefits. Indeed, business requirements for the DMI were neither adequately defined nor revised and updated, said the NAO.

Overall, the BBC lacked sufficient independent assurance that its original design was technically sound. Subsequent technical problems contributed to timetable extensions, eroding user confidence and undermining what details had been set out in the business case.

Hiding the facts

Implicit in the PAC’s criticism was the suggestion that BBC managers hid the truth via a failure to supply “important evidence” to the Committee in 2011 – a negative report by Accenture. This contributed to a “false impression of progress”, said the PAC.

Hodge said: “When my Committee examined the DMI’s progress in February 2011, the BBC told us that the DMI was ‘absolutely essential to have’ and that a lot of the BBC’s future was tied up in its successful delivery.

“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.

“The BBC was far too complacent about the high risks involved in taking it in-house. No individual had overall responsibility or accountability for delivering the DMI, or took ownership of problems when they arose.”

Bang goes the theory

Bang Goes the Theory.

An apt choice: the only programme made to date using the DMI’s delivered technology.

The PAC’s report catalogues the scheme’s failures. These include the assertion that the only part of the DMI to be delivered, the digital archive system, has just 163 regular users and costs £3 million a year to run. In contrast, the running costs of the Infax tape-based system that it replaced were just £700,000 a year.

The BBC admits that the new system is “clunky” and takes around ten times longer to use than Infax. Just one show – ironically, ‘Bang Goes the Theory’ – has been made to date using the technology.

The need to apologise for the DMI’s collapse has extended to former BBC director general Mark Thompson, now CEO of the New York Times. “I want to say sorry, I want to apologise for the failure of this project,” he said when forced to appear before the PAC in late 2013.

Thompson had a different take on events. “One of the issues… was a pronounced and growing difference of opinion between the team making DMI and the business users about how effective and how real the technology was,” he said. “I can smell business obstinacy: when the business is unready and not ready to play ball.”

Mark Thompson

Former director general Mark Thompson apologises to the PAC in late 2013.

Perhaps the DMI was a modernisation scheme too far, in the context of the BBC also moving functions out of London to MediaCityUK in Salford, while redeveloping its existing bases, such as Broadcasting House. That’s a lot of major change within a short timescale. At such times, employees hang on to ‘what they know’ for the sake of quality and continuity.

Talking heads

To date, the only major head to roll has been Linwood, who was suspended when the DMI was canned in May 2013 and then sacked two months later.

Unsurprisingly, Linwood – vindicated a year after his dismissal – has a different perspective on the DMI’s failure, claiming that the BBC changed its mind about it and wanted it to fail: “They wrote off software that was working and they wrote off infrastructure that was working,” he told the PAC. “They were written off because the business decided not to use them. They’ve tried to pin this on technology to avoid facing up to the truth.”

Linwood paints a picture of warring factions within the corporation, each working to their own agendas and making it impossible to impose a single, standardised production process. As a result, he believes that the business case became distorted and confused.

Whether or not that was true, the BBC’s director of operations, Dominic Coles, told the PAC that the BBC is now allowing departments to source their own solutions from third-party suppliers. “We’re chunking it up into deliverable projects,” said Coles. “We are no longer going to be [delivering] one integrated ‘it all works or nothing works’ [system].”

Broadcasting House

The BBC has embarked on a string of high-profile modernisation schemes within a short timescale.

A leaked PowerPoint presentation from a member of staff in 2007 reveals that some employees had concerns right from the start. One slide said that there was ‘fear of the scale and scope’ of the DMI, that there was ‘enormous confusion regarding the concepts’, that there was a ‘product focus’ rather than a ‘solution focus’, and ‘non-experts’ were ‘inventing established concepts’.

Whichever account of the debacle is correct, the BBC has accepted its organisational failure to manage the scheme effectively and has promised “crystal clear accountability” from now on. A spokeswoman for the BBC Trust, the corporation’s governing body, said: “This represented an unacceptable loss to licence-fee payers.

“Acting on the conclusions of previous reports into the DMI, we have strengthened reporting to the Trust so that problems are spotted early and dealt with quickly. We are also carrying out follow-up reviews once projects are completed, to make sure the lessons from DMI are being implemented.”

Lessons for all business leaders

The PAC has made recommendations of its own to the BBC, all of which apply to any organisation that is embarking on an ambitious transformation project. For all organisations, these broad recommendations include:

• Ensure that governance and assurance arrangements match the scale, strategic importance and risk profile of major programmes and projects.

• Major projects need to be led by an experienced senior responsible owner who has the skills, authority and determination to achieve transformational change, and can see the project through to successful implementation.

• When reporting on major projects, use clear milestones to enable an unambiguous and accurate account of progress and problems.

• Apply rigorous and timely scrutiny to all major projects to limit any potential losses that will affect stakeholders and customers.

• Be more proactive when chasing and challenging executives’ performance in delivering major projects, so that stakeholders’ and customers’ interests can be properly protected.

To these, the Strategist would add that it is essential that every part of an organisation understands and buys into any centralised change programme and is willing to work collaboratively to achieve its aims. Without that singular vision, any programme – no matter how innovative or well-intentioned it may be – may descend into political infighting. TS

The Strategist says

The BBC’s ambitions for the scheme cannot be faulted, but senior managers failed to sell the DMI internally. This was coupled with an excessive focus on technology for its own sake and too little focus on what the real-world benefits might be. Jargon does not equal progress, and experienced, skilled people dislike evangelical IT-led change unless senior managers can demonstrate that they respect the deep knowledge within an organisation and their intention to work collaboratively with expert staff. Organisations should be wary of pushing through too much change too quickly in too many areas of the business. At such times, employees dig their heels in – not because they are obstructive or old-fashioned, but because they have a commitment to (and responsibility for) continuity and excellence.
Stuart Lauchlan is co-founding editor of Diginomica, a Strategist media partner. Chris Middleton is founder and editor in chief of Strategist magazine.



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