Siemens AG should have challenged local management

3.16  The Siemens business culture is based on trust and delegated authority to its senior management. Local management is empowered to run its accounts or areas of business with a degree of autonomy. Local managers were committed to delivering a successful outcome at NS&I and invested heavily in the project with a view to achieving this result in the long term but Siemens' financial oversight failed to alert it to the escalating costs of the project at an early stage.

9		Governance of the contract has changed
		This figure shows how membership of the groups governing the contract has changed since April 1999
		Source: NS&I

3.17  By April 2001, Siemens AG was concerned by the continuing fall in profit forecasts and sent its internal audit team to assess the project. The team concluded that unless management acted, SBS was going to make a significant loss on the deal. Siemens AG has now changed its management practices by introducing more robust sign off procedures at all management levels and setting SBS financial targets for each year of the project.