Committee Reports > List of Committees > Dáil > 1997 > Committee of Public Accounts > Report No. 02 - Value for Money Examinations

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Déardaoin, 6 Márta 1997.

Thursday, 6 March 1997.

The Committee met at 11.10 a.m.

DEPUTY DENIS FOLEY IN THE CHAIR

Mr. John Purcell (Comptroller and Auditor General) called and examined.

Mr. Matt McNulty (Director General, Bord Fáilte Éireann) called and examined.

Mr. John Dully (Department of Tourism and Trade representative)called and examined.

Public Session.

REPORT ON VALUE FOR MONEY EXAMINATION - GULLIVER: THE IRISH TOURISM INFORMATION AND RESERVATION SYSTEM

Chairman: I welcome Mr. McNulty to the meeting.

Mr. McNulty: I am accompanied by Mr. John Rafferty, manager of the Gulliver project, Mr. Luke Boden, - Financial Controller, and Mr. John Dully, Assistant Secretary of the Department of Tourism and Trade.

Mr. Purcell: This is a value for money report on the project to develop a computer based tourism information and reservation system commonly referred to as the Gulliver project. Gulliver has been jointly developed by Bord Fáilte and the Northern Ireland Tourist Board to serve the tourism industry, North and South. The report concentrates on Bord Fáilte’s role in the project and references to the Northern Ireland Tourist Board are solely for the purpose of presenting a complete picture of events.

The project started in 1990 with a three year completion time frame but by 1993 it had become apparent that the original concept and specification for the system were not capable of delivering the planned functions at a sustainable cost. An alternative plan involving the use of personal computers linked to the central data base was put in train but at the date of our examination it had not been fully implemented. I am not sure of the current position but the Director General will be able to up date the Committee.

Expenditure on the project to the end of 1995 was £10.2 million, offset by fee income of £1.6 million. Funding for the project came from the two tourist boards, EU grants and the International Fund for Ireland. I am afraid the examination found the project did not represent value for money on a number of scores. The system has not provided the planned service seven years on and was not being used to a great extent by the industry. The cost is greater than had been estimated for what is there at present. It can also be said that the project was not particularly well managed which is evidenced by the need to change tack when the original system was found wanting.

There has been a delay in getting the new system up and running in the tour operators and information offices. A further concern at this stage is that the system may well have been overtaken by advances in technology which facilitate interaction and communications in a user friendly environment at much lower prices. The system developed by Dublin Tourism is an example of what can be achieved in this respect. I recognise the development of information technology applications such as Gulliver give rise to risks but successful projects manage to control those risks. While it is impossible to future proof 100 per cent, long development time frames substantially increase the risk of obsolescence.

On the basis of what has been achieved to date, there must be a question mark over the extent to which Gulliver has enhanced the pre-existing information and reservation system. Similarly, I would not be too sure about the value represented by the current portfolio of assets. In effect, that depends on whether the existing facilities can be economically adapted or developed to take advantage of possibilities offered by technological change. I am aware negotiations are almost complete to secure private sector participation in the development of the system and, hopefully, this will help to bring a sense of commercial realism to its development and ensure its future as a worthwhile tool for the industry.

Chairman: Mr. McNulty, would you like to give the Committee a brief outline of the up to date position as regards this report?

Mr. McNulty: Obviously, it is a complex and difficult project because it involves technology and, therefore, it looked to the future even when initiated in 1990 and does so today. I would like to refer to the context in which Gulliver was proposed by us to the Northern Ireland Tourist Board. We agreed to go forward together with it in 1990. In 1988, as a result of a very thorough look at where tourism was going over the next 15 years, we divided those 15 years into three five year periods. The first five year period, which has gone by, was designated-to getting the industry to grow more rapidly because growth prior to 1988 had been rather sluggish. The five years we are now in were designated to building sustainable tourism. The five years which will begin in 1999 will be designated to managing the tourism industry because by then we feel the number of visitors will have gone up to possibly six million and the effects of the industry will need to be managed.

As part of the in-depth look at the industry, we had to look at ways in which we were going to do business and communicate with our future customers who, in the case of Bord Fáilte, are in overseas markets. That is a very important distinction in terms of what the Comptroller said about the Dublin Tourism system and Gulliver. It is easy to get technological systems which are fairly cheap and can communicate with local audiences in Ireland or Dublin city. It is a different matter when it comes to getting technology which will be part of a global information and reservation service which must link into the overseas markets, including Germany, the US, France, etc., and provide a network service in Ireland.

Gulliver was always a futuristic project. The reasons we got into it were that we were sure the ways in which we would do our business as we progressed into the future would be vastly different to the ways we had been using up to 1988. Prior to 1988 there had been a mishmash of systems in place using available technology and bringing about improvements in manual systems which had severe limitations in terms of international distribution. Microfilm and microfiche were also in use.

In 1988 we took the decision that the way we would do business in the future and the way we would communicate with our customers would become very dependent, if not completely dependent, on technology. There are only four ways in which you can communicate with your customers. First, you can see them in person - the way of the past. People would call into our offices overseas. That was already in decline and had declined to virtually nothing by 1988. Second, people can write to you by post, which was also severely in decline. Third, people can telephone or fax you using telephonic communications. That was a growth was communicating through technology. It was clear the new area of communicating through technology would have to underpin the other three in addition to becoming the dominant form of communication. In other words, if people were calling into an office, you needed to be able to put information up which you could deliver to them. That information would have to be delivered by technology. If people wrote to you, you would need to produce information to send them. Increasingly, that would have to be done by technology. If people telephoned and wanted a fairly immediate response, that would have to be delivered through technology.

Technology was beginning to show signs of how it was going to develop. The situation in which we found ourselves was that we took a deliberate decision that given the nature of Ireland’s tourism industry and the fact that Ireland is an off line destination, we would have to make the necessary innovative future investment in technology. We did that because Ireland’s tourism industry is very dispersed and is small scale. We have a national policy of trying to distribute the tourism economy to all parts of the country. It was against that background that we wished to be in on the early development of technology. We took that decision deliberately because we felt it was best for the future of tourism here. We realised there were risks involved because the technology would change.

We admitted to the Comptroller when he was preparing the report that those risks existed and came through the system as we anticipated they would and, in some cases, they came through differently. The basic problem underlying Gulliver was the same problem that would underlie any operation that was based on technology. Technology is constantly improving and changing. As you install the latest technology, a new technology which will erode it is already on the drawing board, if not at full development stage elsewhere. We took the decision to go into it because we realised there would be a good learning curve for the industry. That has been put in place and is one of the benefits of the Gulliver system as it operates.

The use of technology, combined with the major advances which have been made in terms of digital technology, means we can take text, sound, moving pictures, graphics, vision and store them together, transmit, mix and match them in sophisticated ways and they can be brought to the marketplace. Three great communication industries on which tourism of the future will depend, include broadcasting, telephony and the computer are all coming together into a seamless whole based on digital technology. The Gulliver system, which we claim is one of the leading systems available to any tourism industry in the world, is particularly well placed - we are hoping to effect a sale to the private sector - to give Irish tourism and the national tourist board the marketing advantages as we approach the end of the century.

Chairman: How much did Bord Fáilte spend on Gulliver in 1996?

Mr. McNulty: The deficit for the year would be about £450,000. Mr. Boden will advise me of the total expenditure.

Mr. Boden: It was £1 million net.

Chairman: As it cost £10.2 million up to the end of 1995, that is a total of £11.2 million up to the end of 1996?

Mr. McNulty: That is correct.

Chairman: According to page 16 of the report, for every £1 of revenue earned by Gulliver in 1995 a further £1.68 was provided by Bord Fáilte Éireann to bridge the shortfall between revenue and costs.

Mr. McNulty: One of the problems with Gulliver and with the systems tourist boards have to instal, something I should have stressed in my initial address, is that such boards depend fundamentally on information. We need a large quantity of information to service our potential customers in the field, to produce brochures and for all sorts of other purposes. Gulliver is both an information and reservation service. One of the reasons reservations were incorporated in it is that it is virtually impossible to get any financial income from information - at least, it has been up until now. In other words, when we talk about income to Gulliver, we must not forget the huge job it does in informing us, through brochures and everybody who needs this information from us at the same time.

I admit the revenue stream has been low but it has been significant even at 2 per cent, which amounts to £10 million in terms of business given to the industry in 1996.

Chairman: I have an interest in this particular project. Given the lower level of bookings coming through the system, would you say the tourist industry has lost faith in Gulliver?

Mr. McNulty: No. I would not, by any means. We have the highest adherence here of any system in the world. Some 93 per cent of the industry is registered in Gulliver. It will come into its own when it is linked to the world. It has not been possible to link it fully to the outside world mainly because had we proceeded in earlier years, the point that the Comptroller and Auditor General made would have been very relevant. We were aware that we had a better system in mind, that better technology was on the way, that we could do this more efficiently at less cost to ourselves and with greater efficiency for the industry during 1997. We still hope to do that. Reservations are already improving. We had a 15 per cent increase in 1996 and we are anticipating a further 15 per cent increase in the current year.

Chairman: It has cost £11.2 million up to the end of 1996. How long more do you expect to run Gulliver before you can expect to break even?

Mr. McNulty: We expect that with the sale of Gulliver, which we hope to effect shortly, the business going forward for Gulliver probably envisage losses for a further three years because a considerable investment needs to be made in order to connect Gulliver to world systems and international markets. We expect that Gulliver might not become profitable for a further three years.

Chairman: What stage is the proposed sale of Gulliver at?

Mr. McNulty: All the negotiations with the private sector investor have been completed. We have made the formal request to our Department, as the Northern Ireland Tourist Board has done to its Department. We are awaiting sanction from both Departments. The sale will then be completed.

Chairman: With the private sector?

Mr. McNulty: Yes. We are, in effect, selling the Gulliver business and system to the private sector. Both tourist boards will own 26 per cent of shares in the new company. The investor will own 74 per cent.

Chairman: What do you anticipate that will cost you?

Mr. McNulty: To effect the sale?

Chairman: Yes.

Mr. McNulty: Obviously, we are being paid for it.

Chairman: I know you are being paid for the sale, but if you have a 26 per cent interest and it is in a loss making situation at present, how much will that cost you on a yearly basis?

Mr. McNulty: The sale covers the fact that we will not be responsible for any further losses in Gulliver in that three year period.

Chairman: Will the private investor involved be Irish, from within the 26 Counties?

Mr. McNulty: Yes, it will.

Deputy E. Byrne: We have been talking about terribly futuristic technology which is obviously very innovative. Is Bord Fáilte breaking into new concepts as well as new marketing? Was this a brand new concept, an indigenous idea, or were there models elsewhere that we could have copied in order to avoid the learning experiences and pitfalls we have discovered?

Mr. McNulty: No, there was no model elsewhere and even today there are very few models. Even as it is today, Gulliver is in the top two or three in the world. In its new format we expect it to be in the lead position. In future, as a result of the development we have put into Gulliver we expect to recover some of the earlier costs involved in developing this technology. As you say, it is very futuristic. It is important for Members of the Committee to understand that the earlier approach to technology in the 1970s and 1980s was that people wanted to enable current functions to be done through technology because it was more efficient. But as we got into the technology from 1988 onwards it became clear that it opened up new ways to do business. The Internet was coming on stream and we now have a major site on it which was launched and is serviced by Gulliver. I am happy to tell you that at the Inter 97 competition it won the prize for the best Internet site in the world by any tourist board.

Deputy E. Byrne: Maybe I should address my next question to the Comptroller and Auditor General. If we are talking about Gulliver, a pioneering project which is still being developed, what is your attitude to a report on value for money at this point? Do you not think the value for money only comes after the system is fully operational and has been assessed? In other words, if the Comptroller and Auditor General tells us, which he has, that to date it is not value for money, but we are only still at the developmental stage, how does that equate and work out?

Mr. Purcell: I am judging value for money against the original plan that was drawn up by the tourist board. That envisaged getting the system up and running in three years, having most if not all of the tourist offices connected to it and having modules in tour operators’ offices. I am saying that after seven years we do not have that. We spent a lot of money on it. I have no doubt that the concept is an excellent one but I feel there has to be accountability for the management of the project which, at present, has not really fulfilled what it was intended to fulfil a few years ago.

Deputy E. Byrne: I ask that question because we have experience on this Committee of EU auditors coming in if EU money has been involved. The report of the Comptroller and Auditor General highlights the fact that it did not constitute value for money. We have drawn down about £3 million from EU sources. Can anyone explain whether the EU auditors could investigate in the same way that the Comptroller and Auditor General did and find that for the £3 million investment the EU did not get value for money and, therefore, end up paying a penalty?

Mr. McNulty: May I give a view on that?

Deputy E. Byrne: Yes.

Mr. McNulty: It might help the Committee if it knew how the money which came from outside sources was spent. About £3.5 million was spent on developing the research, software, etc. The EU money was given for that portion of the system. That system evolved from the earlier system but still represents considerable value for that £3.5 million. Some £2 million was spent on educating and training people throughout the industry on the use of Gulliver, including our staff. That money has not been wasted. A sum of £1 million was spent on kitting out the tourist information network in Ireland and we can still derive value from that money. About £2.5 million was spent on the operating costs over the six year period. The residual of the money, just over £1 million, was spent more recently on reconfiguring the system to the new system which will be operable from 7 April.

Deputy E. Byrne: Can I be assured that the EU auditors cannot use this report to claw back funds? I see heads shaking so I take it there is no possibility of that happening.

What is wrong with the industry? Over half the hotels and guesthouses registered with Bord Fáilte are members of Gulliver which entitles them to be listed on the information system. However, the report states that less than one third of members actively use the system, whereas over 90 per cent of Gulliver members in the self catering sector actively use the system to offer accommodation for sale. In other words, there is 90 per cent active use by one sector of the industry but very low use by the hotel sector. Are some sectors of the industry saying to Bord Fáilte that they do not need or want the system because they have their own way of attracting custom?

Mr. McNulty: I do not think they are. There is very high membership of Gulliver - at 93 per cent it is higher than the membership of any similar system in the world. As the Deputy said, about one third actively use it to make allocations of accommodation and receive bookings. The reason is that up to now the primary source of custom for Gulliver has been post arrival visitors - people who have already arrived in Ireland and are using the services of the regional tourism organisations. That end of the market accounts for 2 per cent of total business.

The intention, obviously, was to run this system in such a way that it could be accessed by travel agents, tour operators and customers in overseas markets. That section has been deficient up until now but we expect that when the new basis of the system is launched bookings and information requests will grow rapidly.

Deputy E. Byrne: Is there any way of telling us how much Gulliver will be valued at when it is fully operational? What will be the market value of the project?

Mr. McNulty: I can only make a guess at that. We have gone through a very public procurement process in terms of attracting anybody who was interested in doing a deal with us on the sale of Gulliver. Through that process, a value has been established for the project. When it is market ready and distributed it will obviously increase in value but the purchaser will also make considerable capital investments in it over the next three years in order to fully achieve that.

Deputy E. Byrne: Some £4.6 million was received by the computer company working with the tourist board, which is a substantial sum of money. Is the computer company which developed the software and retains a share of the ownership linked inexorably into the Gulliver project, even when the company is privatised? What is the relationship between the computer company’s hold on Gulliver and that of the tourist board?

Mr. McNulty: The software and technology with which we are going forward from this point is completely different to that involved in the deal which will come to a conclusion on 7 April. In other words, the technology for what could be called the Gulliver mark II system, which is the distributed database system, is completely different to that of the centralised technology which was used in the original concept and which was part of the problem we had to solve. The original system was centralised with all inquiries having to go through the centre. The new system is distributed so that everybody has the bulk of the information available on their PCs. Therefore, communication costs are reduced and only apply when people want to effect an actual reservation.

Deputy E. Byrne: Are you satisfied that the tourist board and the company are happy with the strategy to sell the company by public tender and that there is no conflict?

Mr. McNulty: The original computer company would have no conflict because no part of the equipment or software with which it was involved is in the new system. It has all been used up and will cease to be of any use after 7 April.

Deputy E. Byrne: Will none of the equipment of the company which cost £4.6 million be used in Gulliver mark II?

Mr. McNulty: The computer equipment, both software and hardware, had a life of six years, which is about as long as one can expect these days from such equipment.

Deputy Finucane: I am glad Mr. McNulty is present. I often wonder about the origins of Gulliver. Gulliver, according to the fairy tale, was a giant and the Lilliputians were the small men. I could not help thinking, when reading in the Comptroller’s report that over £11 million has been spent on this project, that it sounded like a very costly fairy tale.

Mr. McNulty was ebullient in his introduction but, from reading the report of the expenditure to date, it seems to be a gigantic white elephant. He seems to be optimistic for the future. He said that he originally spoke about a 15 year process for tourism - to grow from 1988 to 1993, to build sustainable tourism from 1993 to 1998, and to manage the tourism industry from 1999. I presume, having started this project in 1990 to expire in 1999, that the goal is to manage properly by 1999.

I wonder about the value for money. The conclusions in the Comptroller and Auditor General’s report of May 1996 speak for themselves and I back them. Has Bord Fáilte studied the telemarketing reservations system for Ireland? Three or four companies, such as the Holiday Inn chain, have their worldwide telesales base in Cork. Having seen the success of those operations and the linguistic skills of the people working there who deal with customers all over the world, I wonder if we will ever see a reasonable return for the amount of money which has been spent on the Gulliver system.

I know that Mr. McNulty is projecting into the future, but we first read about this project in 1990. A massive amount of money has been spent on this and I wonder if the taxpayer will ever get value for it. It appears, on the basis of the summary findings in 1995, that if only 1.3 per cent of bed nights are booked through the system the end users are not using the system. Therefore, it has a serious credibility problem.

Mr. McNulty: The report is inclined to funnel thinking towards thinking of Gulliver as only a reservations system. We, as the national tourist board, normally do not get involved in reservation systems; we are involved in information giving. In its normal work, Bord Fáilte spends quite an amount of its money on communicating with its customers. If Gulliver had never existed, Bord Fáilte would have spent those amounts of money on manuals, staff and other ways of communicating with its customers. In other words, this is not necessarily incremental expenditure on what Bord Fáilte would have normally spent - it has a substitutive element.

Giving information and communicating with customers is the basic task of a national tourist board overseas. As I said, it is impossible to get income for that. So, we coupled Gulliver the reservation service with Gulliver the information service to try to get some income. The main income will come when Gulliver is capable of dealing with the overseas market. It is only capable of dealing with it at the moment in a very limited way. The developments planned for this year will put us in a position to realise the potential that was always there and which we could not tap because we could not advance until we had the new technology perfected and tested. To go forward prior to this we would have been doing so with a technology on which we could not rely. I hope we are not being criticised for causing a delay which we believe is in the best interests of the total sustainability of the project. We did not go forward and collect these additional reservations using the old technology which would have been more costly and which would have no life in the market. We kept our position until the technology was correct and tested. It will be operational from 7 April this year.

Deputy Finucane: You are not being criticised for delaying, Mr. McNulty, but it is reasonable for us to assume that since the project has been there since 1990 it has had a very long gestation process. It would be reasonable for any Member of the Committee to anticipate that a project which has been going on for that length of time would be fully operational. On the basis of what you have said, and what I have read, I am still not convinced that the Gulliver project will ever achieve its objective. However, you might appear in three years time and convince us of an enhanced tourist information and reservation base with regard to Gulliver. Do you often reflect and say you wish you had never gone ahead with Gulliver?

Mr. McNulty: No, I do not. We looked very carefully at Gulliver and took a decision. In today’s market all the signs are that the way we will do business with customers in the overseas markets will fundamentally change over the next five years. We will be doing business with them in their homes, in the workplaces, through interactive television and on the Internet, all of which was not readily available in 1988. They are readily available now and they are fully integrated, connectable and usable. That means that the question which has to be asked in any value for money report is, what would happen to Ireland if we did not have a Gulliver? Where would we be in terms of this international market place? How would people who offer tourism services in remote parts of Ireland, including the west, be connected to the international market place? It would be difficult for them to organise this and to do it. Because we have a national system which serves the island of Ireland, North and South, we are now in a leadership position for new ways of doing business. We hope that over the next number of years we will prove that the initial decision to get in early, get the experience, find out about it and get the tourism industry trained, will all pay off in a major way for Ireland.

Deputy Finucane: Let us hope so.

Deputy Broughan: It is a fairly devastating report. My colleague referred to a fairytale, but I felt it might more appropriately have been called the gullible system. We got a lecture from Mr. McNulty on new technology at the start of the meeting but it seems that the essential error he made, according to this report, is that he dived into a new computer technology system before he could see how the system would develop. We all use PCs and computers, we are all at the edge of technology and have databases but Mr. Nulty was going into a very difficult area in that his customer base is almost certainly constantly changing. On the other hand we see that his main centres were not linked up four or five years after this system had started.

I wish to ask the Comptroller and Auditor General whether he did any cost-benefit analysis in preparing this report vis-à-vis what Mr. McNulty has been saying, about whether he should have gone ahead at the stage he did, given that he did so possibly with the best of intentions?

Mr. Purcell: I agree with Mr. McNulty that you cannot wait for technology because you will always be waiting. It changes incrementally at speed. However, one of the lessons that has been learned in the development of sophisticated computer projects is that you have to have a tight time-frame if you want to get the benefit out of it. We are still waiting for the benefit from the investment back in 1990-91. That is fairly clear. It is a lesson that has been learned worldwide about the development of computer systems. A three year time frame was a long period anyway, but it was extended beyond that. In addition, there was the complication that it really could not handle what it was supposed to.

Deputy Broughan: When the Comptroller and Auditor General or his staff were reviewing this, was such a system not impossible given the technology in some of our overseas tourist markets?

Mr. Purcell: The technology was certainly there within the past five years, although it was perhaps not as common as it is now. Deputy Finucane mentioned teleprocessing and telemarketing which have certainly been there in the past five years or so. Looking back, however, the system architecture strategy was obviously wrong at the beginning. One could say that it is to the credit of the managers of the system that they recognised that and, at least, did not throw good money after bad. There were problems at several levels. The usage of the system was not there by those it was intended to serve. In an attempt to increase usage and membership of Gulliver, it was made mandatory as part of the registration fee for guesthouses that they would be members of Gulliver. That was a very proactive move on the part of Bord Fáilte but if that had not been there usage would have been even less. It is not just the technology but the readiness of the clients - in the broadest sense of that word - to accept that technology. That does not seem to have been there.

Deputy Broughan: What software or hardware company is involved in this?

Mr. McNulty: Do you mean in terms of the original development?

Deputy Broughan: Yes, the company we paid so much money to.

Mr. McNulty: The original company involved in the development system was Digital.

Deputy Broughan: So it was a Digital system?

Mr. McNulty: Yes.

Deputy Broughan: What is the value of these obsolete systems and machines to anyone at this stage?

Mr. McNulty: Clearly, the value is in the new distributed database system. The value for money report is looking at a project which is in evolution, starting back with the idea in 1990, and which went live in 1992. It took two years to form it and it has progressed since and has been changed again following a fundamental review in 1993. We are now on what is quite correctly referred to in the report as the distributed database system which we developed in Bord Fáilte in conjunction with the Northern Ireland Tourist Board. That is different from the centralised system that was there at the beginning. The centralised system plays no further part

Deputy Broughan: Why had you not linked up all the centres to the old system after five years?

Mr. McNulty: Because as we are progressing we require capital investment to make those decisions. As we receive capital investment it is very restricted. We get about £500,000 to £700,000 most years.

Deputy Broughan: If you started a system which could not even link up your own offices and Northern Ireland Tourist Board offices, was the whole thing not doomed from the start? It says in item 40 that only 47 out of a total of 112 were linked up in December 1995.

Mr. McNulty: All the major tourist offices in Ireland were linked to the old system. We had to delay linking the overseas offices because we were aware that the new system was going to be cheaper, easier and better to link up. We did not want to incur the cost of linking up the old system, which required dedicated post office lines, with the new system, which requires ISDN lines.

Deputy Broughan: It was decided not to proceed with the Minitel network. Is it Correct that many likely customers outside the United States would not have been able to access the information for a considerable period? Mr. McNulty: must be given credit for being prepared to embark on the process but is it not the case that the basic elements of the package were wrong?

Mr. McNulty: At the beginning of the project, when the concept was being explored, it would have been necessary for the National Tourist Board to put in place a system geared to carry the information database for Ireland. That was being done physically up to that time but, from 1988 onward, it would not have been possible to continue in that manner. That would have been a cost for which there was no income. Due to the fact that we attached a reservations service which had the potential to bring in income to reduce our costs, the concentration is placed in that income-generating area.

Many of the costs involved in Gulliver would have been, quite rightly, incurred in putting in place an information technology system to distribute the database which had become so large and complex, and the need for accurate information was so great, that it could no longer be dealt with by anything other than such a system. That cost would have been incurred in any event. The cost of adding on the reservation service was significant but it has already generated some income which has reduced costs. In the future, it is hoped that it will generate even greater income.

Deputy O’Malley: The Comptroller and Auditor General summarises his conclusions in Paragraph 86 of his report. From experience, we are aware that Mr. Purcell is conservative in expressing his views and is particularly gentle when it comes to criticism. However, he made five findings in respect of this matter which are completely negative and relate to past events, the present situation and future prospects. Without exception, they are all negative. Is it not a matter of considerable concern that this system - which cost so much - works badly, is seldom used and appears to have no real prospects?

Mr. McNulty: I will repeat some of the statements I made earlier. The system is used quite a lot and is fundamental to the system of dealing with tourist inquiries within Ireland, which number in excess of two million per year. Its use in terms of reservations - we are only able to employ it following the arrival of tourists in Ireland - has been more limited than we would have wished. However, we were not in a position to bring forward the new system any sooner. We were involved in negotiations since the middle of last year in connection with its sale. The finance to distribute it overseas is part of the ongoing commerciality of the project.

In fairness, we had always envisaged that when the project was initiated, put into operation and developed, it would be privatised. From the early stages, a board designate was put in place which was made up of representatives from the tourism industry. I believe the Comptroller and Auditor General admits that it was a complex project, involving the Northern Ireland Tourist Board, Bord Fáilte, Departments on both sides of the Border, the industry, the board designate and, latterly, the steering group. It was a very difficult project on which to make progress. We admit that there were some faults but the primary problem was the degree to which the initial system was deficient and the degree to which we were obliged to respond to changes in technology.

Deputy O’Malley: However, Mr. McNulty does not dispute the Comptroller and Auditor General’s five findings? Will he answer “yes” or “no” rather than providing a further lecture?

Mr. McNulty: I dispute them in the sense that the cost of developing and operating the system is greater than estimated. During a six year period, this amounted to £200,000 greater than estimated. Bearing in mind that much development work was invested in the project, the Comptroller and Auditor General is correct that it was over estimated. Management of the project has been deficient in certain respects. It has been a particularly difficult project. We will never achieve a Gulliver-like project which we can finally state has been completed. The project is going to have to continue to respond to changes in technology. That will happen for as long as the project is evolving and doing its job.

We gained much experience from what we have been through and that will stand us in good stead. Education and training in use of the Gulliver system were provided at a cost of £2 million which has not been a loss. The system in place has not provided the planned service but the system ready to go into live operation on 7 April will provide the planned service. The system has a large adherence from the tourism industry but it has not been used as extensively as we would like. However, it should be borne in mind that, until now, it has only been used to deal with people’s reservations following their arrival in Ireland. It should also be borne in mind that it is dealing with tourism inquiries and providing the main database for Ireland in terms of brochure production, etc., which require information.

Deputy O’Malley: This is hopefully about to happen seven years after the establishment of the project? With regard to the services included in Gulliver, was it stated that it was intended to include travel and car hire companies which have not yet been included? I would have thought that these were fundamental inclusions and I do not see the point of the system if it is intended to continue to exclude them seven years later. Travel companies are not defined in the report but I assume they include airlines?

Mr. McNulty: The airlines are involved in the larger global systems to which, we hope, it will be possible to link Gulliver. The airlines developed their own systems. They were first to enter the field and have very large systems. However, within their systems preference is given to car hire companies and hotels. The difference in our system is that we are trying to ensure that all of the tourist plant in Ireland, be it in rural or remote areas, can be included on the same basis as the large players and not disadvantaged in any way. Gulliver is a distribution system and, in addition to the information on its database, it can provide access for separate databases which may develop in the Irish tourism industry and provide further distribution in terms of international markets.

Deputy O’Malley: From my limited experience of tourism in Ireland and the problems it faces, there are two major crosses which it must bear. The first is the Provisional IRA in Northern Ireland and the second is ease and cost of airline access.

One of the difficulties with the global airline computer booking system to which Mr. McNulty referred is that Aer Lingus excluded certain people from it and made it very difficult for new entrants to the marketplace to use it. I understand, that litigation proceedings were initiated against Aer Lingus in the Irish courts and the European Court in this regard. The problem remains the same and it is not possible to interline certain tickets or exchange them, as is the case in most parts of the world. Would it not be a major contribution to Irish tourism if alternative access to the booking system was made available so that new entrants and competitors would not be excluded or severely disadvantaged?

Mr. McNulty: The Deputy is echoing one of the points I made in favour of Gulliver which was designed to include the entire Irish tourism industry on a similar basis and not, as is the case with some of the major systems, select people with whom they are prepared to work and leave others out.

Deputy O’Malley: How can you say this is in Gulliver’s favour when Gulliver does not include it? Why, after seven years, do you continue to exclude travel companies?

Mr. McNulty: Airline and car hire information is available on Gulliver.

Deputy O’Malley: People can get that on their television sets.

Mr. McNulty: We are not in a position to offer reservations because that must be done in conjunction with the companies. They must opt to include capacity and agreements must be made with the new Gulliver system in order to do that.

Deputy O’Malley: Is the new system not seriously deficient if it does not offer tourists or potential tourists the possibility of booking?

Mr. McNulty: It has the capacity to do that.

Deputy O’Malley: It has the capacity, but they are not on it so they cannot do it.

Mr. McNulty: They are on it for information purposes, but not for reservation purposes. There is no reason they cannot or should not be on it.

Deputy O’Malley: Why are they not on it ?

Mr. McNulty: Until now ?

Deputy O’Malley: Yes.

Mr. McNulty: Because it was not possible to make that arrangement. The new technology is only becoming available now.

Deputy O’Malley: Will you put them on immediately?

Mr. McNulty: We are in the process of selling Gulliver and that will have to be done in the context of the new company. They are on it for information. It is also possible to connect to Gulliver via the Internet so information can be drawn down from Gulliver. The Gulliver database underpins the Irish tourism database on the Internet.

Deputy B. O’Keeffe: Two elements of the Comptroller and Auditor General’s report are damning. One is that the system was based around senior management and that there was no board involvement. The second relates to the contract. Not only was Digital, the company which put it in place, asked and paid to deliver a service but it was also given a share of the company. How much was paid to Digital? What percentage share did it get of the operation? From an early date Bord Fáilte had a system which was inoperable. Did Bord Fáilte tell Digital that it would have to claw back some of the money given to it because it did not deliver the service and, therefore, it was in default of the contract?

Mr. McNulty: As regards the Deputy’s point about decisions being made by senior management, a reference elsewhere in the report indicates that Gulliver came to the Board of Bord Fáilte seven times during that period. Reports were made to the Board of Bord Fáilte on those occasions.

As regards the amount of money indicated by the original contractor to supply Gulliver, the costs for purchasing the equipment, developing the software, managing the facility, etc. amounted approximately to £4.5 million over the six year period.

Deputy B. O’Keeffe: Some of the software supplied for the contract was obsolete. Is Bord Fáilte seeking redress from Digital on the basis that it did not deliver the service according to the contract signed?

Mr. McNulty: We are considering redress, but I would prefer not to comment on that at this stage.

Deputy B. O’Keeffe: Can you state if you are in negotiations with Digital to claw back some of the payments made to it because it breached the contract?

Mr. McNulty: We have been in contact with Digital on the initial architecture of the system and the services provided. Those contacts with Digital are continuing.

Deputy B. O’Keeffe: Are you hopeful of a satisfactory outcome?

Mr. McNulty: I would prefer not to comment on that.

Deputy B. O’Keeffe: This is not the first time a group which introduced technology that did not work has come before us. It seems that Departments and the semi-State sector are not proficient at buying systems which will work. Salesmen seem to be able to sell a product but we do not seem to have the people to analyse or vet what is being offered. It seems the State is wasting millions of pounds on such systems.

Mr. Purcell: As regards information technology and software developments, in particular, a strong case can be made for milestones, delivery, etc. and for payment to be conditional on the full performance of the software because that is the area which does not usually live up to high expectations. That would constitute good practice in terms of the development of computer projects which should be taken on board and built into the contracts.

Deputy B. O’Keeffe: Approximately one-third of the country is included on Gulliver. However, the perception is that it is not reliable. Irrespective of the improvements you hope to make to this system, is there any guarantee you will change this perception?

This country is seen as an excellent location for telemarketing services. Is it not time for Bord Fáilte, An Bord Bia, An Bord Tráchtála, IDA Ireland and the hotels which market Ireland to work together to set up a telemarketing company here? Perhaps it would be less costly, better focused and give a better return than the other systems mentioned.

Mr. McNulty: That point is under discussion because it is the way forward. We hope our discussions will be completed towards the end of this year. The alternatives, such as people doing this for us in other markets, are less satisfactory.

As regards co-operation with the other agencies which sell or promote Ireland, we all meet on a regular basis through the foreign earnings committee, chaired by the Minister for Tourism and Trade, the ambassadors and the overseas markets. Those reports are available to me and the Chief Executives of the other organisations. An increasing amount of co-operative work is being done. As regards the point about setting up a call center in Ireland to deal with inquiries, the first part of that is scheduled to go into operation in September.

Deputy B. O’Keeffe: Perhaps you could elaborate more fully on that point. I am Chairman of the Joint Committee on Sustainable Development which has had discussions with different boards. One point in our report is that there is no interaction between the various agencies and that they are building their own bureaucracies and not getting value for money.

Will Mr. McNulty inform the Committee of the current position? Are the various sectors seeking to establish this type of co-ordinated operation for Ireland?

Mr. McNulty: Yes, in terms of the recent development of Tourism Brand Ireland - with which Members are familiar and in connection with which I appeared before another committee - there was full consultation with all other agencies overseas in respect of the formation of the brand. There were also meetings to see whether they wished to influence it, whether it could be used for different purposes or whether we could become more useful to each other.

In terms of the call centre initially involving Bord Fáilte and the regional tourism organisations, there are a growing number of people communicating with us by telephone. Due to this service growing so rapidly, we would have to contemplate increasing the number of people employed to carry out this work in Frankfurt, Paris, London, New York and elsewhere. Obviously that is not as sustainable a proposition as putting a multi-purpose centre in Ireland which could use the new Gulliver database and provide this service to the world on a 24 hour basis in many languages on behalf of the tourism industry. There may be possibilities to combine with this other information elements necessary for other State sectors and bodies.

Through the foreign earnings committee we make ourselves aware of (ingoing developments and anyone wishing to become involved can do so. There is full co-operation at present in respect of promotion in overseas markets and meetings take place under the aegis of the ambassador on a regular basis. Reports from these meetings are used by the Ministers and myself to understand what is occurring. The initiative involving the establishment of the call centre in September rests with us because we are the principal agency dealing with telephone calls requesting information about Ireland. It is hoped this will begin in September.

Deputy B. O’Keeffe: Therefore, this is still taking place under the auspices of Bord Fáilte. Does Mr. McNulty foresee a role for other State companies involved in marketing Ireland and is there a possibility for interaction? If that happens, is there any need for Gulliver?

Mr. McNulty: Yes. To take the last point first, the information database must be contained on an electronic system. Otherwise it cannot be distributed, corrected accurately, updated or drawn down into the formats required. Gulliver is essential to any ongoing situation, including the establishment of a call centre in Ireland. The information is extensive, must be constantly updated and can only be accessed through an electronic database system such as Gulliver.

In terms of overseas markets, Members will be aware of Government policy regarding the creation of Ireland Houses. Bord Fáilte participated in those that were established in the United States and the most recent one in Madrid. In the context of Ireland House, the various agencies operate on one campus, usually with the Department of Foreign Affairs, and share facilities including reception and information giving, and there has been an increasing interactivity between staff. It is a move in the right direction but the Deputy’s point is accurate because there is much more scope for development and sharing between bodies which have different mandates from Government.

Some of the mandates becoming increasingly important relate to the need to co-operate, share and bring about mutual benefits wherever possible. For example, we receive much co-operation from the IDA with regard to attracting international conferences. We also receive a great deal of co-operation from an Bord Bia because food is very much part of the Irish experience. I hope it would state that it receives great co-operation from us on the tourism side in terms of promoting Irish food. This is featured in our new advertising campaign.

Deputy Upton: On the future of this system in the context of the Internet, what will be Gulliver’s relevance, given the development of the Internet and that most people will have access to it in their homes during the next ten to 15 years?

Mr. McNulty: The Gulliver system is essential because, it underpins the Internet and interactive television - which is coming into operation in the United States from the middle of February. This Irish tourism database is available through Gulliver. Therefore, it services the Bord Fáilte entry and those of other interests in the Irish tourism industry on the Internet. It will also service the new communications due to come on stream during the current year. In the context of interactive television, 2 million sets will be in place by the end of the year. These will use the Internet and their owners will be able to interlink directly into Gulliver in their own homes. That is all part of the integrated system for the new Gulliver in the near future.

Deputy Upton: Is it correct to describe Gulliver as a new product in terms of tourism?

Mr. McNulty: It is a very new and forward-looking product. Neither Bord Fáilte nor the new commercial company will ever be in a position to state that it has been completed. Gulliver will have to react to the new technologies, which are rather staggering in term of their capabilities. By virtue of the fact that Gulliver is in operation, we are better placed than any other tourist board to take advantage of these developments which are rapidly coming through the system. As already stated, 2 million interactive television sets will be available in the United States during the current year. Gulliver is accessible to 93 per cent of those in the US who own PCs. Tremendous links will be possible with the new Gulliver system from 7 April.

Deputy E. Byrne: Given the information that was forthcoming about the future use and potential of Gulliver, how could it have been arbitrarily decided that the project is bad value for money? This returns to the question I asked earlier because the project is not yet complete and we have reaped its benefits. It is similar to casting foundations in concrete and proceeding to build. I get a sense of unease from Mr. McNulty, who seems to believe it is being alleged that he should have aborted the project when its end results have not yet been seen.

Mr. Purcell: We are discussing two different things. If the task of Gulliver was to merely establish an information database which was capable of being accessed, remotely or otherwise, we would be discussing a different project. However, Gulliver had different objectives and it did not fulfill all of these. I am not stating that the concept is had I agreed with Mr. McNulty that it is an excellent concept. It was good to see Bord Fáilte attempting to become involved at the leading edge at that time. However, with the way the project developed and the way it was managed, I would not judge it as value for money under the headings of effectiveness, economy and efficiency.

Deputy E. Byrne: Could they not have-----

Mr. Purcell: The system can be used. However, if it was merely a matter of setting up an information database for access - I must not understate the complexity of doing so - this is relatively straightforward in technical terms. That would have been a different project and I expect that it would not have cost anything like the costs incurred to date. Mr. McNulty is correct in stating now that it is in place we should try to maximise its potential. We will be able to do so through developments such as the Internet, interactive television, etc.

Deputy Upton: Does Bord Fáilte have a product development department?

Mr. McNulty: Yes.

Deputy Upton: On the concept of product development in general, from my experience of these matters, the failure rate is quite inordinate and perhaps 95 per cent of new products are useless. However, enormous amounts of money are made from the five per cent that succeed. As I understand it, that is how things work with the bigger organisations: they merely have to discard and order.

This is an old debate which I have had previously with the Comptroller and Auditor General. I do not want to recommence it. In order to succeed failure has to be dealt with. This is not to be cavalier and throw money around in an unco-ordinated and careless manner. I would like to see this project in the context of the other products developed by Bord Fáilte. What is their success rate?

Perhaps the public service could benefit from a technology review prior to investing in it. It may be a little too influenced by skilled salesmen rather than by what is most appropriate to its needs. What levels of success would you expect with new products and do you agree there is a need to sustain a certain level of failure to benefit in the longer term?

Mr. McNulty: The Comptroller and Auditor General will probably admit that undertaking value for money audits is difficult at the best of times, but undertaking one on a project such as Gulliver which involves technology and is very future oriented is especially difficult. This is reflected in the report. The project is complex in the sense that we had two tourism boards, two Departments, an industry board and another group which was appointed to oversee the privatisation.

The ideas and concepts which were involved in Gulliver remain substantially true and well focused in terms of the way we are going to do our business. The difficulty arises because one must react to new products coming on stream which are produced by other countries, companies, etc. If one believes that they are correct and should be taken advantage of it would be a bigger mistake not to do so than to react, as we did, in trying to take advantage of them and having fluid management.

Deputy Eric Byrne’s comment about putting down the foundations in concrete is a good simile, however, a difficulty in the computer area is that nothing can be set in concrete. It must be fluid, move in various directions and look at what is happening in terms of rapid new developments.

While I am not trying to lecture the Committee on technology, it is very difficult for those outside the tourism business to get a full grip on it. However, we now have broadcasting, telephony and we have got the computer industry coming together. From this year on, two million people in the US will be able to do business through their television sets. Next year, four million households will be able to do business based on new satellite technology which will go into position in 1997.

The Gulliver database, and the new Gulliver distributed system gives us the best possibility of ensuring that we can collect the available inquiries and service them through all that technology. We would not change any aspect of it in terms of where we have it today. However, mistakes were made at the outset because, as Deputy Eric Byrne and Deputy Upton said, and the Comptroller and Auditor General recognises, we did not have in-house management who had done this before and we had to rely to a large extent on hiring outside consultants.

Deputy Upton: To what extent are you now familiar with what is happening in the US? Are your people there becoming familiar with these developments? What is your anticipation of the future arising from them?

Mr. McNulty: Two years ago the G7 countries decided that the interactive television would be the main way of transmitting information to the home. We then began to consider the implications. I spent the week before last in the US looking at the new technology and discussing it with the tourism industry and others in North America. We have approximately 20 people in the US. Two or three of them are highly skilled with regard to technology and are looking at developments. We now have a department in head office staffed with experts and the management of Gulliver, who have tremendous grasp of the future situation, have developed this new system.

Chairman: Can overseas tourists use the Internet to make reservations in Ireland?

Mr. McNulty: Yes, but the position will be enhanced during the current year. While they can do it now problems sometimes arise in terms of getting confirmation and transmitting money through the Internet. However, it is expected that during this year it will be possible for them to use the Internet widely to do bookings, including accessing Gulliver.

Chairman: Mr. Dully, as Assistant Secretary with responsibility for tourism, are you satisfied with the management of Gulliver with regard to value for money?

Mr. Dully: We are very satisfied with recent developments, which will lead to a more commercially suitable and technologically comfortable environment for this kind of operation. We are happy because Bord Fáilte will now focus mainly on international marketing of Irish tourism and will not be distracted from that core function. The report is factual and the Comptroller and Auditor General has reported as he saw matters. We could not see it differently from the way he describes it in those circumstances.

Deputy E. Byrne: I do not know who decided to undertake a value for money audit on Gulliver. However, this should have been an interim report because the project is still evolving. Consideration is being given to privatisation and the inclusion of other systems. We cannot condemn the project because it is not complete. Could we suggest that the Comptroller and Auditor General designate this as an interim report and proceed to undertake another value for money survey with Bord Fáilte at the end of another three year period?

Mr. Purcell: The value for money survey arose as a byproduct of our financial audit of Bord Fáilte. A lot of money was invested in Gulliver; it started as a small seed and grew. I may be precluded from undertaking a value for money examination in three years because by then I hope that 75 per cent of the shareholding will be in the private sector. I would not have a role in such circumstances.

Deputy B. O’Keeffe: Perhaps we would be kept up to date?

Chairman: The Committee welcomes this examination of the value for money of the Gulliver tourist information and reservation system. The importance and benefit to tourism of an efficient information and reservation system cannot be denied. However, the Committee must express concern regarding the manner in which this project was managed. We note the doubt expressed by the Comptroller and Auditor General as to whether the costs and output targets for completion of the project can be met.

It is vital that adequate structures are in place to make the best use of the funding, both EU and domestic. All public planning and management sector bodies have a responsibility to spend public resources in the most effective way possible. The Committee strongly recommends that all Departments set and monitor appropriate targets for all their spending programmes so that appropriate and timely lessons can be learned for the future.

The Committee would appreciate being kept up-to-date with regard to the present and future position of Gulliver.

Thank you Mr. McNulty.

The witnesses withdrew.

THE COMMITTEE ADJOURNED.