Outsourcing has once again been in the public eye due to two recent high profile project failures.
Last month, MI5 abandoned its reported £90m digital records management system over concerns that implementation of the system would lead to an “intelligence vacuum.” Just a few days later, the BBC finally scrapped its Digital Media Initiative (DMI) at a final estimated cost to the licence payers of nearly £100m. Although the DMI was initially an outsourced project, after the reported failure of expert vendor Siemens to deliver what it had promised, the project was taken in-house in 2009.
The prevailing question amongst tax payers in the aftermath of these problematic outsourcing initiatives has to be, “Why?”. Why did such large-scale projects fail? Should there be anyone to blame and what can be learned moving forwards? In truth there is usually more to those questions than may initially meet the eye.
‘Expert Vendor’ Responsibilities
As part of plans to completely overhaul its intelligence sharing system, it is reported that MI5 hired Deloitte and tasked them with producing a solution. The agency first estimated that the system would be in place for the 2012 London Olympics to help counter potential terrorist threats, but this proved to be highly optimistic. The situation did not improve and Deloitte were replaced by a new team of consultants at the beginning of this year. Unfortunately, this was not enough to rescue the project.
Meanwhile, the BBC’s DMI debacle is defined by many as a folly of scale. A Guardian source was quoted as saying, “The scale of the project was too big and it got out of hand.” Rob Wilson, the Conservative MP for Reading East, said, “The BBC spent well over £100m experimenting with a system that it appears was highly unlikely to work.”
The common denominator in both stories is the use of outsourced consultants and providers to run the projects. Some of the most salient questions therefore must focus on the responsibility of the consultants who advised the organisations at the outset and who were subsequently instructed to deliver the projects. Expert consultants and providers have a duty to warn, which in this context means that the inherent risk in projects of such scale should have been very stringently assessed and challenged by the consultants/vendors. The vendors contracted by MI5 and the BBC should have warned their respective clients of the apparently low likelihood of success. There is little reference in the reported articles as to whether or not this warning from the respective vendors did happen. If it did, it would appear the powers-that-be decided to plow on with the projects regardless.
A cynic might say that the consultant vendors were all too happy to ‘take the money and run’ rather than adopt a conscientious stance in an effort to provide their clients with the best possible outcome. Whether or not this was the case is difficult to say, but I would be interested to know if the expert providers assigned to the respective projects exercised their duty to warn as they are legally obliged to do so.
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High-Risk Project Management
What is perhaps most unusual about both stories is the chosen approach. Let’s not forget that we are talking about big projects with price tags approaching £100m. Not only that, these were innovative programmes that carried an inherent high level of risk. Could it be considered folly to launch into such huge projects without the appropriate understanding and warnings?
In an email to BBC staff announcing the failure of the DMI, director-general Tony Hall said, “We have a responsibility to spend licence-fee payers’ money as if it was our own and I’m sorry to say we did not do that here.” This implies a lack of appropriate diligence in the way in which the project was handled, which corroborates with the facts the public have been given. After all, no project of such scale should ever be undertaken without first having a very firm understanding of the inherent risks and probable complications.
While we can only speculate what happened behind the scenes, a sensible route would have been for the expert consultants to suggest a staged ‘pilot’ programme on a smaller scale, where evidence of success in subsequent smaller steps could contribute towards the implementation of the larger project. This would have allowed the end-to-end implementation be put into practice with far less risk. Innovative projects are inherently high risk, so that risk must be managed by taking gradual steps towards the final outcome. It would appear that both the BBC and MI5 went for gold from the very beginning and suffered the practically inevitable consequences.
Lessons Learned
Innovation is risky but it is a necessity to keep service delivery driving forward to drive better effectiveness. However, a suitable level of control, risk assessment and appropriate business case challenge from your expert provider (who has a duty in law to provide such measures – even if it is not expressly documented in the written contract) should provide a layer of assurance that prevents you from not achieving your business outcomes. As part of the process, iterative project management should allow innovative ideas to be tested and proven on a smaller scale before they are adapted for the intended final use. It would appear that such an approach was either not adopted or misunderstood by the likes of MI5, the BBC, Deloitte and Siemens.
With regards to the respective outsourcing debacles at MI5 and BBC, one must recognise that both organisations made a tough decision — but did the right thing — in scrapping the projects to prevent further escalating costs with no clear time scales for the appropriate outcomes to be achieved. When public money is at stake – admitting defeat so transparently leaves one open to great scrutiny – and criticism, but it was the best thing to do under the circumstances. The individuals revealing these concerns and taking a stand to cancel these projects should be applauded, not criticised, for their honesty. It is just a shame that such an outcome should never have been on the cards in the first instance.
Photo Credit: Erik Daniel Drost
