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 for hardware and software. Every higher educational institution that I have served over the past 26 years has had some initiative to cut costs and improve efficiency. Over the past 5 years though, it has been much like trying to squeeze blood from a turnip, trying different approaches to providing services. Over the past 3 years in our work building a consortium of private colleges and universities (the Higher Education Systems and Services Consortium- HESS) and now leading the technology contracts category for E&I Cooperative Services, I have realized that it is not always WHAT we are buying but HOW higher educational technology organizations are buying that is the core challenge.
Our higher education market dynamics in technology are changing quickly with more of our valued software companies getting acquired by corporate holding companies. These companies are loosely based 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 our valuable technology companies in a very difficult position of having a mandate of 5% net revenue year after year. With their costs rising by an average of 2% annually, the rate hikes and/or scale backs in services rule the day. The technology companies many times aren’t to blame since 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 few companies today competing in the software and (viable) hardware industry?
I am now convinced that until we address the core issue in our 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.
I have seen firsthand over the years how strategic buying and collaborative agreements have saved millions of dollars for institutions who take the time to find these opportunities. I believe this so strongly that I recently made the decision to leave my role in higher education as a CIO 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 have 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 much larger 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 of our vendors are in a pinch too. These contracts cut time and energy by being a single point of “best of breed” pricing and process as well as terms and conditions for both institutional buying agents as well as for hardware and software suppliers alike. 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 best efficiency.
These benefits are not only for the institutions but can help our hardware and software suppliers reduce their costs so they can pass savings on to us. My organization helps suppliers navigate and comply with overwhelming state and federal procurement regulations, communicate products and services contracts to our 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 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.
Thanks for reading my thoughts and have a great day!
This article was published in EDUCAUSE Review on July 3, 2017 at https://er.educause.edu/blogs/2017/7/in-enterprise-technology-operations... online.