BBC group finance director, Zarin Patel

Change, and the thrill of managing change, is what gets Zarin Patel out of
bed in the morning. A good thing, too, because as group FD of the BBC there’s a
lot of it around.

The BBC is no stranger to change. In the 1990s, then director-general John
Birt pursued his reforming mission to introduce more discipline and financial
control, management reform and internal markets. With Greg Dyke’s appointment in
2000, the mood changed to one of cutting back the resulting administrative layer
that had grown up to manage those new disciplines.

With the BBC’s Royal Charter up for renewal in 2007, the pressure is on again
to meet budgets and targets, while at the same time delivering high-quality
programming. Under current director-general Mark Thompson, the BBC is aiming to
generate savings of £139m a year by 2007-08, all of which is to be reinvested in
programmes.

Achieving such savings calls for dramatic action – a 46% reduction in
headcount no less. This translates into the loss of 980 jobs through natural
wastage and redundancy, and about 750 outsourced. In finance, the aim is to cut
the current total of 1,100 (including shared service centre staff) by about
half.

“The split between outsourcing and inhouse is still to be worked out, but
there will be significantly more outsourcing,” Patel says. “We do have a
successful 10-year contract, which is run by [outsourcer] EDS, where we have
outsourced all our transaction processing. What we need to do is move more
transaction processing to shared service centres so that the BBC is actually
focused on decision support analysis and financial planning. It’s really a
standard finance transformation in a lot of ways.

“We have a very good platform in SAP. We have all the tools and have quite a
good shared service centre model.” The aim now is to try to move to what Patel
calls a selfservice model, which will be web-based, so that programme producers
have the information they need at their fingertips to enable them to take
decisions. “We’ve got the technology platform, we just have to use it more,”
Patel says.

Although Patel only took up the group FD post in December 2004, she appears
unfazed by the scale of the targets that face her. “New challenges refresh
people,” she says. “You do your best work in the first three years of a new job.
Then I think you defend the status quo, because you built it.”

Patel actually played an important part in the BBC’s previous value for money
programme, after she joined the broadcaster in 1998. She views the current
cutbacks in the context of the natural development of big organisations. “They
build up a big corporate centre and suddenly you find the centre is bigger than
the rest of it,” she says. In the BBC we have gone through a
broadcast/production split. We created an internal economy much like the NHS did
and ended up with about three separate corporate centres.”

In the late 1990s, Patel was required to look afresh at the BBC’s
organisation to see how to achieve more value for money. In the process, she
says, she probably told her BBC FD predecessor, John Smith, some “difficult
things he didn’t want to hear” about how to achieve change in an organisation.
“It’s not just the money, but the human element that matters, because it’s
changing behaviour. Money is the easy part of any value programme. You can do
the analysis, but how do you actually convince people to change?”

The latest cost-cutting targets are the result of a lot of thinking, Patel
says. “John had started this journey a while ago. If you look at the BBC’s
record of efficiency, it’s probably like any other organisation – you go in
waves. The last wave in the ’90s was largely around creating an internal economy
– it drove out huge efficiency gains – 5, 6, 7, 8, 9% per annum, but you can’t
sustain that. When Greg came on board we went from the hard efficiency to the
cultural and quality issues.”

As Patel explains, over time a relentless focus on efficiency could start to
affect quality in terms of increased number of repeats, fewer original comedy
programmes being commissioned and so on. “So you have to work hard at making
sure that efficiency doesn’t undermine quality,” she says.

“You have to think quite hard about setting targets. But we started doing
this thinking more than a year ago and really thinking hard about where the next
level of efficiency comes from. We were all pretty much convinced it had to be
transformational.” Hence, for example, the targets for dramatic reductions in
internal headcount.

Now that Patel has taken over the FD hot seat, she is in a prime position to
lead that transformational change. So what was the first thing she wanted to
change? “Attitude,” she replies. “We’re in this charter update mode at the
moment. As part of that we have got new arrangements for governance through the
BBC Trust… Openness of scrutiny is the underlying issue, which means we are now
doing our job more in the public arena than we have ever done before. So it’s
about readiness for that. It’s sharpening the place up to look outside much more
in its thinking.”

Another goal is to restate the finance team’s mission in the BBC. As Patel
explains, the BBC is facing a huge business challenge due to the
faster-than-ever changes taking place in technology and, as a result, audience
demands. Having owned an iPod for just six months, Patel knows from personal
experience how quickly buying patterns, content demand and accessibility needs
can alter.
“The audience is now in control,” she says. “It wants brilliant content, any
place, any time, anywhere. And that’s a big challenge for the BBC. Speed to
market is going to be essential. We are going to have to take more bets. Do you
decide you’re going to be on every PDA, every mobile, every broadband,
everywhere?

That’s simply unaffordable. You’ve got to sense what your audience is doing,
not just in the content it wants, but how it’s going to consume it. Those
challenges are really big and the finance team needs to sit in the middle of how
you enable the organisation to get the best value out of its content so it can
deliver that value back to the audience.”

The digital switchover is another huge, pressing challenge. Not only does it
involve a big one-off cost, but there are social issues involved in terms of
persuading people to change and considering the needs of those who can least
afford to. The BBC’s role in the digital switchover was recognised in its last
funding settlement, when licence fee increases were set at RPI plus 1.5%. As
part of that settlement, the BBC had to deliver efficiency improvements and
achieving continuous efficiency improvements remains a key goal for Patel. “No
organisation is completely fit forever because the world moves on and people
move with it. Efficiency will continue to be part of the funding mix, without
any doubt.”

In terms of the licence fee and its collection, evasion rates are now down to
5%. “We think we can get it down another percentage point, and then the licence
fees plateau,” Patel says. “Then, how do we reduce the cost of collection? How
do you, for example, move to compulsory direct debit? What we are doing is
moving to e-billing and online payment, which absolutely transforms your cost
base.”

The challenges of revenue collection are well-known to Patel. She spent the
four years before becoming group FD as the BBC’s head of revenue management, in
effect, responsible for collecting the licence fee and reducing evasion. Her
efforts won her the unusual accolade for an accountant of Client Marketer of the
Year in 2004. Patel explains that her approach was to focus less on the threat
of prosecution and more on convincing people to do what she wanted – to pay up.
“You have to think hard about what you’re trying to convince people to do,”
Patel says. “All you’re trying to do is get them to pay on your first contact
with them. It’s cheaper for us and better for them. So it’s a consumer pr
oposition, not a kind of enforcement proposition.”

Patel initially came to the BBC from KPMG because, having completed a
secondment in a “fairly troubled” construction company, she developed a taste
for life outside the profession. She enjoyed the immediacy of life at the sharp
end, having to persuade the banks to keep funding the payroll.
Although Patel had “a fantastic time with KPMG”, where in the ’80s her clients
were completing numerous transactions, she became frustrated because, as she
says of the professional’s life, “at the end of the day you can only advise, you
can’t do”.

By chance Patel heard about the financial controller opportunity at the BBC
and decided to go for it. “It’s the best decision I’ve ever made,” she says.
“It’s a fantastic organisation. It’s hugely stimulating, really challenging
because you’re in the public eye all the time, you’re constantly doing things
that are leading edge and the place is full of bright, clever people, so the
intellectual stimulus is there.”
She didn’t initially intend to stay this long, however. “I remember thinking:
four years in a public service organisation and then back to a plc,” she
confesses.

‘But I’ve been with the BBC six years, and it will be seven years soon, and
then I think another three or four years to see this job through. It’s just that
the work is so very interesting, and because you don’t have a bottom line you
have to work incredibly hard to demonstrate value but also to work out what it
is you should do.

“We are making huge changes, and I find change exciting. It’s what gets me up
in the morning. It’s also an organisation where as a finance and businessperson
– if you are the right one – you are essential to the creative life of the place
in terms of finding money for programmes. You are working for an organisation
where your aim is to enrich people’s lives with the programmes you make.”

Patel is keen to encourage her staff to draw on ideas of best practice from
elsewhere. “We’ve just sent a troop of people to the US on one of these top-dog
tours, looking at the absolute best in finance provision and technology,” she
says. “The team have come back absolutely brimming with ideas. Sometimes you can
send people on training courses, but the better training is to invest in them
going round and seeing how things are done.”

Visits to UK organisations are also valuable, but Patel says: “The reason for
going to the States is because, with Sarbanes-Oxley, there has been huge
pressure on financial teams. I think Americans are braver at trying new things.
We are very good at outsourcing – we outsource far more than the US does – but
Americans are brilliant at thinking about process reengineering and continuous
improvement. They’ve got a track record for doing it well, and they don’t mind
boasting about it.”

Boasting is not one of Patel’s personal habits, even though she is the first
woman to hold the BBC’s top finance job and recently earned a Guardian ranking
as the 12th most powerful Asian in British media. “It’s important to know there
are people out there who make it, who can be an example,” Patel says. “But it
doesn’t matter what you are. It’s what you do and your personality that matter
most. So I’m a woman. So what?”