IT Outsourcing at BBC

Presented By:Sugandha

Pasricha Anil Varma Nishant Pratap Gauri P.Ghatge Chandann P.Mohyal

Introduction

BBC at a glance

Group Of British & American electrical company Granted Royal Charter in 1927 Earnings from Licenses Radio Broadcasting on 14th Nov,1922 TV Broadcasting in 1936 Advent of ITV , Channel 4

Competition after 1955

Role Of BECTU
2

Division of BBC

BBC Broadcast BBC Production BBC Technology Direction BBCTL Outsource the IT to SBS
Need for outsourcing Requirement for BBC

Division of BBC Technology Group

BBCTL SBSMH

Why Outsourcing ?

Reasons for outsourcing at BBC

1.

20- 30 million pounds could be saved every year.

2.

350 employees could be saved from loosing their

jobs.

3.

UK governments pressure for increasing revenues.

4.

Change in the global broadcasting industry, the digital factor.

Benefits of OUTSOURCING
1.

2.
3.

4.

5.

The economies of scale. Danger of management being over stretched. Gains could be used for investing in other areas of BBC. Development and innovation could be accelerated. Transfer of risk.

Selling BBCTL

20 - 30 million pounds could be saved every year. 800 servers & networks of BBC were distributed across UK. Cost of 30k desktops would be reduced when outsourced to a third party. Planned to cut costs internally, but it required the Co. to lay-off 350 employees. The BBC board did not agree to this.

BBCTL had developed some award-winning technologies like Colledia. UK govt.s pressure for increasing revenues Change in the global broadcasting industry, the digital factor. BBCTL delivered technology services to BBC under the TSA.

Selecting Supplier
DEAL:- Acquire BBCTL with staff of UK and USA and access to BBCTL contracts with various clients(20 million). Terms of Contract:1. Provide Tech support and services to BBC for 10 yrs 2. Manage PCs across BBCs global operations. 3. Manage BBC s websites and broadcast feeds(1.7 billion visitors/day) 4. Procure broadcasting technologies and channels of BBC( 128 channels) and move towards digital TV.

BBCTL employee union was not convinced with the deal and feared the loss of jobs of more than 300 employees. BBC appointed an evaluating team of 26 core members for the deal. Phase1: 80 bidding companies was sent a pre qualifying questionnaire to evaluate their market position, financial strength and their knowledge of broadcast business ( Evaluation by Finance, Procurement and Technology dept)

1. 2.

3.

Phase2: Shortlisted 9 suppliers based on phase1 ( e.g Accenture, IBM, SBS, HP etc). More info was asked about their strategy for transformation of BBC based on the changes in the broadcasting business. Evaluation Included: Cultural Fit Best Value for Money in technology procurement and commitment to technology innovation. Resource Allocation, Scale of Operations and Funding to help BBC realize its vision.

Phase3: finalists were Accenture, SBS and CSC. Negotiations were carried out involving over 100 people from various departments of BBC. CSC pulled out in Halfway and SBS and Accenture were given a time to submit their proposals as per the rules from BBC and heads of Govt. Issues with Outsourcing Of IT Contracts:1. E- Governance 2. Intellectual Property Rights 3. Cannibalization in IT Contracts

THE WINNER
Project Leo- a coded project: For cost reduction by layoff BBCTL handed over Project Leo to Siemens & Accenture on June 14, 2004 (The finalists) The labor union dilemma- BBC made promise that employees would remain with BBCTL but bidder were indecisive. The ballot test by BECTU-verdict against sell-off Union demanded-Job guarantee, pensions, three year pay deal,5% increase in wages BBC management agreed on 2.5% wage increment and bonus of 800 only

8th July,2004,BBC declared SBS as single preferred bidder and signed TFC(Tech framework contract) Scoring system was used Reasons for SBS selection Cultural know how(company and Britain both) Better understanding of public service organization Hardcore engineering background Vast resources available Its scale of operation

Contd..
SBS-BECTU Meeting for discussion -Agreed to retain all staffs for next one year but gave nothing in written Deployment of some staffs out of BBCTL horizon Promised to introduce pension plans similar to BBC

Meeting result
Union still unsatisfied BECTU planned strikes to delay sell off as BBC management refused to disclose the agreement clauses Ballot results-84% In favor of industrial action

SBS new offer

First round of action on July 30-31, got a call off retain some of BBCs terms up to next 3 years Improved pension benefits to 45+ employees No transfer outside city Offer was put on to a vote - On advice of BECTU lawyers Legal threatening by BBC Union submitted list of secondary issues and wanted to be communicated to SBS

GOVERNMENT APPROVAL
Sept 01 2004, BBC failed to meet the deadline for sell off British minister of culture (Mrs. Tessa Jowell) accepted the contract approved by executive council and denied to fulfill any further demands of union politely I have no legitimate reason to withhold my approval for the sale- Tessa Jowell

BBCTL UNDER SBS MANAGEMENT

October 1st ,2004 SBS was handled charge over BBCTL First six months BBCTL worked under TSA between BBCTL BBC Erstwhile BBCTL employees were not required to change their work place SBS constituted new boards for:

Governance Partnership (Chaired by Varney) Innovation & Contract.

General Elections 2005, UK A litmus test for SBS

SBS allotted 100,000 for IT infrastructure 200 computers were interlinked with 3 Kms of cables Installed 3 separate graphic systems & 60 broad cast vans Rehearsed Developed contingency plans for failures (Two other studios were kept as back-up) Upgraded website (BBC) Centralized information center was developed for gathering information (election result & for sharing by other BBC units) Separate arrangement for system monitoring

FUTURE OF SBS

SBS created a center for global competency for future projects Global market between 25 billon to 100 billionVarney BBC planned creative archives project for sports coverage using broadband & modernized production facilities Analyst views (+)Trend setter (-)Lost some very potent IPRs Similar deals between Vodafone & Accenture; Discovery channel & Ascent media

REFERENCES

Espiner, T., BBC Hits Outsourcing Costs Snag, http://services.silicon.com/itoutsourcing/0,3800004871,39160280,00 .htm, accessed 24 November 2007 Klepper & Jones, Outsourcing IT Systems and Services, www.businessforum.com/woj01.html, accessed 19 November 2007 Kumar, M., Information Technology Outsourcing at BBC, 2006 IAOP, 2007 Overby, S., ABC: An Introduction to IT Outsourcing, 2007, www.cio.com, accessed 20 November 2007 Pinsent Masons, An Introduction to IT Outsouring, www.outlaw.com/page-501, 2004, accessed 20 November 2007