Outsourcing
Outsourcing Turns IT Leaders Into the New Air Traffic Controllers
As more higher ed institutions turn to different outsourcing models--traditional, cloud-based, or consortial--IT leaders must manage, monitor, and integrate technology solutions from all directions.
One of the first things Steve Swartz did after being hired as CIO at Fitchburg State College (MA) in 2008 was to test the responsiveness of the outsourced IT help desk.
"When I interviewed for this job, the school president told me I had to improve customer service in IT," he recalls. He soon found out why. "I waited 44 minutes before [the help desk provider] answered the phone."
On his first day, Swartz found on his desk a 2-inch-thick stack of help tickets, all with elements that were wrong--for example, callback requests with no phone number on the ticket. "This was killing us," he says. "Your reputation is made or broken by how the outsourcer does customer service. It couldn't have been going south any worse."
But rather than bring tier 1 help desk support back in house, Swartz switched to another outsourcing operation, Perceptis, and has witnessed a dramatic turnaround in customer service metrics and perceptions. Now the average time on hold is 38 seconds, he says, and in a survey, the number of "extremely satisfied" customers jumped 63 percent in the first year.
A Matter of Priorities
Many in Swartz's generation of CIOs have come to accept and even embrace the role of outsourcers in their portfolio of IT services. In 2009, 47 percent of the 352 CIOs surveyed by the Center for Higher Education Chief Information Officer Studies (CHECS) said they had selectively outsourced some part of the IT function, up from 43 percent the previous year. Meanwhile the number of CIOs reporting that they retain exclusive control over their IT functions dropped to 52 percent, from 55 percent in 2008.
UC-Davis Pulls Plug on E-Mail Outsourcing Pilot
One risk with outsourcing to the cloud is that service vendors may not be as attuned to privacy issues as academic institutions would like them to be. For example, outsourcing student e-mail to Google has become almost commonplace on college campuses, because it can offer cost savings and greater storage capacity. Yet after a pilot project last spring involving faculty, staff, and student e-mail, stakeholders on the University of California-Davis campus had enough concerns about privacy issues that they decided to seek alternatives.
"I use Gmail myself every day for personal use. It is a great service," says Peter Siegel, CIO and vice provost at UC-Davis. "But it became apparent to our faculty that when you are working with innovative companies, and evaluating their current capabilities, it is not always clear where they are going."
Indeed, Google's hallmark is rapid change. From the contractual language, for instance, it was not clear to UC-Davis officials that data moved from e-mail to a calendaring system would have the same level of protection as in e-mail.
"Our faculty wants content protected to a higher standard--as though it were all legally protected information," Siegel says. "The view of our faculty is that we can't validate that this is not a problem. When I have talked to other schools about these concerns, they talk about the way the system works today, but they don't realize that this is a dynamic architecture."
The governments of Canada and France also have expressed concerns about Google's privacy policies. "These are not just university concerns," Siegel says. "Respectfully, I think Google has not paid as much attention to building confidence in privacy policies as it should."
John Nicholson, an attorney in Pillsbury Winthrop Shaw Pittman's Washington, DC, office and a member of the firm's privacy and data protection practice team, draws a distinction between student and faculty e-mail. Many students have a Gmail account when they arrive to campus and will keep one after they leave. So their college experience is just a phase in their relationship with Google, and their e-mails are much less likely to contain data subject to restrictions, he says.
"The e-mail of university employees, however, could contain information about their research work with other campuses, and their employment relationships, and it might involve issues of e-discovery subject to university use policies," he points out.
Cloud service providers are trying to find a balance between negotiating and holding the line on policies, including privacy provisions. "Large universities are used to negotiating terms with outsourcing suppliers and getting their way much of the time," Nicholson says. "Companies like Microsoft and Google are not used to that type of negotiation, so there is still a tension to be worked out there."
Meanwhile, Siegel says UC-Davis is looking at creating an internal cloud solution for e-mail that may include the UC-Davis health system and potentially other UC campuses. "For the next few years, we believe we might be able to get the same kind of savings as cloud," he says, "if we scale it large enough and still host it internally."
Especially at small colleges and universities with lean staffing, outsourcing services that are seen as commodities is freeing up staff members to focus on core business and instructional applications.
For instance, the bad experience with one outsourced service provider didn't sour Swartz on the concept. "If our president offered me the funds to hire the staff internally, I would tell him no," he says. "I would much rather spend that money on IT efforts that improve the educational experience, such as a lecture capture project. [Help desk] work is pretty low-level. Sixty percent is password resets. I don't want to hire people to stare at the phone waiting for it to ring."
Swartz has heard outsourcing described as a slippery slope, and naysayers warn that soon he won't have any skilled staffers left, but he doesn't see it that way. "We outsource things that are pretty low-tech and high-volume. But other things that are very technical, such as network administration, I can do at a far cheaper rate with employees than if I paid someone outside to do it."
The trend toward outsourcing is on the upswing partially because of the economic downturn, says Geoffrey Tritsch, vice president of Vantage Technology Consulting Group, an IT consulting firm focused on higher education and healthcare. Many schools are facing the fact that their systems need upgrading. With freezes on capital budgets, outsourcing is seen as a way to improve service without raising capital and personnel costs, Tritsch says.
Besides traditional outsourcing arrangements, newer cloud-based services are becoming popular on the promise of increased scalability. "If you buy an asset, you have to make sure it will meet needs now and in the future," Tritsch explains. Cloud-based outsourcers, he points out, offer the possibility to have that scalability without having to pay for it up front.
'The Game Has Changed'
IT leaders at large research universities have needs and responsibilities that are different from their counterparts at small liberal arts colleges, and have more resources at their disposal. That means they may have more in-sourcing options to weigh and more leverage in negotiating with outsourcing firms.
The increasing availability of cloud-based and software-as-a-service options is also changing perceptions of the IT function on campus, say some large-school CIOs.
A few years ago, universities typically outsourced an IT function in its entirety. But now, "the game has changed," says University of California-Berkeley CIO Shel Waggener, noting that it's becoming less common to buy an entire solution and more common to use an assortment of smaller services.
OUTSOURCING WISDOM
Pay as much attention to the terms for exiting a contract as to service levels, even if it makes you uncomfortable. "A prenuptial agreement is always an awkward conversation to have. Nobody wants to think about breaking up at the beginning of a relationship--in life or in business."
--John Nicholson, an attorney with Pillsbury Winthrop Shaw Pittman
The combination of in-sourced and outsourced services can also be a bit of a mixed bag. For instance, UC-Berkeley might permit faculty and staff to use Skype and other free Web-based tools in lieu of a sophisticated videoconferencing system, and while that choice would save money, it would also raise security, efficiency, and integration issues.
That kind of exposure doesn't put off Waggener, but it leads him to describe the IT leader's role as less a technology czar and more an air traffic controller who can "monitor and align solutions," he says.
At Berkeley, Waggener is reshaping his information services and technology department into four segments: infrastructure services, data management, application services, and client service teams. This last group is made up of technology account managers who can help departments piece solutions together from both internal and external offerings. "It requires a new skill set," he notes. "It is not a core technologist and not a technical design architect but a new role in the middle."
Staffers' skills will have to evolve, he adds, to understand what vendor lock-in means when it isn't about capital outlay, but about contracts and transition costs. "They will have to work more closely with the university contracts people," Waggener says.
All of these changes may involve IT giving up some control in exchange for richness of features and rapid deployment, he adds.
Vantage Consulting's Tritsch agrees. "You have to get past the idea of IT as a central organization that does things to other people and see it more as a resource partner," he says. "That is a relationship that doesn't exist at a lot of schools and it is a fundamental change that this move to outsourcing is helping to drive."
Managing a Portfolio of Business Models
Another metaphor for the role of CIO in an increasingly outsourced world is portfolio manager, which is how Lev Gonick of Case Western Reserve University (OH) sees his job. Overseeing, tracking, integrating, investing, and divesting in a wide array of external and internal resources has become the new way life for the CIO of the Cleveland-based research institution.
The long economic downturn has created a set of drivers for CIOs to ask what value-added services they are providing, he says, and Gonick, like any good portfolio manager, is determined to have Case Western take advantage of emerging business models, from open source solutions, to public and private cloud services, to university consortia working on shared services.
Antioch: Outsourcing the Whole Enchilada
It's still rare for a university to outsource its entire IT function. But after an unsuccessful attempt to centralize IT services across its five campuses in four states, in January 2010 Antioch University (OH) entered into an agreement with SunGard Higher Education that includes all IT services and management.
"Centralization, even without outsourcing, was controversial," says Toni Murdock, Antioch's chancellor. "These campuses pride themselves on independence."
Previously, Antioch had great disparity in the quality of IT services on its campuses. "We had five development offices all using different software packages," she says. "And though we had a common administrative software package, we didn't get proper training, so many features weren't being used to capacity, and people were keeping financial information in their own Excel spreadsheets."
Although it is too early to evaluate the outsourcing deal, Murdock says SunGard has been aggressive about eliminating redundancies in software licenses and plans to take over IT help desk support from another outsourced vendor. It is working on a five-year strategic plan and has created a governance structure that didn't exist before. "We now have an IT steering committee looking at the 30,000-foot level and committees around administrative applications and academic technology," Murdock says.
She senses that SunGard brings expertise from its experience working on other campuses.
"We are a small institution, and to hire top-caliber people to lead IT is difficult and costly," she adds. "But with SunGard, I feel like there is a whole team of experts behind the person assigned to Antioch."
Case Western already has taken a few different innovative approaches to outsourcing. For instance, six years ago, rather than just turning help desk service over to a commercial vendor, it helped establish the for-profit company Perceptis that Fitchburg State now uses.
"Like most campuses, our help desk was undercapitalized," Gonick recalls. "We were not in a position to make the capital investment to create a distinctive, first-class service." But after surveying commercial offerings, Case Western IT executives felt that there might be a gap in the market for help desk services focused on higher education. "We decided that rather than see that as a problem, we would look at it as an opportunity to help create a business."
By making a long-term commitment to the startup, Case Western helped to draw acceptance and venture funding to the company. Case Western even had an option to be an equity investor but chose not to exercise it.
The whole arrangement "has definitely led to a better experience for our campus community," Gonick says.
OUTSOURCING WISDOM
No contract is perfect the first time around. So you need a vendor partner that is flexible enough to agree to modify what you have created. "If a vendor is unwilling to do that, you do not have a good long-term relationship."
--Steve Swartz, CIO of Fitchburg State College
The university has innovated in other IT areas as well. In 2003, Case Western helped establish a regional nonprofit group called OneCommunity to offer regional high-speed Internet access and network services. "We reached out to healthcare, government, and museums to build an organization to handle both the network plumbing and thought leadership," Gonick says, "and the usage has just exploded. We are expanding from 23 to 48 counties in Northeast Ohio. And aspects of our network management have been handed over to the nonprofit, so that is one less thing we have to do."
The Consortium Model
A cross-institutional collaborative approach to aggregating both demand and IT expertise has long been an option for major research universities through organizations like DuraSpace, Kuali, and HathiTrust. But small schools are turning to a consortial approach as an outsourcing option.
West Los Angeles College started offering online courses in 2000 and used Pearson eCollege for three years. Eric Ichon, dean of distance learning and instructional technology, liked the solution but, at $30 per enrollment, found it too expensive as enrollment grew. Instead of seeking another course management vendor, he turned to a nonprofit consortium called Etudes that grew out of tools developed in-house at Foothill College in Los Altos Hills, CA.
At about $1.30 per enrollment, Etudes presented a lower cost option that still offered comprehensive course management software and additional benefits of training, access to user groups, and support, Ichon says. "We have been pleased with all the services available to us," he says. "With online user groups and conferences, it really is a community, and the enhancements do seem faculty-driven, which I would say is quite unusual for course management systems."
Vivie Sinou, executive director of Etudes, which has 25 member institutions, says vendor price increases and state budget cuts combined to force community colleges to seek alternatives. "This outsourcing model really grew out of a need to become more efficient and to leverage IT resources in a way we hadn't done before," she says.
In the market for an enterprise portal last year, Mark Shor, CIO of 17,000-student Touro College in New York, surveyed the market and found options ranging from $200,000 to $600,000 per year, just for software licenses.
Turning to the nonprofit CampusEAI Consortium, Touro received a grant that brings the cost of a hosted myCampus enterprise portal, identity management, and single sign-on solution to $30,000 per year. "The application integration is a huge benefit," Shor says. "We couldn't do this work in-house."
Sinou thinks the consortium trend will continue. "Small colleges don't have funding to create and support in-house services the way a large university can," she says. "But if they join forces and each put up some dollars, they can create something much better."
The Challenge of the Decade
Integrating outsourced models--whether traditional, cloud-based, or consortial--into IT strategic plans is the challenge of the decade, believes Case Western's Gonick.
"We are fundamentally being more proactive about looking at technology as a service," he adds. "We are exploring other possibilities for consortium activities in standing up the infrastructure for research or storage or ERP in the cloud."
He notes further: "Two years ago there were many fewer CIOs talking about this. Today we are very pleased that not only are more talking about it, they are actively engaged and we can learn from others' experience."
