Memorandum on the BBC’s Digital Media Initiative

28 January 2014

Full report: Memorandum on the BBC’s Digital Media Initiative

The BBC was too optimistic about its ability to implement the Digital Media Initiative (DMI) and achieve the benefits, according to a report today from the National Audit Office for the BBC Trust.

The BBC’s aim had been to create a fully integrated digital production and archiving system to help staff to develop, create, share and manage video and audio content and programming on their desktops. In May 2013, the BBC cancelled the programme after concluding that most of the £125.9 million it had spent had been wasted. Today’s NAO report concludes that problems with getting the system to work contributed to a growing gap between technology development and what users expected. The executive did not have a sufficient grip of the programme and did not appear to appreciate the extent of the problems until a late stage.

The findings from the report include the following:

  • When the BBC took over responsibility for developing the DMI technology from Siemens in July 2009 it had little time left to meet critical internal deadlines.
  • The BBC did not establish clear requirements or obtain a thorough independent assessment of its technical design to see whether the DMI was technically sound.
  • The BBC completed the most straightforward of its new technology releases for the DMI but these proved not to be a reliable indicator 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 governance arrangements for the DMI 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. Reporting arrangements were not fit for purpose.
  • The BBC did not adequately address issues identified by external reviewers during the course of the programme. For example, it was aware that business requirements for the DMI were not adequately defined.
  • The BBC estimates that it spent £125.9 million on the DMI. The BBC offset £27.5 million of spending on the DMI against transfers of assets, cash and service credits that formed part of its financial settlement with Siemens. This left a net cost of £98.4 million.  The BBC cancelled the DMI without examining the technical feasibility or cost of completing it.
  • The BBC wrote off the value of assets created by the programme, but is exploring how it can develop or redeploy parts of the system to support its future archiving and production needs.

 “We are grateful to the NAO for carrying out this report, which reinforces the conclusions of the PwC review commissioned by the Trust. 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.”

 

Diane Coyle, Vice Chairman BBC Trust, 28 January 2014

 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.”

Amyas Morse, head of the National Audit Office, 28 January 2014

Notes for Editors

£125.9 million
BBC’s estimate of spend on the DMI

£98.4 million
BBC’s estimate of the net cost to license fee payers

6 years
Time the BBC took to plan, design and attempt to build the DMI

£133.6 million
Budgeted cost of the DMI (April 2007 to March 2017)

184
BBC staff and contractors working in the DMI programme team at its peak

Note: all financial information in this report is expressed in cash terms.

1. The NAO’s findings are based on its high-level review that it carried out over four weeks during November and December 2013. The NAO relied largely on the findings of existing reviews that the BBC and the BBC Trust prepared or commissioned, supplemented by its own review of key documents. These included technical reviews that the BBC commissioned from Accenture and a review of governance and project management that PwC carried out for the BBC Trust. The NAO did not undertake extensive audit work to verify the accuracy of information that it received.

2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474

3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.

Contact: Rupi Gohlar
Direct line: 020 7798 7066 Mobile: 07917 555388 Email: pressoffice@nao.gsi.gov.uk
PN: 8/14
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