Outsourcing of BBCTL

Introduction
Beginning in 1922 as a radio transmission service, the British Broadcasting Corporation (BBC) is now the largest of its kind throughout the world. Following the introduction of television services in 1936, the BBC became well known and respected for its honest, accurate news reporting especially during the Second World War.

The purpose of the BBC is “to enrich people's lives with programmes and services that inform, educate and entertain”. As the British people effectively own the BBC, it also has to meet certain targets and standards fashioned by the UK Government in order to receive funding. In the year 2000, one of the targets was to increase revenues by £1 billion over a seven year period. Like many large organisations, the BBC chose to do this initially through innovation and eventually through outsourcing. On October 1st 2004, BBC Technology Limited (BBCTL) was outsourced to Siemens Business Services (SBS) over a ten year period for £1.9 billion.

BBC Technology
The BBC Technology group was created in San Francisco, US in March 2001 in order to help the BBC reach their pressing financial goals. In was split into two divisions, BBC Technology Direction and BBCTL. BBC Technology intended to raise revenue through the provision of technology services to the BBC and other third party sources in both Britain and the US. It employed 1400 people and provided services for television channels such as ESPN. The group was very successful in doing so, reporting a turnover of £230 million by 2004.

Effect of outsourcing
To this day, the BBC states that its vision is “to be the most creative organisation in the world”. When John Varney joined the BBC as Chief Technology Officer (CTO) in 2002 he soon identified that by outsourcing technology, more funds could be generated in order to do just that.

Varney calculated that through outsourcing BBCTL, a saving of £20 million to £50 million could be made. When the decision to outsource was relayed to the media, it was stressed that the resulting surplus would be used to develop content for television programmes, in turn providing a better service for the viewing public. To produce the same savings internally, 350 employees would had to have been made redundant. With increasing pressure to boost revenue, outsourcing seemed like the obvious answer. Through outsourcing to a company which concentrated specifically on technology, this would allow the BBC access to up coming digital technologies while freeing more resources to focus on creativity.

The BBC decided that the contract should span a ten year period which became an issue of much debate for the media and Broadcasting Entertainment Cinematograph and Theatre Union (BECTU). Employees and the BECTU were concerned that over a period of ten years, changes could be made which would result in the loss of their jobs. Worries were heightened when SBS refused to give job-related guarantees to staff. Critics also argued that Siemens could not be relied upon to produce a high quality service over such a long time period. On top of this, it was argued that the BBC may be limiting their access to new technologies, some of which BBCTL had created. The greatest concern however, arose from the fact that no clause for early termination of contract was included in the proposed terms.

Selecting a supplier
The process of selecting a technology supplier began in November 2003. In keeping with European law, the contract was to be advertised in the Official Journal of the European Communities which meant that it was open to any potential applicant. Although the BBC had no control over this aspect of the process, through stipulating the criteria of the contract carefully, they were effective in ensuring that no time was wasted on companies which would be unable to provide a suitable service. A team of twenty six employees looked after the contract. As this same team were to take charge of selecting a supplier, negotiation and initiation of changes, they were able to work closely with all concerned parties in efficiently beginning the process of change. This was important in ensuring that at all stages of the selection process requirements were met, as it was crucial that the deal received approval from the EU Commission and the UK Government. Thirty one companies completed a pre-qualifying questionnaire and the BBC were meticulous in analysing the financial position and technological awareness of each. A team of finance, procurement and technology specialists examined the standing of each company in relation to the contract resulting in nine suppliers including HP, Accenture, Fujitsu and SBS being short-listed. The selection process ended in SBS being declared as the preferred bidder before eventually securing the contract.

Long term results
Although many were sceptical, when the transaction with SBS was finally completed technology services ran smoothly and employees appeared satisfied. The worries that many had expressed over the initial handover and the subsequent months amounted to nothing as the process was handled both slowly and with care. The first big test of the new collaboration was the BBC coverage of the 2005 general election which silenced critics with its impressive reporting on polling results. It was recorded as the most advanced coverage of an election to date and ran without a flaw due to painstaking preparation and maximum effort on the part of SBS.

Conclusion
The BBC needed to outsource to a company that understood their strategy and long term goals but also had the capability to run BBCTL successfully and increase profitability. SBS have allowed the BBC to ensure digitalisation by 2012 and have continually set targets in keeping with the savings required in order to satisfy the UK Government. The estimated savings by the BBC of £20 million to £50 million per year have continually been reached. Nonetheless, as SBS have secured the contract for a further seven years great things are expected by the UK Government and the BBC alike in years to come.

References
http://www.bbc.co.uk

http://www.silicon.com/research/specialreports/enterprise/0,3800003425,39128184,00.htm

Information Technology Outsourcing at BBC by M Vinaya Kumar