Outsourcing | Feature

The Host With the Most: University as Application Service Provider

University ASPs can benefit both the host institution and smaller client colleges, but there's a cloud on the horizon.


Illustration by Jason Schneider

In this era of political rancor when everything's a zero-sum game, it's refreshing to think that two parties could actually come together to create a win-win situation. That's exactly what's happening, though, as a number of larger universities take on the role of application service providers (ASPs) for smaller schools.

It's not all confetti and roses, of course, but--done right--larger schools can gain valuable revenue and expertise acting as an ASP, while smaller institutions receive more bang for their computing buck.

Drexel University (PA) has been one of the pioneers in the field. For more than 10 years, the Philadelphia-based school has provided IT services, including hosting SunGard Banner, to schools such as Cabrini College (PA), Neumann University (PA), Medaille College (NY) and Cumberland University (TN). 

The benefits for Drexel have been tremendous. According to John Bielec, Drexel's CIO, 30 percent of the university's IT budget now comes from outside sources.

While Drexel's income as an ASP probably stands at the high end, other university ASPs have also managed to reduce their own costs significantly.

For UMassOnline, which hosts Blackboard for five University of Massachusetts campuses, five public state universities and community colleges, and five small private schools in Boston, the primary goal is cost sharing. "From our perspective, it is beneficial because we can spread the cost across 15 campuses instead of just five UMass campuses," says Ken Udas, CEO of UMassOnline.

Fees collected for hosting both Blackboard and Oracle database software for other schools have also allowed UMassOnline to hire an additional support staff member.

The University of Cincinnati, a public research university with more than 41,000 students, started out with three schools as clients for its hosted Blackboard service back in 2004, but has since ramped up to 10. The prices it charges are based on school size. For a school like Ohio Wesleyan, the annual fee is $35,000.

Client Benefits
From the perspective of smaller, client schools, cost is obviously a significant factor when considering a contract with a university ASP. "There is no way they could get the staffing, software licensing, and training to support Blackboard at that cost on their own," says Paul Foster, assistant director of instructional and research computing at UC, of his university's clients.

But Drexel's Bielec cautions that small schools should not look at any such arrangement simply on a cost basis. Instead, he says, they should focus on what they get for their money.

"A school with a couple of thousand students might have an IT staff of eight, 15 servers, and a budget of $1 million. They get limited capacity for that $1 million," he says. "In the ASP arrangement, their capacity increases exponentially. They have access to the same applications and support that every student at Drexel has, and they are paying the same as they were before in more of a mom-and-pop IT operation."

Certainly, for Owens Community College (OH), the decision to partner with UC in May 2010 went beyond the purely financial. Initially a Blackboard ASP client, Owens had brought hosting in house in 2004. But with online courses growing 30 percent each year, Owens' overburdened IT staff encountered a number of technical issues, and began to look at other options. The school, which has locations in Findlay and Toledo, eventually selected UC as its Blackboard ASP. UC's bid was substantially lower than that of Blackboard ASP Services.

"It was a cost decision, but we also needed the most stable environment possible," says Mark Karamol, division director of e-learning at Owens. "We did reference-checking with other schools and got outstanding feedback about UC, and 13 out of 14 members of a faculty task force voted to choose UC."

The issue of system reliability definitely resonates with smaller schools, particularly when it comes to applications that are considered mission critical. For Patricia Ainsworth, CIO at Salem State University (MA), the school's Blackboard LMS meets that definition. "If we ever have a physical disaster, the LMS has to survive so we can continue teaching courses online," she says of her school's decision to contract for hosting with UMassOnline. "I have just one data center. Hosting the LMS there with no redundancy would be risky. We have decided that we are not going to host our own LMS."

Redundancy concerns aside, the reality of straitened budgets also made Salem State's decision to outsource the LMS hosting understandable. Last year, the 15,000-student school was forced to lay off five of its 47 IT employees.

Outsourcing its LMS has not spared Salem State from platform churn, however. UMassOnline, which has acted as an ASP for 10 colleges outside the University of Massachusetts system, recently announced that Blackboard will not support its current LMS platform beyond February 2013.

Salem State will soon have to decide whether to stay with UMassOnline, which is going through its own LMS selection process, or go a different route. "Migrating courses to a new system can be painful," says Ainsworth. "The big horror story is if you outsource your data center and then try to move to a different hosting service or bring it in house. That is the most painful."

Finding the Right Partner
Salem State's hosting options have definitely expanded since it first contracted with UMassOnline. Cloud-based offerings from vendors now offer schools a viable alternative.

A Cloud on the Horizon

The proliferation of cloud-based solutions from vendors represents the biggest threat to university ASPs. Certainly, the number of schools with which Drexel University (PA) works has leveled off, according to John Bielec, Drexel's CIO. "People have an increasing range of options in terms of hosting and running software," he explains.

The competition appears to be centered primarily on the LMS market, since university ASPs have difficulty competing in other arenas. For instance, Drexel gets two or three calls a year from schools interested in its offerings involving finance, human resources, and student portals, but partnering on back-office applications is a more difficult decision because it involves trusting another school with your data and giving up a certain measure of control. As a result, Drexel hasn't seen much expansion there.

Administrators at the University of Cincinnati, which started as a Blackboard-based ASP in 2004 for three schools and now serves 10, also have doubts about whether they can continue to develop their LMS model. "That is the $10,000 question," says Michael Lieberman, UC's interim vice president and CIO. "We have only lost one school customer. What we hope is that it will stay stable and we can keep all the small schools we have now. But we don't have any others on the horizon."

The increased competition could work to the advantage of smaller colleges looking to lock up an affordable, reliable hosting solution. It certainly paid off for Owens Community College (OH), a two-campus institution that had been hosting Blackboard in house but was struggling with technical issues. In 2009, a planning team analyzed the costs of keeping operations in house or outsourcing them--either to Blackboard ASP Services or the University of Cincinnati. The team recommended UC's hosted solution.
Among its findings:

  • UC had a proven track record of hosting Blackboard for a number of Ohio colleges and could allocate more staff to back-end operations than Owens could.
  • UC agreed to conduct three training sessions per year on the Owens campus.
  • The quote from Blackboard ASP Services was substantially higher than that of UC.
  • The cost of keeping Blackboard in house was only 1.5 percent lower over three years than of outsourcing it to UC.
  • In an outsourced environment, the Owens Blackboard administrator would be able to give his undivided attention to customized scripts and the Blackboard snapshot, improving that aspect of the operation.

Freed of having to resolve back-end technical issues, the college might be able to save money in technical support costs.

For its part, UMassOnline plans to continue offering hosting services to other colleges. "We have had a number of new schools interested in the hosting arrangement and we have told them to wait until we are further along in the procurement process to see if they are still interested," says UMassOnline's Udas.

UMassOnline is anticipating bids from a number of vendors, and the system could be open source, but multi-tenancy is part of the deal, no matter what, "Whether five or 15 schools, the architecture would be similar," he says in reference to the five UMass campuses that he must support.

For any small school considering a hosting relationship with a university ASP, it's imperative to identify precisely what it expects from the relationship.

At Salem State, Ainsworth takes the approach that her relationship with UMassOnline is no different from the ones she has with commercial vendors of software services. "We have to treat UMass just like any other hosting vendor in formal negotiations," she says. "They must compete on the same footing. It is not a different type of relationship."

The relationship between Drexel and its client colleges, on the other hand, tends to be more collegial and casual. According to Bielec, Drexel's 80-person IT staff treats other schools the same way it does its own internal colleges. "We have a business college, an engineering college and we have Cabrini College," he says.

While a legal contract is still advisable, this kind of collegiality is what makes a partnership with another university appealing to many smaller schools. Certainly, Owens feels that its partnership with UC carries benefits that a commercial hosting service would be unable to duplicate.

For example, the group of UC customer schools meets regularly to talk about changes they would like to explore. "I think there is strength in numbers and we have a better voice in working with Blackboard," says Karamol.

He also points out that UC finds workarounds for issues facing Owens that Blackboard itself might not have found. "For example, we have numerous start dates at the beginning of a semester," says Karamol. "This required modifications that UC was willing to help us make."

That's not to say there haven't been some rocky moments, especially in the beginning. A fire in the UC data center knocked Owens out for the better part of a day. "We also had a single sign-on system that required some changes," recalls Karamol. "But once we smoothed out those early glitches, my department has been very pleased with the service."

A Contract Job

The decision to hand over a mission-critical application to be hosted by another university inevitably comes with its share of angst. Surprisingly, Drexel University (PA), which pioneered the concept of the university ASP, doesn't have detailed service-level agreements (SLAs) with its partner schools. "It's more of a handshake," says John Bielec, Drexel's CIO. "The schools get the same level of service as Drexel colleges. So if there is a problem, it [usually involves everyone] and gets resolved quickly."

But some CIOs from smaller schools believe that a contract is essential--and that it pays to pore over it closely.

"I have learned that in working on any type of agreement like this you have to bring with you a lawyer who is very well versed in technology contracts," says Patricia Ainsworth, CIO of Salem State University (MA). "You can't just take what they hand you and sign on the dotted line. You have to write it yourself to protect yourself."

Mikael Blaisdell, a California-based consultant on software as a service, agrees with Ainsworth. He suggests that SLAs must cover not only operational uptime guarantees and what happens if they aren't met, but also security and backup resources. Customers should also ask what kind of access the host will provide to its customer support team and about response-time guarantees.

But the biggest issue, says Blaisdell, is access to the customer's own data if the client decides to go somewhere else. "While many SaaS vendors are happy to provide a lot of assistance in creating an on-ramp to migrate data into their system," he explains, "the customer must plan on an eventual exit and make certain that the 'off-ramp' is going to be as easy to use. Nothing lasts forever."  

Drexel recognizes that partnerships can end and gives schools a 30-day out. Furthermore, Bielec believes schools can change hosts quite easily, at least when it comes to learning management systems. "We don't want to play a blame game or keep them using a system if the arrangement is not working for them," he states.

A Matter of Perspective
UC has also benefited from the relationship in ways that go beyond simply financial. "The revenue we receive has helped fund some internal positions to support Blackboard," notes Foster, "but I think the quality of the experience of users on the UC campus has been improved. In terms of Blackboard adoption, we now get 10 perspectives, not just one. We share perspectives and it really is a consortium."

UC's path to becoming an ASP was not part of a grand strategic plan. Indeed, IT executives had never even considered hosting applications for other schools until 2003, when they were contacted by the Archdiocese of Cincinnati's K-12 schools for information about their experience adopting Blackboard.

"After those discussions, we thought perhaps we could offer a hosted solution, and it evolved from there," remembers Foster. A survey found that many regional higher education institutions were interested, but it took several months to get established.

A state-level organization called the Ohio Learning Network served as a catalyst by subsidizing the software licenses for the smaller schools. But with budget cuts looming, those subsidies may be cut, says Michael Lieberman, UC's interim vice president and CIO. A group of public university CIOs in Ohio is exploring other shared software services, as they see the budget cuts coming next biennium, he adds.

Despite the uncertainty surrounding her own school's relationship with host UMassOnline, Salem's Ainsworth believes hosting arrangements between large and small schools probably will proliferate, simply because small schools can't afford to do as much on their own. She believes Massachusetts should follow the model of states such as Connecticut and New York by creating a statewide infrastructure for an LMS and then requiring all schools to use it or buy their own. "That is a political battle because it gets into turf wars and talk of unfunded mandates," she admits. "But I think it makes sense for all state schools to be in on one centrally funded project."

Related Reading

For an in-depth look at Drexel's experience hosting software, see "The Application Service Provider Model at Drexel."

For schools that don't want to host mission-critical applications in house, there are options beyond the host-client approach. In "Beyond ASP: Shared Services," CT profiles an innovative partnership between two Ohio schools.

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