How to Learn From a £100m Digital Disaster
This post not only demonstrates how too much focus on technology puts digital business transformation initiatives at risk of failure, but it enables executives to look for unwelcome parallels between their own transformation initiatives, and the cases described below – then design and implement a rapid response strategy to avoid similar consequences.
While most leaders will readily acknowledge the lessons learned described below, it takes a wise leader to take action and apply them in their own place of work.
Introducing The Failed BBC Digital Transformation
In 2005, The Digital Media Initiative (DMI) concept was created to ‘fully prepare the BBC for the on-demand digital world’. It was a complex business transformation programme aimed at transforming the way in which the BBC makes content for its audiences.
Central to the delivery of DMI was a technology solution that would allow BBC staff and partners to develop, edit, share and manage video and audio content and programming on their desktops, and it was set up to deliver:
- 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, for example desktop editing tools;
- Common enterprise services underpinning the above.
DMI was cancelled in May 2013 with an asset write-down of £100m, and PwC was engaged to review the failed transformation programme.
Seven Questions to Reflect Upon
PwC posed the following seven questions during their forensic investigation of DMI; all of which are relevant to other large digital transformations. Executive sponsors and senior stakeholders of all such initiatives should look to be reassured when posing similar questions to their senior management who have been charged with leading transformation initiatives inside their own organisations.
Question 1 on governance arrangements: What governance arrangements were put in place for the oversight of DMI? Were they fit for purpose?
Question 2 on project and financial management: What project and financial management arrangements were put in place to ensure DMI delivered the anticipated benefits on time and to budget and did these arrangements follow an agreed BBC methodology? Were they fit for purpose and followed?
Question 3 on risk management: What risk management arrangements were put in place and did these arrangements follow an agreed BBC methodology? Were they fit for purpose and followed?
Question 4 on executive reporting: What project reporting arrangements (including information on project delivery, technical delivery approach, costs and risks) were put in place for the Executive Audit Committee, the Executive Board and the BBC Trust? Were they fit for purpose and followed?
Question 5 on project reporting: Were the agreed project and risk reporting arrangements followed? Were the reports fit-for-purpose? What actions resulted from the reports? Were they fit for purpose?
Question 6 on the implementation of the National Audit Office (NAO) findings: Did the BBC Executive implement the recommendations focusing on project management governance, and risk management from the NAO’s 2011 report on the management of DMI?
Question 7 on recommendations: What are the wider project management and reporting lessons that can be learnt from DMI and applied to other BBC projects?
ACTION: Adapt these questions for your own organisation and ask to read, hear and observe in practice, how each question is answered.
Overall Findings and Lessons Learned
It is simple to see that the shortcomings of the DMI transformation were far from technical and it is vital that executives engage the right business transformation capability, if they want to avoid the errors of the BBC and countless other troubled transformation programmes.
1. The programme governance structure implemented for DMI was not effective in dealing with the complexity of the project.
2. Corporate Governance bodies were not provided with a clear view of the status of DMI through the formal reporting of progress and management of risk.
3. The focus and priorities of DMI were on technology build and not sufficiently on enabling BBC-wide change.
4. The DMI Business Case was not subject to periodic review.
5. The lack of an integrated assurance plan reduced the effectiveness of governance in managing risk.
6. The key lessons to be learned were broken down into the following six areas of transformation management:
Programme and Corporate Governance
– Programme governance structure
– Role of the Design Authority
– Role of Corporate Governance
– Programme reporting
Programme Lifecycle Management
– Agreeing on a common approach
– Programme planning and plan management
Risk and Issue Management
Programme Assurance Planning
– Business Case definition and approval
– Project financial management
Benefits Management and Tracking
ACTION: Understand how all of the above is being addressed in the context of your own transformation programmes. Don't simply accept ticks in the boxes. Ask to see the documentation, have it explained to you and get to see how it is being put into practice. Uncover any parallels between your organisation and the lessons learned at the BBC in item 6 above – then take prompt and effective action.
Fundamental Omission on Capability
In our view, one fundamental omission from PwC's report is around ‘transformation management capability'. The right transformation leadership would have ensured that each of the shortcomings listed above was adequately addressed. Those listed are nothing more than basic building blocks of transformation management, and transformation executive sponsors have a responsibility to ensure the right capability is engaged to adequately cover off each one of them.
ACTION: Assess whether your transformation managers and leaders have the real-life experience and capability required to ensure the right things are being done well across the transformation. Don't fall into the same trap as the BBC by allowing managers and leaders who over-focus on technology and lack holistic business transformation management expertise, to drive your transformation into closure.
Download the 58-page PwC report
Lessons from Co-op's £300m Transformation Failure
Similar to the BBC, in 2013, Britain’s Co-op Bank cancelled an IT transformation programme resulting in a £300m investment write-off. In his independent review, Sir Christopher Kelly pointed to; “changes to leadership, a lack of appropriate capability, poor co-ordination, over-complexity, under-developed plans in continual flux and poor budgeting”. Again the focus of the review was on failings in management and governance – not on technology.
Download the 158-page report
13 More Transformation Case Studies
This Digitalist Magazine article looked at 13 case studies of different types of business transformation in large European corporations, where only 30% were successful.
Technical expertise is not what is required to leverage the lessons learned from the digital disasters at the BBC, Co-op Bank and the other 13 transformations; but business transformation management expertise is.
Don't fall for the same mistakes that the BBC, Co-op, and countless other organisations have done, by placing transformations in the hands of those that have terrific technology expertise, but who lack the holistic business transformation management capability required to achieve the transformation success your stakeholders are expecting.