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October 30, 2008

On Strategic Outsourcing and the Future of IT on University Campuses

Here is a loose transcript of my comments on Outsourcing/Insourcing at this year's Educause point/counterpoint session.

a.In general, this is not a conversation about a set of binary choices.
b. This is also not a conversation about tactical outsourcing for discrete activities. That process has long been understood as an important option in the tool box of the CIO.
c. As CIO I view my human, technical, and financial resources as a portfolio to be managed
d. The twin drivers that dictate how I manage that portfolio are shifts in the internally-focused eco-system as well as exogenous dynamics outside the university, in the broader marketplace.
e. Once the University eco-system was the more dynamic of the two eco-systems. That is largely speaking no longer the case. We created organizations back in the late 80s and 90s that were architected to reflect our earlier role as developers and creators of technology in the technology development and deployment cycle. Speed and scale are now favoring the external environment. The consumer and market-supported enterprise environment. Many of our organizations remain calcified.
f. In a resource constrained environment, coupled with an ever growing set of expectations driven by the externally-facing marketplace tightly coupled with accelerated expectations within the University, IT organizations need to both reflect and re-position themselves. It is a classic conversation around core and context which makes intellectual sense. Most higher education institutions are budgeting, and reward systems are slow to move and are at best incremental. Thus there are few apparent incentives to be more aggressive, agile, and responsive. Where specifically and precisely do IT organizations bring value add to the mission of the Universities and the constituencies that they serve? Everything else is context. Whether Universities IT staff and service lines should in the context portion of the portfolio is what CIOs are paid to sort out through governance.

Here are three examples looking at customer satisfaction, commodity services, and emerging technology. In each case, we look to strategically outsource, not to existing providers but rather in identifying gaps in the marketplace, trying to creatively and collaboratively set up new service models and service organizations to attend to the opportunities.

(1) Help Desk. There are relatively few examples of best practices in the area of enterprise call centers or IT help desks within HiEd. They are typically under-capitalized, relatively poorly staffed, tooled, and managed. In many cases, help desks are still structured and supported through the organizational lenses of the mainframe era. There are silos of uneven support throughout most campuses
In 2003-04 we supported the creation of PerceptIS as an LLC with initial equity options. The management objective was to create a new organization, a break from the past, that would be created in support of a customer-centered, 7*24*365 environment, fully tooled, and managed based on best practices. Our goal was not to create PerceptIS as the call center for Case Western Reserve University, or even NEOhio. Our goal, from the outset was to create an organization with core competencies in this customer-facing arena and turn a context-services into a core services of a for-profit organization to service the broad education sector. We also wanted to leverage the growing availability of unified messaging services and encouraged the new company to become the ‘jet blue’ of call center technologies offering home-based, multi-lingual services homing, wherever possible back to Cleveland. We also wanted to encourage the development of a call center technology platform which would enable real time customer relationship management starting with proactive knowledge through our online directory services of the customer as they called, IM’d, or submitted on-line request for services. The company has grown more than 6 fold in the past 3 years and is servicing customers on both coasts and is about to move into expanded call center facilities in Cleveland.

(2) Networks in the research and education arena are sacred cows. In 2003 (5 years ago) we set out to create a non-profit that would create value-add in what was emerging as a commodity services line in the provisioning and continuous availability of massive amounts of bandwidth. The new organization is known as OneCommunity. Today in Northeast Ohio it services over 150 organizations in 22 counties connecting 1500 facilities and enabling the servicing of a huge ‘campus’ supporting passive gigabit on our intranet and aggregating 5+ Gigs of commodity internet (to supplement the specialized research needs on NLR and I2 which it also aggregates on behalf of NEOhio). Not only has this aggregation and co-operative model helped to drive down the cost of commodity bandwidth by more than 50% (because the P/L for this service line is discrete and based on cost-recovery), OneCommunity has managed to take a commodity service in which faculty, students, and staff simply expect it to be there, like digital air, and turn that contextual service into a core competency and a strategic play. Connect, Engage, and Transform has become the tag line for this organization that began with 1 seconded IT engineer from Case Western Reserve University and a volunteer. Today, 5 years later, this non-profit has nearly 40 FTE and a budget approaching $20m. It has just begun to develop a national center of excellence in community networking with support from a $25m grant from the Knight Foundation.

(3) CampusEAI is the third example. At the time, I felt the need to accelerate the adoption of what was then a new and emerging technology. The space was portals and integration services. This community-source project has evolved and while it provides the University with a modest revenue stream through a royalty licensing agreement, it now services and even hosts portal and adjacent services in more than 100 campuses around the world, again, based in Cleveland, Ohio.

Whether it is a case of customer service ‘need’ (PerceptIS), commodity services being elevated to a strategic play (OneCommunity) or an approach to emerging technology (CampusEAI), it is important for us to think about the balance in advancing the mission of the institution as well as laying down new tracks. In each case as we look to strategically outsource we are looking to shift our limited fiscal and human resources in favor of value-add to the core mission of the institution and our role as stewards of the University’s investments in IT. Rather than simply pursue an RFP for outsourcing, where possible, we have tried to determine whether there are opportunities to create unique value propositions to service our Higher Education sector and/or our region as we grow the outsourcing partnerships.

The global economic meltdown is going to have dramatic and profound impacts on Universities and their IT organizations. Before state legislatures and/or Boards of Trustees mandate cuts or outsourcing solutions from the barrel of a gun, we, the CIOs and other IT leaders on campus should proactively engage in serious conversation on generating shared services models to improve service, leverage new generations of scalable technology, and save the institution resources. Failure to act comes at our own peril.

Lev Gonick
Case Western Reserve University
Cleveland, OH 44106
October 30, 2009

Posted by lsg8 at October 30, 2008 09:48 AM

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