In Enterprise Technology Operations, Sometimes It's Not What We Buy but How We Buy It

As a veteran technology leader in higher education, I could not begin to count the hours that I have spent either on the phone or in person with hardware and software suppliers, negotiating (occasionally begging) for better prices. Every higher education institution I have served over the past 26 years has had some initiative to cut costs and improve efficiency. Over the past five years, though, the situation has gotten significantly worse, with many institutions pursuing different approaches to providing services in an effort to squeeze blood from the proverbial turnip. For the past three years, I have worked to build a consortium of private colleges and universities — the Higher Education Systems and Services Consortium (HESS) — and currently lead the technology contracts category for E&I Cooperative Services, and during that time, I have realized that it is not always what we are buying but how higher education technology organizations are buying that is the core challenge.

The market dynamics for higher education technology are changing quickly, with many valued software vendors being acquired by corporate holding companies.¹ These companies operate based loosely on the assumption that by consolidating — to a degree — an industry’s competitive environment, they can control pricing and maximize profits at 5% or more annually. This puts technology companies in the difficult position of being expected to generate 5% net revenue year after year. With the generally accepted cost of living increase at 2% annually, rate hikes and/or scaled-back services rule the day. The technology companies many times aren’t to blame because the mandate comes from the board of directors of the holding company that owns them. Think back — is it not true that there are many fewer companies today competing in the software and (viable) hardware industry?

I am now convinced that until we address this core issue in purchasing operations, technology organizations will continue to struggle with strained budgets and receding services in higher education. Private and public funding sources are now stressing the need for collaborative and cooperative purchasing methods to lower institutional costs. Strategic collaborative purchasing and planning in higher education must become a higher priority if we are to continue to provide the best technology resources for our students, faculty, and staff.

Over the years, I have seen firsthand how strategic buying and collaborative agreements have saved millions of dollars for institutions that take the time to find these opportunities. I believe this so strongly that I recently made the decision to leave my role as a CIO in higher education to lead the development of new and broader competitive contracts in higher education at E&I Cooperative Services, a not-for-profit shared-contracts organization. In fact, I found a new passion for this work in helping to found and run the HESS Consortium, and I strongly believe that these collaborative efforts can make a large, positive impact on our operations.

How do these cooperative services help save money? Fundamentally, they allow many institutions to purchase together for economies of scale from shared, collaborative contracts. But this is only one way they help IT organizations. Collaborative contracts help save resources for both the buyer and the seller. As I said, many vendors are in a pinch, too. These contracts cut time and energy by providing a single point of pricing and process, as well as terms and conditions for both institutional buying agents and hardware and software suppliers.

Cooperative services such as E&I have experts in the area of managing and negotiating public and private competitive contracts, as well as teams devoted to sharing and supporting these contracts for institutions. As a former technology leader, I think of them as an operational partner for contract services, facilitating work that is not central to the core mission of the institution or business. In my opinion, it is the single most often overlooked way that technology operations can cut time and cost in higher education. And now, in this new economy, institutions desperately need these services to run their operations with the greatest efficiency.

These benefits are not only for colleges and universities but also can help hardware and software suppliers reduce their costs so they can pass savings on to higher education. My organization helps suppliers navigate and comply with state and federal procurement regulations, communicates product and services contracts to member institutions, and supports the use of those contracts for the institutional buyers in many different areas.

It is time to come together to create a new approach to strategic technology buying in higher education. I hope you agree, and I hope to see you take part in streamlining the way we all do business in our colleges and universities each day. It is still true that we can all do more together.

Note

1. For example, see Jeffrey R. Young, “Education-Technology Giants SunGard and Datatel Announce Merger,” Chronicle of Higher Education, August 5, 2011; Liana B. Baker and Greg Roumeliotis, “TPG Close to $3.5 Billion Deal to Buy Ellucian - sources,” Reuters, August 12, 2015; and Steve Shenk, “From Local Threesome to National Jenzabar,” Crossroads, Eastern Mennonite University, January 13, 2015.

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Keith Fowlkes is vice president, Technology Contracts Category, E&I Cooperative Services, and vice president, Board of Directors, and executive director for Technology Partnerships, The HESS Consortium.