Penguin problems

On 26 June I quoted a report from Publishing News to the effect that Penguin was experiencing severe problems with their new state-of-the-art warehouse. The problem was that the software didn't work, which meant that the firm couldn't deliver books to meet the booksellers' orders. Something of a catastrophe, really, and the estimated loss to Penguin was put by PN at £20m to £30m.

Then, on 25 October I again quoted from PN, which reported that Penguin authors were beginning to make noises about being paid compensation for lost sales.

And now PN reports that Penguin are currently saying that their new warehouse will not be fully automated until March 2005 'at the earliest'. In other words, men will still be going round collecting books in baskets over the busy Christmas season, which is absolutely crucial for both booksellers and publishers if they want to end their financial year in profit.

Penguin are naturally trying to emphasise that sales of new books are doing OK -- 43 bestsellers this year, as against 33 last, et cetera. But backlist sales are way down, both for Penguin and for booksellers.

What interests me in all this (since I am mercifully not a Penguin author) is how a firm like Penguin came to experience such a disaster with new software. After all, problems with warehouse software are far from new in UK publishing. The most famous failure was that of a distribution firm known as Tiptree, and the causes of that spectacular ballsup have been fully analysed by a group from the University of Wolverhampton School of Computing and IT. That case history is posted on the web and can be studied by anyone. Presumably (says he hopefully, but without any great faith) it was looked at by Penguin management before they embarked on their great adventure.

It is now at least eight years since I was involved with a major software development scheme. It involved the creation of new management systems for a group of about 15 UK universities. Between them, the universities could summon up some amazing academic firepower, but even so (as I recall) outside specialists were called in to do the actual software writing. What the universities did was to set up an elaborate procedure for laying down exactly what the new systems had to do, and then for monitoring and testing the output of the software developers as and when it appeared.

At the time I was inclined to think that the network of commissioning and monitoring committees was over-elaborate, but with hindsight I can see the point of it. After all, even then we knew all too well about the failures of software systems which had cost many millions of pounds. And since then there have been many more such debacles (for details, see almost any issue of Private Eye). Most of these failures seem to involve the national health service and other government departments.

What procedures did Penguin have in place, I wonder, for designing the specification for their new software? And what methods did they use to monitor and test the output of their software developers? If I was a Penguin shareholder, and even more so if I was a Penguin author, I think I would want to know. But I doubt if anyone outside the company will ever be told. Commercial confidentiality, don't you know.

Back to Tiptree for a moment. The case history referred to above includes one interesting sentence: 'As difficulties surfaced, Tiptree tended to play them down to the point where customers could not believe what they were hearing.' Does this ring any bells?

The case history also tells us that Tiptree faced substantial claims from publishers for lost sales and that these claims were eventually settled 'by negotiation'.

I don't know exactly what happened to Tiptree in the end, but an internet search reveals that the 'former site' of the company in Colchester is likely to become the home of a brand new Tesco supermarket. Which is not altogether encouraging for those of us who would like to see a new and improved look to UK publishing.

Can Penguin survive? Well, if it was an independent company I would be inclined to think not. But as it is part of the massive Pearson group I suppose the answer is yes. Though whether the present management of the company will survive is another question altogether.