Outsourcing 'deal of the decade' will throw up major challenges

The scale and innovative nature of the BBC's £2bn IT services contract poses a wide range of challenges for both the public...

The scale and innovative nature of the BBC's £2bn IT services contract poses a wide range of challenges for both the public broadcaster and its preferred supplier, Siemens Business Services, according to Trevor Brignall, business development director at Capgemini's telecom, media and entertainment UK practice.

The challenges will include the retention of key IT staff, who already work at BBC Technology and avoiding a culture clash in the commercial approach between the supplier and user.

"It is one of the deals of the decade in outsourcing terms and it is quite a challenge for a number of reasons," said Brignall. "Can you retain key IT staff when they move to the outsourcing supplier and if there are any redundancies who will pick up the tab?"

As the deal will combine the sale of BBC Technology and the supply of IT services to the BBC, both parties will need to have a clear idea of how they will benefit. Assets will have to be clearly catalogued and a strategy for how extra value can be squeezed from the BBC's IT will have to be drawn up.

Siemens will face intense pressure to deliver innovative technology, cut costs and boost revenues. The contract also comes as the BBC seeks a renewal of its royal charter.

"BBC Technology is very much the jewel in the crown [of digital technology], but sadly it needs polishing," said Brignall. "The deal is about how you can exploit opportunities to the maximum."

Benefits of the deal include a long-term cash injection for the BBC, which has pioneered new IT such as digital and Freeview services but has been unable to reap the full commercial rewards.

"The BBC has always been very strong on technology," said Brignall. "For example, 15 years ago it was playing a part in digital TV but it could not maximise the commercial opportunity because of constraints."

Steps to the deal

November 2003: BBC announces plans to sell its wholly-owned commercial subsidiary BBC Technology following a review which identified potential annual savings of between £20m and £30m

December 2003: BBC calls for bidders to deliver a 10-year, £2bn IT outsourcing deal. The successful bidder will also take control of BBC Technology. The outsourcing contract includes the provision of hardware, systems and applications, telephony and consulting

April 2004 The shortlist of the eight bidders is revealed and includes Computer Sciences Corporation, Fujitsu, EDS, Accenture and IBM

May 2004: The BBC cuts the shortlist down to three bidders - Accenture, Computer Sciences Corporation and Siemens Business Services

June 2004: Computer Sciences Corporation pulls out from bidders' shortlist

June 2004: Union Bectu warns the BBC that it plans to ballot members at BBC Technology about taking industrial action over the sale of the coproration's commercial subsidiary

July 2004: BBC names Siemens Business Services as the supplier for the contract, which will start in the autumn

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