Digital Media Initiative

British Broadcasting Corporation

Memorandum
prepared by the Comptroller and Auditor General
presented to the BBC Trust
JANUARY 2014
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Memorandum prepared by the Comptroller and Auditor General
presented to the BBC Trust
This memorandum has been prepared under Clause 79(3) of the
Broadcasting Agreement between the Secretary of State for Culture,
Media & Sport and the BBC dated July 2006
Amyas Morse
Comptroller and Auditor General
National Audit Ofce
27 January 2014
British Broadcasting Corporation
Digital Media Initiative
National Audit Ofce 2014
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Contents
Key facts 4
Summary 5
Part One
The DMI 12
Part Two
Chronology of events 17
Part Three
Costs, residual benets and plans 27
4 Key facts Digital Media Initiative
Key facts
133.6 million budgeted cost of the DMI (April 2007 to March 2017)
184 BBC staff and contractors working in the DMI
programmeteamatits peak
125.9m 98.4m 6 years
BBCs estimate of spend
onthe DMI
BBCs estimate of the net
cost to licence fee payers
the time the BBC took to
plan, design and attempt to
buildthe DMI
Note: all nancial information in this report is expressed in cash terms
Digital Media Initiative Summary 5
Summary
Our scope and purpose
1 In May 2013, the BBC cancelled its Digital Media Initiative (DMI) after concluding
that most of the 125.9 million it had spent on the DMI had been wasted. In this
memorandum we summarise:

the BBCs aims for the DMI;

what went wrong;

where the money the BBC spent on the DMI went; and

what the BBC got in return.
2 Our ndings are based on our high-level review that we carried out over four weeks
during November and December 2013. We relied largely on the ndings of existing
reviews that the BBC and the BBC Trust prepared or commissioned, supplemented
by our 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. We did not undertake extensive audit work to
verify the accuracy of the information received.
Overview of the DMI
3 The DMI was a major technology-enabled transformation programme that was
designed to allow BBC staff and partners to develop, create, share and manage video
and audio content and programming on their desktops. It required the development of
a fully-integrated digital production and archiving system. It also needed a signicant
cultural change to standardise practices across television production in some of the
BBCs main divisions that produce factual and current affairs programmes.
6 Summary Digital Media Initiative
4 The BBC decided at the outset to build a custom-made digital system as
commercially available products at the time did not support its aims for transferring
digital les between production and archiving processes. The main elements of the
proposed system were as follows:

Production tools. This new software would enable production teams in some
of the BBCs main television production divisions to share content for factual
and current affairs television programmes, carry out basic video editing at their
desktops and save partially completed work. Production tools would also allow
users to transfer rough edits between their desktops and the BBCs professional
editing facilities, while retaining any detailed information (known as metadata)
associated with the les.

Digital archive. The digital archive would provide a new online digital store for
nished television programmes and other selected programme-making materials
and information. TheBBCs intention was to provide a more efcient alternative
to storing archive material on magnetic tapes or other physical media. Production
teams would be able to add detailed information (or metadata) about the content
of digital les to make it easier to nd archived material. The digital archive would
be integrated with production tools to enable the automatic transfer of les and
associated information between them.

Archive database. The archive database would replace an existing system for
cataloguing and managing physical archived content. The new system would be
integrated with the digital archive to enable all BBC staff and third-party producers
to search and order completed television programmes and related material held in
the BBCs digital and physical archives.
5 We reported previously to the BBC Trust, in January 2011, on the DMIs progress
at December 2010. The BBC contracted Siemens in February 2008 to build the system
but the contract was terminated by mutual agreement with effect from July 2009. The
BBC took responsibility for implementing the system in-house from September 2009
but did not assess the value for money and risks of this approach against alternative
options. We recorded in our report that the BBC had started to implement the system
and that users had been positive about the elements they had seen. We noted, however,
that there was a considerable way to go to develop a technically complex system,
whichrequired integrating several independent elements without any time contingency.
In addition, we noted that success would depend on take-up by users across the BBC.
The BBC estimated that the DMI would cost 133.6 million and create nancial benets
totalling 97.9 million from April 2007 to March 2017.
Digital Media Initiative Summary 7
Key ndings
6 When the BBC took over responsibility for developing the DMI system in
July 2009 it had little time left to meet critical internal deadlines. When the BBC
contracted Siemens to complete the system by May 2009, it had envisaged that the
technology would be ready in good time to support its move to Salford in summer 2011.
The BBC took system development in-house, in summer 2009, after its contract with
Siemens was terminated. At that point the BBC had used 18 months of development
time without securing a working system. It estimated that the system would not be ready
until February 2011, a delay of 21 months. By August 2010, it became clear to the BBC
that its schedule would be delayed by a further ve months to July 2011, which left no
contingency in its timetable. From March 2011, emerging problems with the system and
also unclear user requirements resulted in the BBC moving the completion date beyond
autumn 2011, and beyond required dates, for example to support production teams
relocating to Salford.
7 The BBC completed the most straightforward of its new technology releases
for the DMI but these proved not to be reliable indicators of progress. The DMI
programme team planned to implement the system in phases by issuing a series
of technology releases that would successively add new capabilities. However, the
BBC changed its technology release plans owing to technical and timetabling issues.
InJanuary 2010, BBC-commissioned consultants reported that plans for the DMI were
supercial and lacked clarity about the scope of technology releases. We examined
progress as at December 2010. We found that the BBCs plans did not map on to release
schedules, which could lead to confusion about releases. We also found that planning
processes for system development and testing were not strong enough to support the
more complex integration of the system elements. Confusion about what each release
was supposed to provide and the complexity involved made it difcult to establish what
progress the BBC had made and what more it needed to do to complete the DMI.
8 Technical problems and releases not meeting user expectations contributed
to repeated extensions to the timetable for completing the system, eroding user
condence and undermining the business case. In June 2010, BBC-commissioned
programme management consultants reported that although there were several
important issues to address, such as poor planning, there had been a positive reaction
to the DMI components that the BBC had provided. However, as the project began
to encounter further difculty and delay, users lost condence in the DMI to provide
a reliable system that met their requirements. Some television production teams that
relocated to the BBCs new site at Salford had to install alternative digital storage and
adapt their editing technology to operate as stand-alone systems. As soon as this
happened, the BBCs forecast of business benets for a fully functioning DMI system
started to erode.
8 Summary Digital Media Initiative
9 The BBCs management of the DMI was focused more on the technological
aspects of the programme rather than enabling BBC-wide change. To achieve
the forecast benets after building the system, the BBC would have to change its
archiving and production processes. However, PwC found that DMI reporting focused
on technology risks and issues rather than whether the programme could achieve
operational change to business practices in the BBC. PwC concluded that the BBC
executives view of progress could have been more clearly informed by taking into
account reporting by projects that depended on the DMI, such as the move to Salford,
on the impact of delays in delivering the system.
10 Governance arrangements for the DMI programme were inadequate for
its scale, complexity and risk. The BBCs decision to take the DMI in-house was
high-risk. It needed to ll capability gaps to complete the programme by recruiting
staff with the right skills or using third parties to deliver DMI components. Its plans also
involved high levels of parallel development work to complete and integrate the system
and meet important internal deadlines. Despite this:

The BBC did not appoint a senior responsible owner to act as a single
point of accountability and align all elements of the DMI. Future media and
technology was responsible for developing the investment case, delivering and
deploying the system, training users and achieving its share of the projected
benets. The divisions that would use the DMI, once delivered, were responsible
for using the system and ensuring that it generated the projected benets in their
areas. The splitting of responsibilities across divisions and the absence of a senior
responsible owner meant that differences between the expectations of those
developing the DMI system and its intended users were not resolved. The BBC
executive board noted when it closed the programme the need to ensure clear
accountability for delivery in programmes like the DMI.

Reporting arrangements were not t for purpose. PwC found that the DMI did
not provide clear and transparent reporting on progress against the plan, costto
complete, or achieving benets to enable effective decision-making within the
corporate governance structure. We found that there was also a six-month gap
between a serious deterioration in the risk rating at the end of 2011 and when it
was reported to the executive board, in June 2012, and the BBC Trust, in July 2012.
This change in risk rating had, however, been reported to the nance committee in
February 2012. In December 2013, following a review of governance arrangements
across the BBC, the BBC announced it would introduce a new approach to speed
up project reporting and identify issues earlier.
Digital Media Initiative Summary 9

The executive board applied insufcient scrutiny during 2011 and the rst
half of 2012. The DMI was not subject to any audit or assurance reporting,
beyondreports prepared by the project management ofce, between early 2011
and July 2012. The BBC emphasised to us that during this period it was overseeing
several other major projects, including the move to Salford and preparing for
the2012 Olympics. After the BBC executive board became aware of the problems,
it initiated a review of the DMI timetable, costs and benets in May 2012. At that
point, the programme was 15 months behind the timetable in the business case
approved by the BBC Trust. The BBC Trust nance committee raised concerns
about progress when it was informed in July 2012 that the DMIs risk rating was
red. When the executive board cancelled the DMI in May 2013, it identied a failure
to recognise the severity of the issues in the reports they had received.

The BBC Trust questioned the executive in September 2011 whether delays
might lead to the possibility of reduced benets, but then applied limited
challenge until July 2012. The BBC informed the BBC Trust nance committee in
September 2011 that the DMIs risk status had increased to amber-red. TheTrust
nance committee questioned the executive about slippages in achievingmilestones
but took assurance that there was potential for unforeseen benets. The DMIs risk
status increased to red for the period October to December2011. Agap in reporting
in the rst part of 2012, which neither the BBC nor the BBC Trust addressed, meant
that the Trust did not know this until July2012.
11 The BBC did not adequately address many important issues identied by
external reviewers during the course of the programme.

The BBC lacked sufcient independent assurance that its design for the DMI
was technically sound. It is standard practice in technical design to commission
thorough independent technical assessments. We noted in our previous report
that the BBC had not obtained an independent technical assessment of its design.
TheBBC did not take sufcient steps to implement our recommendation to
complete an independent technical assessment. The assessment it received from
its technical consultants in December 2010 examined only part of the system and
was therefore incomplete. Additionally, the BBC took insufcient steps to address
the signicant remedial work that the consultants concluded was needed on the
parts they examined.
10 Summary Digital Media Initiative

The BBC was aware that business requirements for the DMI were not
adequately dened. The BBCs initial focus was on rolling out early technology
releases to demonstrate progress, even though it had not established detailed user
requirements for archiving and production. Unclear requirements subsequently
resulted in delays, procurement problems and a lack of alignment between system
development and the requirements of the archiving and production teams who
would use it. BBC internal audit reported in July 2012 that the BBC had still not
established a blueprint stating the required end-state for the system. A high-level
internal review carried out by the BBC in August 2012 reported that although the
purpose of the archive was understood, DMI requirements remained vague and
production teams were indifferent about using production tools. Accenture, in a
technical assessment for the BBC of part of the DMI, reported in March 2013, that
the BBC was confused about what parts of the system were for.

The BBC did not revisit the business case. In our January 2011 report on the
DMI, we noted that the BBCs projections of the nancial benets had weakened.
We therefore recommended that the BBC should resubmit programmes for
approval where the delivery model, risk prole or costbenet projection changes.
However, BBC internal audit reported 18 months later, in July 2012, that despite
signicant changes to the timetable and projected benets, the BBC had not
revisited the business case that the BBC Trust approved in April 2010.
12 The BBC Trust approved the executive boards proposal to close the
DMIinMay 2013.

The executive board halted work on most parts of the DMI in October 2012,
other than the archive database which was already in use. At that stage,
theDMI steering group considered that the production tools software developed
by the DMI programme team was potentially viable for use in programme-making
and supporting some efciency benets. However, they had not yet been proven
and the intended users of production tools had reported that they had no desire
for further development owing to unclear business direction. The archive was still
not complete. Theexecutive board initiated a review of the BBCs future technology
requirements for archiving and production and DMI outputs. This included
commissioning an independent technical review of the parts of the DMI it had not
already halted.

The executive board concluded that its original vision for integrated production
tools was no longer valid, taking account of the delays and wider developments
within the industry, and that it needed to revise its approach to developing a
BBC-wide digital archive. It therefore decided in May 2013 to retain the archive
database but close the rest of the DMI programme. The BBC did not examine the
technical feasibility or cost of completing the DMI. However, the BBC and the Trust
concluded that owing to technological difculties and changes to business needs,
continuing theprogramme would be throwing good money after bad.
Digital Media Initiative Summary 11
13 The BBC estimates that it spent 125.9 million on the DMI. The BBC offset
27.5 million of spend on the DMI against transfers of assets, cash and service
credits that formed part of its nancial settlement with Siemens. This left a net cost of
98.4million. 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.
Conclusion
14 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 benets. 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.
15 The level of assurance and scrutiny that the BBC executive applied to the DMI
was insufcient for a high-value and strategically important programme that involved
signicant risks. The BBC executive did not have a sufcient grip of the programme and
did not appear to appreciate the extent of the problems until a late stage. If the BBC had
established better governance and reporting for the DMI, it would likely have recognised
the difculties much earlier.
12 Part One Digital Media Initiative
Part One
The DMI
1.1 This part describes:

the BBCs aims for the DMI; and

roles and responsibilities for approving, managing and monitoring the DMI.
BBCs aims
1.2 The DMI was a major technology-enabled transformation programme that was
designed to allow BBC staff and partners to develop, create, share and manage video
and audio content and programming on their desktops. It required the development of a
new, fully-integrated digital production and archiving system. It also needed a signicant
cultural change to standardise practices across television production in some of the
BBCs main divisions that produce factual and current affairs programmes.
1.3 The BBC decided at the outset to build a custom-made digital system as
commercially available products at the time did not support its aims for transferring
digital les between production and archiving processes. Figure 1 shows how the BBC
envisaged the various components of the new system would work together. The main
elements of the proposed system were as follows:

Production tools. This new software would enable production teams in some
of the BBCs main television production divisions to share and organise digital
content for factual and current affairs television programmes, carry out basic video
editing at their desktops and save partially completed work. Production tools would
also allow users to transfer rough edits between their desktops and the BBCs
professional editing facilities, while retaining any detailed information (known as
metadata) associated with the les.

Digital archive. The digital archive would provide a new online digital store for
nished television programmes and other selected programme-making materials
and information. The BBCs intention was to provide a more efcient alternative
to storing archive material on magnetic tapes or other physical media. Production
teams would be able to include detailed information (or metadata) about the
content of digital les to make it easier to nd archived material. The digital archive
would be integrated with production tools to enable the automatic transfer of les
and associated information between them.
Digital Media Initiative Part One 13

Archive Database. The archive database would replace an existing system for
cataloguing and managing physical archived content. The new system would
be integrated with the digital archive to enable staff and third-party producers to
search and order completed television programmes and related material held in
theBBCs digital and physical archives.
1.4 The BBC estimated that the DMI would cost 133.6 million to implement and
provide nancial benets of 97.9 million up to March 2017.
Figure 1
Original concept for how the DMI system would work
Source: National Audit Ofce diagram based on internal DMI programme documents supplied by the BBC
The BBCs aim for the DMI was to fully integrate archiving and production processes
Archive
Digital archive
Used to store audio and video clips or entire programmes.
Users browse the database online, download content or
save content from their desktops. Adding metadata to files
allows users to carry out detailed searches
Archive database
Holds detailed records of content in digital form and on
physical media. Users can search the archive online or order
stock held on physical media in the BBCs central archives
Work-in-progress: desktop production
Desk-based production software for production teams to
log and review new content, add metadata to describe
it, share it, and complete initial editing. Rough edits are
transferred electronically to editing suites for final editing
Production tools
Bundle and package
Content is prepared for
distribution to television,
radio, online, mobile
phones and other
devices
Editing suites
Production teams carry out
final editing in specialist
production suites and then
transfer completed files
back to their desktops
Capture
Tape-less cameras capture video and metadata
Supporting infrastructure and enterprise services
Supports the transfer of digital files around the BBC
14 Part One Digital Media Initiative
Approving, managing and monitoring in-house delivery
1.5 Figure 2 summarises the roles and responsibilities for approving, managing and
monitoring the DMI as at June 2010. The executive board approved the nal business
case for the DMI on 12 April 2010 and the BBC Trust nance committee
1
approved
it on 24 June 2010. Both received quarterly reports prepared by the BBCs project
management ofce on the performance of the BBCs major programmes and projects,
including the DMI. The BBC direction group received ad hoc briengs from the DMI
programme leadership team.
2

1.6 The BBC told us that executive-level responsibility for the DMI ultimately resided
with the executive director who led the BBCs technology operations. We understand
from the BBC that when the business case for the DMI was approved by the BBC
Trust in June 2010, the director of future media and technology was responsible.
TheBBC transferred executive-level responsibility for technology to its chief operating
ofcer in March 2011 following a reorganisation. It transferred responsibility again in
September2012, to its chief nancial ofcer, following another reorganisation.
1.7 For a programme of the DMIs size, we would have expected the BBC to appoint
a senior responsible owner to take responsibility for meeting programme objectives,
achieving benets and ensuring system development and business requirements were
aligned. However, the BBC split responsibility for the DMI between divisions. Future
media and technology was responsible for developing the investment case, delivering
the system and achieving its share of the projected benets. The divisions that would
use the DMI were responsible for deploying the system and ensuring that it generated
the projected benets in their areas after it had been built.
1.8 The DMI steering group was responsible for overseeing the Programme. It was
chaired by the chief technology ofcer, whose line manager was the director of future
media and technology (until March 2011, when the chief operating ofcer took over
executive-level responsibility for technology). The other members of the DMI steering
group were senior representatives from future media and technology, and the intended
users of the new system. The BBCs chief nancial ofcer had a place on the DMI
steering group from May 2010 but in practice a member of her team attended meetings
on her behalf. No other executive director had a place on the steering group.
1.9 The business case for the DMI stated that the DMI programme director was
responsible for delivering the DMI and the chief technology ofcer, as chair of the DMI
steering board, was accountable. However, it also stated that benets realisation in BBC
divisions was the responsibility of the users of the system, subject to it being delivered
to time and acceptable quality, although the latter was not dened. As such, in our view
there was no clear accountability for reconciling technical and user issues.
1 The Trust nance committee succeeded the Trust nance and compliance committee. It had the same role in relation to
the DMI and in this memorandum we use Trust nance committee to refer to both.
2 PwC, BBC Digital Media Initiative: Review of the BBCs management of the DMI, December 2013
Digital Media Initiative Part One 15
Figure 2
DMI roles and responsibilities at June 2010
Source: National Audit Ofce based on internal DMI programme documents supplied by the BBC
BBC Trust finance committee
Approved the business case for the DMI. Met monthly, received the project
management office quarterly update on the portfolio of critical projects.
Four members (trustees). Chaired by Anthony Fry
BBC executive board
Approved the business case. Responsible for operational management
of the BBC according to plans agreed with the BBC Trust. Met monthly,
received the project management office quarterly update on the portfolio
of critical projects. Sixteen members (comprising ten executive directors and
6 non-executive directors). Chaired by Mark Thompson
BBC Project
Management
Office (PMO)
Received quarterly
management
information from the
DMI approved by
the chief technology
officer and the
programme director.
Forms an
assessment of the
status of the DMI
and produced
a consolidated
quarterly report
on the whole BBC
portfolio of critical
projects including
the DMI
DMI programme leadership team
Responsible for implementing the DMI programme. Headed by the
programme director
BBC finance committee
Approved the business case and
responsible for monitoring spend. Met
quarterly, received management information
from the DMI programme and the project
management office quarterly update on the
portfolio of critical projects. Ten members.
Chaired by Zarin Patel
BBC direction group
Responsible for pan- BBC issues delegated
to it from the executive board. Twenty-two
members (comprising executive and
divisional directors). Met monthly. Chaired
by Mark Thompson
BBC vision (on behalf of user divisions)
Co-sponsor of the DMI (applying the
programme and generating financial and
non-financial benefits)
DMI steering group
Responsible for guiding the DMI to deliver the outcomes and vision in the business case.
Chaired by the chief technology officer, with other members comprising senior managers
from future, media and technology and user divisions. Met monthly
Future media and technology
Responsible for developing the investment
case, securing investment approval from the
BBC executive and the BBC trust, delivering
DMI and achieving the benefits from DMI
within its division
The BBC Trust finance committee, the BBC executive board and the BBC finance committee approved the business case
Formal reporting Informal reporting Accountability for DMI
16 Part One Digital Media Initiative
1.10 Key roles in the DMI programme leadership team, including the programme
director and technical director, underwent several changes in stafng over a relatively
short period (Figure 3). In addition to creating a lack of continuity in knowledge of the
programme, high turnover in key roles can result in changing focus and priorities, which
can cause delays.
Figure 3
Stafng changes
Discontinuity in key programme roles
Source: Adapted from PwC, BBC Digital Media Initiative: Review of the BBC's management of the DMI, December 2013
2010 2011 2012 2013
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
Line manager to chair
of DMI steering group
Chair of the DMI
steering group
DMI programme
director
DMI technical
director
2009
In post when the DMI approved
First replacement
Second replacement
Third replacement
Digital Media Initiative Part Two 17
Part Two
Chronology of events
2.1 This part summarises the Programmes status when we reported in January
2011 and subsequent developments that culminated in the BBC deciding to cancel
theProgramme. Figure 4 summarises the main events over the Programmes life.
Figure 4
Summary of events
The BBC established the Programme in October 2006 and cancelled it in May 2013
Source: National Audit Ofce based on various published and unpublished sources provided
Oct 2006
Finance committee approves
budget of 2.8million for the
mobilisation of DMI
Aug 2010
Delays in procurement
mean the DMI timetable is
pushed back five months,
with final delivery expected
in July 2011
Mar 2007
Finance committee
approves budget
of 6.6 million for
the detailed design
of the DMI
Jan 2011
National Audit Office reports that the
BBC has made good progress with
straightforward parts of the system but
faces a severe test in the next stages
Jan 2008
BBC Trust approves
programme with
budget of 82 million
Feb 2011
Committee of Public
Accounts is told by the
BBC that it is on track
to deliver the completed
DMI technology by
Summer 2011
Feb 2008
BBC awards
Siemens 79 million
fixed price contract
to design and
deliver the system
by May 2009
Feb 2012
The project management office
grades the status of DMI as red
and suggests the BBC finance
committee consider stopping or
re-evaluating the programme
Jun 2010
BBC Trust approves revised
investment case for a wider roll-out
with a revised budget of 133.6 million
May 2012
Executive board request a review of costs, benefits
and timetable of the DMI. A whistle-blower contacts
the BBC Trust alleging NAO, PAC and the BBC Trust
may have been misled about the DMIs progress
Nov 2012
Work on most parts
of the programme
is halted pending a
fundamental review
Sep 2009
BBC and Siemens terminate
contract by mutual consent
with effect from July 2009.
BBCbrings delivery of DMI
in-house with target completion
date of February 2011
May 2013
Programme permanently
halted and chief technology
officer suspended
2006 2007 2008 2011 2009 2012 2010 2013
18 Part Two Digital Media Initiative
DMIs previous status
2.2 We examined the DMIs status at December 2010 and reported our ndings to the
BBC Trust in January 2011.
3
Our ndings were based on our review of investment cases,
programme documentation, interviews with key stakeholders in the programme and a
high-level review that the consultancy rm Amtec undertook for us of the programmes
status and the risks it faced. We reported that:

The BBC had appointed Siemens in February 2008 to build the system and had
set a target completion date of May 2009. However, forecast completion dates fell
behind schedule and the BBC took the programme in-house in September 2009
after agreeing a no-fault termination settlement with Siemens with effect from
July2009. The BBC did not assess the risks and value for money of alternatives
to in-house delivery or revisit an earlier assessment it made in February 2009 that
this would be the highest risk option. The BBC considered that it could develop its
capability by recruiting staff with relevant expertise or using third-party suppliers
to build system components that the BBC would then integrate. When it took the
system in-house, the BBC had spent 18 months on development without securing
a working system. The BBC estimated that the DMI would not be ready until
February 2011, a delay of 21 months.

By August 2010, the BBC found that its schedule would be delayed by a further
vemonths to July 2011. The BBC had implemented two of the six technology
releases (Figure 5), the second of these comprising three sub-releases.
InJune2010, BBC-commissioned consultants reported that users had
been positive about the elements of the system the BBC had implemented.
Theconsultants said that although there were several important issues to address,
such as poor planning, there had been an improvement in stakeholder engagement
and a positive reaction to the components completed. However, the BBC had
completed only the most straightforward elements of the system. Completing
the more complex future stages would be a severe test of the BBCs approach.
We recommended that the BBC should draw up more detailed plans specifying
resource requirements and responsibilities for each team to avoid confusion about
releases or poor visibility ofprogress.

The BBC had not obtained an independent technical assessment. It is standard
practice in technology projects to seek independent assurance to ensure that
technical designs can be implemented. We reported that the technology solution
had so far proven to be valid. However, planning processes to develop and test the
system were not sufciently rigorous to support the more complex integration of
the system elements.
3 Comptroller and Auditor General, The BBCs Management of its Digital Media Initiative: Report presented to the
BBCTrusts Finance and Compliance Committee 13 January 2011. Presented to Parliament by the Secretary of State
for Culture, Media & Sport, February 2011.
Digital Media Initiative Part Two 19

To develop the system, the BBC relied heavily on third-party products but until
October 2010, it did not have a full-time supplier management lead in post.
Wealso found that for several third-party suppliers, the BBCs programme plan
only gave a date for agreeing a specication and a date for the nal technology
release from the supplier. BBC-commissioned consultants had emphasised
previously, inJanuary2010, the importance of the BBC strengthening its supplier
management for the DMI.
2011
Figure 5
BBCs description of technology releases at February 2010
Source: National Audit Ofce based on internal DMI programme documents supplied by the BBC
The BBC planned to issue six technology releases from February 2010 to February 2011 that added
progressively more sophisticated capabilities
Release 1:
Basic archive
Users can
archive
Who gets what?
Small number of
users in the BBCs
information and
archives section
will be able to
search, view
and edit the new
digital archive
When?
From the end of
February 2010
Release 2:
Basic production
tools
Users can edit on
their desktops
Who gets what?
Selected
productions in
childrens, London
factual, Bristol
factual, natural
history unit and
the BBCs West
London site will
be able to view,
log and edit at
their desktops
When?
From the end of
May 2010
Release 3:
Full archive
Users can
find and reuse
content
Who gets what?
Production tools
and the archive
will be combined
so that all BBC
staff can view
the archive and
selected areas
can submit
and retrieve
programmes
asfiles
When?
From the end of
July 2010
Release 4:
Full production
tools
Users can
collaborate
externally
Who gets what?
London, Bristol
and Salford
production
will be able to
share content
externally. New
reporting tools
will be issued
and access to
desktop tools will
be extended
Scotland and
Northern Ireland
will be able to
share digital
archives
When?
From the end of
September 2010
Release 5:
End-to-end
Users can find
and reuse more
effectively
Who gets what?
Productions
in Manchester
and also audio
and music will
get desktop
production
tools. Teams
in Birmingham
will be able
to connect to
thesystem
When?
From the end of
November 2010
Release 6:
Managed service
end-to-end
Transition to
business as
usual
Who gets what?
The system
will be a fully
supported BBC
service
When?
From the end of
January 2011
MarMay Jun-Jul Aug-Sep Oct-Nov Dec-Jan Feb
2010
20 Part Two Digital Media Initiative

The BBCs projection of nancial benets for the DMI had weakened over time.
In January 2008, the BBC estimated that the DMI would generate net nancial
benets of 17.9 million by March 2015. However, its latest forecast when
we reported was that the DMI would represent a net cost to the BBC up to
March2017 of 38.2million, or 10.7 million after including the nancial package
it agreed with Siemens (paragraph 3.3). We therefore recommended that the BBC
should resubmit programmes for approval where the delivery model, risk prole or
costbenet projection changes.
2.3 We concluded that although the BBC had started to implement the system, there
was still a considerable way to go to develop a technically complex system. It required
integrating several interdependent elements without any time contingency. In addition,
the DMIs success depended on take-up by users across the BBC and elsewhere.
2.4 The BBCs timetable involved high levels of concurrent activity and important
dependencies, including supporting its move to Salford. Its initial focus after bringing
the DMI in-house was on issuing technology releases to demonstrate progress and
rebuild users condence. The BBC had made progress when we reported. However,
having no clear baseline and then changing the scope of individual technology releases,
made it difcult to compare what had been completed with what had been planned.
For example, the DMI programme teams plans for the DMI did not match its release
schedules. BBC-commissioned programme management consultants had reported in
January 2010 that plans for the DMI were supercial. The consultants also concluded
that the BBC needed to be clearer about the scope of technology releases and the
exact split of accountabilities across the programme management team. The BBC had
also still to establish detailed business requirements for the DMI.
2.5 The BBCs internal reporting showed that it completed release 1 (the basic
archive) in February 2010. Its high-level release schedule stated that this release would
allow a small number of users to use the new digital archive (Figure 5). However,
release 1 was only a demonstration version that did not include a live digital archive.
TheDMI programme team also repeatedly changed its release strategy and timetable.
Forexample, it split release 2 (basic production tools) into three parts. It issued the rst
part in June 2010 and the last in December 2010 (Figure 6). The BBC planned to pilot
basic production tools in ve production areas. However, we understand from the BBC
that while there was some testing of basic production tools, they were only used in the
production of one broadcast programme called Bang goes the theory.
2.6 We reported in January 2011 that the BBC had not commissioned an independent
technical assessment of the system design when it appointed Siemens or when it
brought the DMI in-house. However, we noted that the BBC had decided to commission
a technical assessment in September 2010. The assessment, which was carried
out by Accenture, was not available to us at the time of our report. The assessment
submitted to the BBC in draft in December 2010 found that the system infrastructure
for the DMI was not sufciently robust to use for producing television content and that
signicant remedial work was required. The ndings only covered part of the system as
the BBC limited the assessment to two specic areas of the DMI. These were platform
conguration and deployment standards, and infrastructure design support and
technical assurances for releases 2.2 and 2.3.
Digital Media Initiative Part Two 21
Developments after our previous report
2.7 Between February and March 2011, there was a shift in the DMI steering groups
expectations of the timetable for completion. The minutes of its February2011
meetings indicate that it considered that the DMI was on track. However, by the
end of March2011, it had concluded that the technology for the DMI could not be
completed until October 2011 at the earliest. Contributing factors included delays in
buying components and software defects that required rework. The delay contributed
to a 12per cent reduction in the estimated nancial benets from 97.9 million in
the business case approved in June 2010 to 86.6 million by the end of June 2011.
TheBBCs nance committee requested a benets review in June 2011. However,
BBCinternal audit reported around one year later, in July 2012, that the programme
team had not produced a benets review owing to other priorities.
Figure 6
BBC internal reporting on planned versus actual progress of the DMI at December 2010
By December 2010, the BBC had completed four releases, of which three were sub-releases issued following
delays in completing the planned scope of release 2
Source: National Audit Ofce based on a review for us in 2010 by the consulting rm Amtec
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Jan Feb
2010
Release 2
Release 3
Release 4
Release 5
Release 6
2.0
2.2
2.3
Release 1
3.0
4.0
5.0
6.0
2.1
1.0
1.0
2011
Planned release schedule
Actual release schedule
22 Part Two Digital Media Initiative
2.8 The BBCs nance committee, executive board and Trust nance committee
received quarterly reports prepared by the BBCs project management ofce.
Thesesummarised the progress and risk rating of the DMI and the BBCs other major
programmes and projects. In July 2011, the project management ofce increased the
DMIs risk rating for the period April to June 2011 from amber to amber-red. However,
the reporting timetable meant that this was not presented to the BBC executive board
or the BBC Trusts nance committee until September 2011 (Figure 7).
Figure 7
Quarterly changes in the DMI risk rating reported by the project
management ofce to the BBC executive board and the BBC Trust
nancecommittee
The BBCs executive board and the Trust finance committee did not receive timely information
onincreases to the Programmes risk rating
Date Risk rating Number of days
after quarter end
the executiveboard
receivedthe report
Number of days after
quarter end theTrust
finance committee
receivedthereport
Jan to Mar 2010 Amber 75 99
Apr to Jun 2010 Amber 75 99
Jul to Sep 2010 Amber 67 105
Oct to Dec 2010 Amber 66 97
Jan to Mar 2011 Amber 74 98
Apr to Jun 2011 AmberRed 74 70
Jul to Sep 2011 AmberRed 66 62
Oct to Dec 2011 Red Not received Not received
Jan to Mar 2012 Red 72 96
Apr to Jun 2012 Red 72 96
Jul to Sep 2012 Red 43 67
Oct to Dec 2012 Red 70 65
Jan to Mar 2013 Red 43 76
Note
1 Reporting to the BBC Trust nance committee dened red as involving issues which may not be resolvable
or manageable but did not dene amber-red. Reporting by the DMI programme dened red as meaning
successfuldelivery outcomes appeared to be unachievable, with major issues that did not appear to
bemanageableorresolvable.It dened amber-red as where successful delivery was in doubt with major
risksorissuesapparent in a number of key areas.
Source: Adapted from PwC, BBC Digital Media Initiative: Review of the BBCs management of the DMI. December 2013
Digital Media Initiative Part Two 23
2.9 The minutes of the executive board and the BBC Trusts nance committee do not
record any discussion of the increased risk rating. The BBC Trust nance committee did,
however, question the executive about whether slippages in achieving milestones for the
DMI and the move to Salford might lead to the possibility of reduced benets. However,
it took assurance that there was potential for unforeseen benets. The BBCs project
management ofce subsequently increased the risk rating to red for the period October
to December 2011, in February 2012. This was reported to the nance committee in
February 2012. However, it was not reported to the executive board until June 2012 or
tothe BBC Trust nance committee until July 2012.
2.10 Progress deteriorated further during 2011 and the rst part of 2012, with delays,
technology defects and a widening gap between what the DMI offered and what users
expected. The delays also resulted in completion dates being pushed beyond the
required dates for the BBC relocating to Salford, which the BBC had identied as a
critical deadline.

In September 2011, BBC sport, which was based at Salford, bought an
off-the-shelf digital storage system at a cost of 800,000 in response to the
non-availability of the DMI. Some other production teams that relocated to Salford
also subsequently installed digital storage and adapted their editing technology to
operate as stand-alone systems as an alternative to the DMI. The BBC identied
the avoided cost of creating local systems as an important benet of the DMI.
Thedevelopment of alternative systems started to erode the case for the DMI.

PwC in its review for the BBC Trust reported that by November 2011 it had become
apparent to the DMI programme team and the Salford team that a critical milestone
for implementing the DMI at Salford could no longer be met.

In February 2012, condence in completing the system and achieving benets had
deteriorated to the extent that the BBCs project management ofce suggested
that the BBCs nance committee might consider stopping, re-evaluating and
redirecting the programme. However, the nance committee concluded that the
DMI could be completed and approved the programme to continue.

Following a major technical setback at the end of April 2012 that prevented the
roll-out of the DMI at Salford, the BBCs chief technology ofcer sent a report
summarising the issues to its chief operating ofcer and chief nancial ofcer.
2.11 On 14 May 2012, the BBCs executive board asked the chief operating ofcer
to give an update on the DMI before the summer. This update reported that most
system components were still incomplete. Later that month, the director of BBC vision,
animportant prospective user of the DMI, raised concerns about the DMIs progress.
Around this time, a former BBC employee contacted the Trust raising concerns about the
DMI programme and how far the progress that we reported in 2011 had been achieved.
24 Part Two Digital Media Initiative
2.12 In July 2012, the BBC informed the BBC Trust nance committee that the DMI was
signicantly behind schedule and its risk rating had increased to red. The BBC agreed to
report back to the Trust after it had completed a review of costs, timetable and projected
benets. In the same month, BBC internal audit reported to the BBCs executive audit
committee on a review of the DMI governance and planning. This review hadbeen
postponed from 2011 to minimise the audit burden on the DMI team. It was the rst
audit or assurance review of the DMI since the January 2011 report (Figure 8). Internal
Audit found that:

The programme team had not updated the DMI business case that the BBC Trust
had approved in April 2010, despite the signicant changes to the timetable and
projected benets. This meant it was not possible to assess whether the DMI was
viable and achievable.

The BBC had not embedded independent assurance within the DMIs
governancestructure.

The BBC had not set out the required end state for the system or developed
detailed user requirements and acceptance criteria until a late stage in the process.
It also did not have an agreed approach to quality assurance.
2.13 The following month, a high-level internal review reported, in August 2012,
thatalthough the purpose of the archive was understood, DMI requirements remained
vague and production teams were indifferent about using production tools. The DMI
subsequently noted, in October 2012, that although production tools were potentially
viable, they had still to be proven and the intended users had recommended stopping
further development owing to unclear business direction. The steering group decided
that the programme team should nish work on production tools, in November 2012,
sothat the BBC would have the option to use them in the future.
2.14 After completing its initial review of the timetable, costs and benets, the executive
board decided in October 2012 to halt work on most parts of the programme and prepare
a revised business case in line with requests from the BBC Trust. The BBC Trust informed
the Committee of Public Accounts in November 2012 that the DMI had fallen signicantly
behind schedule and that the BBC was preparing a revised investment case.
2.15 The BBC continued to review its future needs and what the DMI programme had
delivered. As part of this work it commissioned a technical review from Accenture.
Accenture carried out its review over a ve-week period in January and February 2013.
It examined the development of the archive database and supporting infrastructure.
Theproduction tools developed by the DMI programme team were outside the scope
of Accentures review as the BBC had halted further development owing to unclear
business direction. Accenture reviewed the system requirements and software design
documentation but did not carry out a detailed audit of the DMI or perform any
systemstesting.
Digital Media Initiative Part Two 25
Figure 8
Audit and assurance timeline
2010 2011 2012 2013
Between January 2011 and July 2012, the DMI was not subject to any audit or assurance reviews
Source: National Audit Ofce based on PwC, BBC Digital Media Initiative: Review of the BBCs management of the DMI, December 2013, and internal
DMIprogramme documents provided by the BBC
Jan 2011
National Audit Office
report to BBC Trust on the
DMI, including the period
before the BBC took the
programme in-house
Mar 2013
Accenture report
to the BBC on the
results of its high-level
technical review of the
archive database and
supporting infrastructure
for the DMI
Oct 2010
Review carried out by
Amtec for the National
Audit Office, focusing on
areas of concern identified
by the DMI programme
leadership team
Jan 2010
External review
by programme
management
consultants
Dec 2010
Accenture provide an assessment of the:

platform configuration and
deploymentstandards; and

infrastructure design support and
technicalassurance
of releases 2.2 and 2.3 of the DMI
Jul 2012
BBC internal audit
report to the executive
audit committee on
governance processes
and delivery planning
Jun 2010
Follow-up review
carried out by
programme
management
consultants
26 Part Two Digital Media Initiative
2.16 Accentures ndings included the following:

The programme had not kept pace with changing business priorities and
programme governance was not robust.

There was evident confusion within the BBC about the use of key terms such as
archive database and digital archive.

DMI software that was used for the archive database was also designed to support
production tools. The BBCs decision not to implement production tools meant
that the software architecture for the archive database was overly-complex for a
physical stock and loan system.

There had been insufcient testing of DMI components.
Accenture advised that more work would be required to complete the digital archive
andtest whether it was t for purpose. The BBC has carried out this testing.
2.17 After completing its review, the BBC concluded in May 2013 that its original
vision for integrated production tools was no longer valid and that it needed to revise
its approach to developing a BBC-wide digital archive. It therefore decided to maintain
the archive database but close the rest of the DMI programme. It wrote down the value
of assets to 0 because it considered that the programme had failed to achieve its
objectives. When the BBC cancelled the programme, with the approval of the BBC
Trust, it did not have a technical assessment of whether the system could be completed
or the cost of doing so. When the executive board cancelled the DMI, it identied a
failure to recognise the severity of the issues in reports it had received. It also noted
the need to ensure appropriate governance and clear accountability for delivery for
programmes like the DMI.
2.18 The chairman of the BBC Trust nance committee wrote to the chair of the
Committee of Public Accounts explaining why the BBC had closed the Programme.
Themain reason was that much of the software and hardware that the BBC had
developed could only be used if the whole project were completed. The BBC and the
Trust concluded that owing to technological difculties and changes to business needs,
this would be throwing good money after bad.
2.19 In May 2013, the BBC Trust also commissioned a report on the DMI from PwC with
a focus on project governance and reporting. PwC found that DMI reporting focused
on technology risks and issues rather than whether the programme could achieve
operational change to business practices in the BBC. PwC also found that the DMI
did not provide clear and transparent reporting on progress against the plan, cost to
complete, or delivery of benets to enable effective decision-making. PwC concluded
that the BBC executives view of progress could have been more clearly informed
by taking into account reporting by projects that depended on the DMI, such as the
move to Salford, on the impact of delays on delivering the system. In December 2013,
following a review of governance arrangements across the BBC, the BBC announced a
new approach to project reporting to speed it up and identify issues earlier.
Digital Media Initiative Part Three 27
Part Three
Costs, residual benets and plans
3.1 This part summarises:

where the 125.9 million (gross) the BBC spent on the DMI went;

what the BBC got in return; and

the BBCs plans for digital production and archiving.
Where the money went
3.2 The BBC spent 125.9 million (gross) on the DMI from April 2007 to September2013
against an approved budget of 133.6 million to March 2017 (Figure 9 overleaf). Spend on
staff, contractors and consultants accounted for nearly half of the nal cost of the DMI.
3.3 As part of its negotiations with Siemens before it brought the DMI in-house,
the BBC secured a termination settlement from Siemens worth 27.5 million. This
comprised service credits of 24.5 million, asset transfers valued at the point of transfer
at 2.2 million and a cash payment of 0.8 million. The BBC told us that it had received
all of these in full, which it had recorded in a summary spreadsheet of payments that
it had received. The BBC offset these transfers against DMI costs to give a net cost
of98.4 million.
28 Part Three Digital Media Initiative
Figure 9
Where the money went
Contractors, consultancy and BBC staff accounted for nearly half of the final cost of the DMI
Note
1 Atos acquired Siemens IT Solutions and Services in 2011.
Source: National Audit Ofce using management information supplied by the BBC
Total gross spend
125.9m
Contractors
46.7m
Information
Technology
37.2m
Siemens/
Atos costs
24.9m
Other
2.3m
BBC staff
6.4m
Consultancy
8.4m
Digital Media Initiative Part Three 29
3.4 The DMI programme used a combination of BBC staff, contractors and staff from
third parties and consultants (Figure 10). At its peak, the BBC programme team had
184contractors and BBC staff.
Figure 10
People working on DMI, January 2010 to September 2013
Headcount
200
The number of people working on the DMI peaked in June 2011
Note
1 Excludes consultants as gures were not available. Figures for BBC staff are approximate.
Source: National Audit Ofce based on BBC data
0
20
40
60
80
100
120
140
160
180
Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Jan Mar May
2010 2011 2012 2013
Total DMI headcount
Contractors
BBC staff
30 Part Three Digital Media Initiative
Programme outputs and benets
3.5 Figure 11 summarises the status of each DMI component when the BBC closed the
programme. The BBC intends to redeploy some components but wrote their value down
to 0 in its 2012-13 nancial statements as it had not yet determined their future use.
Figure 11
BBCs assessment of what the DMI achieved
Only the archive database and some enterprise services were in live use when the
BBC cancelled the DMI
Component Description In use? Status
Archive
database
A database to catalogue and
manage archives held on tape and
other physical media as well as
digital content.
Partially The BBC released the first version
in June 2012 and worked from
June 2012 toSeptember 2013 to fix
high-priority defects and meet minimum
requirements. It issued a final release in
September2013, which is being used for
physical but not digital archives.
Digital
archive
A virtual warehouse for storing
digital audio and video content
that would be integrated with
the archive database. The BBC
considered that it would remove
the need for storing programmes
on tapes.
No The BBC suspended further work on
thedigital archive in October 2012 while
itfinished its DMI review. The BBC did
notfinish developing the digital archive.
Production
tools
Fully-featured digital production and
collaboration software that would
allow BBC staff and external users
to get, edit and sharefootage.
It would be integrated with the
archive database.
No The BBC suspended further work on
production tools in December 2012.
Bythis stage, production teams were
using off-the-shelf software and did not
trial the final version of production tools.
Production
reporting
A replacement system for logging
production information about uncut
footage and final programmes that
would be integrated with other
DMIcomponents.
No The BBC did not complete the
development of this component.
The BBC has not yet decided whether
it will use this tool in the future.
Music
reporting
system
Replacement for a legacy
systemthat was a minor part of
DMIs scope.
Yes The BBC deployed this component.
Media
infrastructure
A system to allow files to be moved
around the BBC efficiently and
securely. The specification for this
infrastructure was designed to align
closely with the specification for
production tools.
No The BBC has concluded that the ability
to move files has been proven and is
exploring whether the infrastructure can
be used to develop a future digital archive.
Enterprise
services
These services would offer
reusable software services that
could be used in future projects.
Partially Individual enterprise services are
at various stages of build, test and
deployment. They are not being used for
DMI but the BBC considers that all could
provide some ongoing value to the BBC.
Source: BBC
Digital Media Initiative Part Three 31
3.6 The three main assets created by the DMI were:

an archive database that production teams can use to search and order content
held on tape and other physical media in the BBCs archives;

digital storage hardware and software; and

other DMI components.
Archive database
3.7 The archive database is a cataloguing-and-ordering system for content held on
tape and other physical media in the BBCs archives. By March 2013, the system had
around 5,200 registered users and 640 people using it every week to order stock
from the BBCs physical archives. The system, which the BBC intends to maintain for
three years, had annual running costs of 5.3 million as at December 2013. The BBC
estimates that it can reduce annual running costs to around 3 million by introducing
new contracting arrangements. The BBC intends to switch off its legacy stock
management and ordering system, which has annual running costs of 780,000, but
asat December 2013 had not done so.
3.8 Accenture reported in its technical review for the BBC that software for the archive
database was overly complex as it was designed to support other parts of the DMI
system, including production tools that the BBC was not using. It also found that the
design of the user interface was not aligned with business processes. The BBC carried
out further work to improve the database but, despite users requesting improvements to
the system, it does not intend to issue any further releases.
Digital storage hardware
3.9 The BBC bought large data storage units for the digital archive and to allow les
to be transferred around the BBC. The BBC has used them to support the archive
database and other digital storage. The BBC has set up a project (end-to-end) to
determine its future technology requirements. As part of this it will assess whether it
canredeploy data storage units further.
Other DMI components
3.10 Other DMI components include a replacement music reporting system, which
holds information about the use of music in broadcasts for copyright purposes. This
system was a minor element of the DMI that is used to report on the music used in
BBCbroadcasts. At December 2013 it had ve users.
32 Part Three Digital Media Initiative
Financial benets
3.11 The BBC identied three types of nancial benet totalling 97.9 million from
April2010 to March 2017 in the business case that the Trust approved in June 2010:

Projected cost reduction of 51.2 million from increased efciency in production areas.

Projected cost avoidance of 29.8 million from avoiding spend on local data
archives and local production tools that were not integrated across BBC divisions.

Projected creative dividend of 17 million from reusing existing content instead of
creating new content when it was not necessary.
3.12 The BBC considers that owing to the non-delivery of the DMI, it will secure none
ofthe nancial benets it had previously anticipated (Figure 12).
Figure 12
Changes in estimated lifetime benets
The BBC considers that its spending on the DMI will generate no nancial benets
Note
1 All gures are expressed in cash terms.
Source: National Audit Ofce based on nancial data provided by unpublished BBC data
100
0
10
20
30
40
50
60
70
80
90
2010
estimate
Revised
estimate
(May 2011)
Final
estimate
(May 2013)
Creative dividend
Cost reduction
Cost avoidance
13.2
41.6
29.8 29.8
51.1
17.0
Comparison of planned and actual lifetime benets from to March 2017 (m)
Total: 97.9
Total: 84.6
Total: 0
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