National Computing Centre - Failure

Failure

NCC received substantial proceeds from the sale of NCC Group Limited (circa £11M between 2000 and 2003 plus dividends) and from the multi-million sale of its iconic Manchester city centre buildings (Oxford House and Armstrong House) to Bruntwood Group (now the home of NCC Group plc). Following the retirement of Perkins, Michael Gough was appointed as CEO in 2000 and NCC pursued a new strategy of rapidly developing and expanding its membership services by acquisition.

In 2002 NCC adopted a policy of vigorous support for Open Source Software.

Over the six years from 2000, and particularly after the second sale of its shares in NCC Group in 2003, acquisitions accelerated until all of the company's funds had been used to acquire a number of related companies, membership organisations, publications, publishing rights and to fund joint ventures. The acquisitions included: Management Consultancy News; Conspectus; CIO Connect; The Construction Industry Computing Association; Certus; The Evaluation Centre; Institute of IT Training; The Impact Programme; and PMP. Publishing rights acquired included the Naked Leader and joint ventures included: the NCC/Ashridge Business School MBA; NCC/AQA Applied ICT; and ProfIT.

Funds were also spent on a major refurbishment of offices in Manchester, developing a quickly redundant hosting centre and leasing opulent offices in London, all of which was entirely inappropriate for an organisation of this size. Additionally, attempts were made at developing new products and services including The Open Source Academy, The Evaluation Centre and NCC Midas Web Hosting. All were costly and ill conceived, the later being a hosting option that only offered support 5 days a week and during working hours.

There was also an expensive re-branding exercise in which NCC re-branded as Principia, a brand that was shortly after dropped and the NCC brand resumed, a move that seemed to echo a similarly named and equally disastrous re-branding of the UK Royal Mail to Consignia.

The strategy initiated and implemented by Michael Gough totally failed and the National Computing Centre diminished rapidly in size and turnover. With the many millions received now spent, NCC continued to make unsustainable losses but there was no change in strategic direction. By 2007 to stem the losses NCC was forced to rapidly close or dispose of many of the acquisitions at a vast loss to the organisation as well as to close a number of only recently established operations. Michael Gough was dismissed from the business in February 2008 as a consequence.

In March 2008, Steve Markwell was appointed as Chief Executive but there was no improvement in the company's fortunes or significant change in strategic direction. The only significant asset remaining, Filetab, was transferred in 2009 to a new company called NCC Filetab whose Managing Director was also Managing Director of NCC. With losses and the size of the pension fund deficit increasing, the company was unable to meet its obligations and was placed in to administration by its management.

The NCC had been run for its members since 1966 and throughout had a non executive board overseeing the actions of the Executives. It remains a mystery as to what governance arrangements were actually in place that allowed the management under Michael Gough to waste so many millions of pounds on such an ill-conceived strategy and vanity acquisitions whilst not addressing the vast and increasing pension fund deficit or safeguarding the organisations future.