Information Technology Outsourcing at BBC

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Case Details:

Case Code : ITSY051
Case Length : 13 Pages
Period : 2000-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : BBC
Industry : Media/Broadcasting
Countries : UK

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The value and substantial savings created from the sale of BBC Technology (division) and this procurement of our technology services is a significant step for us in ensuring the BBC is fit for the future and continues to create innovative programmes."¹

- John Smith, Chief Operating Officer, BBC (British Broadcasting Corporation) in 2004.

"In the medium term it (selling the IT unit) is equivalent to selling the BBC's nervous system to someone who can then sell it back and charge what they like." ²

- A Spokesperson of Broadcasting Entertainment Cinematograph and Theatre Union (BECTU) in 2004³.

Introduction

On October 01, 2004, the UK-based broadcaster BBC signed an IT outsourcing contract with Siemens Business Services (SBS)⁴, a subsidiary of the Germany-based Siemens AG (Refer Exhibit I for details about Siemens AG).

The contract was one of its kind in the media industry and was one of the largest secured by Siemens in the UK.

Under the terms of the contract, SBS acquired BBC Technology Limited (BBCTL), the commercial IT subsidiary of BBC and planned to sell IT services to BBC for the next ten years for £1.9 billion (2.7 billion euros).

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1] "BBC Appoints Siemens Business Services to Provide Technology Framework Contract for Next Decade," www.bbc.co.uk, October 01, 2004.

2] Andy McCue, "Green Light for £2 bn BBC Tech Sell-off," www.silicon.com, September 20, 2004.

3] Formed in 1991, BECTU is an independent union which comprises workers belonging to broadcasting, theatre, film, liesure, entertainment and related areas in the UK.

4] SBS was started as a subsidiary of Siemens AG and Siemens Nixdorf Informationssysteme AG (SNI) on October 01, 1995. Initially, SBS offered IT services to Siemens. In October 1996, SBS was incorporated and it opened its offices outside Germany in North America, Austria and the UK. By 2004, SBS has emerged as the world's leading independent IT services provider. For the year ended December 30, 2004, SBS earned revenues worth 4.7 billion euros.

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