Interview: Former BBC CFO Zarin Patel

AS MARK THOMPSON, the former BBC director-general, and six other past and present BBC bosses were subjected to the unenviable experience of facing the rough side of Margaret Hodge’s tongue in a recent Public Accounts Committee hearing, Zarin Patel, the organisation’s long-serving finance chief, will have shared their pain.

Hodge, chairwoman of the PAC, grilled the executives over the size of payoffs made to outgoing executives. Fast becoming known for her scathing vernacular, Hodge lambasted the BBC for “gross incompetence” in the way it handled large payoffs to outgoing executives.

The language would have been all too familiar for Patel, who bowed out of the BBC at the end of June after a 15-year career at the broadcaster. Patel suffered the lash of Hodge’s tongue last summer when she was called before the PAC to answer questions over the organisation’s “utterly unacceptable” payroll policies.

After nine years serving as the BBC’s chief financial officer, Patel is happy to move on and leave the public mauling behind her. And while she must accept some responsibility in the current issue – Patel was jointly responsible, with HR chief Lucy Adams, for signing off severance payments exceeding £500,000 – the latest round of BBC bashing should not detract from a highly successful career in which “value for money” was at the heart of everything the finance function did.

“Your focus is entirely on creating value, getting more from people and resources,” Patel tells Financial Director.

For a finance director of a commercial business, there is a simple measure of success for the finance function: the bottom line. At the BBC, the challenge for Patel was making licence payers feel they were getting value.

The conundrum for Patel was how to monitor the BBC’s performance with an audience in an objective way. Taste, after all, is the most subjective of things. The answer, Patel explains, was to develop the BBC’s own bottom line. A new performance measurement framework was adopted, based on four overall criteria: reach, quality, impact and value for money.

Reach – the proportion of people who use the BBC’s services – is the headline indicator of success, while value is based on the cost of a programme divided by the number of viewers, essentially allowing finance to work out the cost per user hour.

“If I spend £100 and 500 people watch the programme, that means it has cost 20p per user,” Patel explains. “You need something like that. A big part of finance is resource allocation.”

There is perhaps no better example of this tension between cost, resource and the creative process than the famous images of the snow leopard/ibex chase shot filmed in the Hindu Kush for the BBC’s Planet Earth series.

The segment lasts only a matter of minutes and took weeks to film. It encapsulates everything that made the series such a hit with audiences. But you would be forgiven for not thinking about the finance decisions going on behind the scenes.

“How many days can finance allow for the cameraman to wait for that shot? These are the judgements you have to make to capture extraordinary footage,” Patel says. “Capturing those scenes creates real public value that you can’t easily quantify in a bottom line.” However, the BBC did make between £30m and £40m from re-selling the images around the world.

Creative tensions
For every snow leopard, there are hours of unused footage. That tension between creativity and other concerns runs through everything the BBC produces – from flagship drama Dr Who to coverage of the 2012 Olympic Games.

“Once you get a script, you can break it down and cost. I have so much per episode, so what are the creative things that matter?” Patel says, adding that one of the key skills for a finance partner at the BBC is ingenuity “to squeeze that extra pound out of everything we do”.

What does that mean in practice? Patel and the finance team were able to squeeze value from the coverage budget for the Olympic Games – which included 5,420 live hours of broadcasting – by, among other things, recycling a “crappy old container off the back of a lorry” to be used as its main presenting studio.

“We now use it on all our road shows,” she says with some pride.

But as any FD knows, you can only cut so much before the end product starts to suffer. Much of Patel’s cost-cutting activity happened in back-office functions. On her appointment as CFO in 2004, she set about taking control of the BBC’s finances through a series of outsourcing deals and offshoring non-core finance services and bringing all of its accounting together in one place in a “centre of excellence”.

With the BBC’s Royal Charter up for renewal in 2007, the pressure was on to meet budgets and targets, while at the same time delivering high-quality programming.
“My focus was on outsourcing and cutting overheads. We outsourced HR for the first time; not many outsourced that at the time,” she says of the method to recruit a third party to undertake the work. “We decided against offshoring HR because of the interaction it has with people, [but] we offshored bits of finance,” which allowed the company to set up certain functions in another area, but it was still in-house.

“When you do a major change within the organisation, it becomes embedded. Nobody would say now we should in-source finance. It works like clockwork and means you can focus on being a business partner where you can create value.”

Patel was well-equipped for enforcing such organisation-wide change, having come up through the finance function ranks, first as group financial controller – where she reformed the BBC’s financial management disciplines as part of implementing an SAP system – and later as head of revenue management, where she brought licence fee evasion to an all-time low of 5%.

“Everyone in their life needs to do at least one SAP implementation,” Patel says. “It had consequences. We knew how much we were spending on outside trucks, studios etc. Once you have the right information, you can start transforming the business. That first project taught me a lot about how you make change happen.”

Having left the BBC in June after working three roles and becoming the broadcaster’s longest-serving CFO, Patel is currently enjoying a well-earned sabbatical at what she describes as an “inflection point” in her career.

While she is tight-lipped about the specifics of her next role, she admits that “going to an organisation with a digital transformation to do would be exciting”. Given the digital transformation that has taken place at the BBC during her tenure, Patel is well-positioned to deliver that change.

IN BLACK AND WHITE
2004 – 2013 Chief financial officer, BBC
2001 – 2004 Head of revenue management, BBC
1998 – 2001 Group financial controller, BBC
1982 – 1997 Chartered accountant, KPMG