Mixed Results of Technology Outsourcing

it-fyi: Mixed Results of Technology Outsourcing (Chron of Higher

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Mon, 25 Oct 1999 09:00:53 -0500

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Subject: it-fyi: Mixed Results of Technology Outsourcing (Chron of Higher

Date: Mon, 25 Oct 1999 09:00:53 -0500

Technology 'Outsourcing': the Results Are Mixed

By GOLDIE BLUMENSTYK

Betty B. Friedman begged and cajoled for two years before the tech-support
people at the College of Notre Dame provided her graphic-arts students with
their own computer laboratory.

Holding the classes in the college's Macintosh lab just wasn't working, she
says. Not only was the space too cramped for art projects, but the computers
were always being reconfigured by students and professors from the education
department to suit their software, and by other students who used the
computers for various assignments. That messed up her students' specialized
software for photographs and design, leaving them frustrated and unable to
do their own assignments.

But the people in the college's Office of Information Technology -- employed
not by Notre Dame but by Collegis, a company hired by the college -- had
their own ideas about efficiency.

"They thought I was a flaky artist," Ms. Friedman recalls, and they didn't
appreciate the academic issues involved. "As a whole, they didn't understand
the graphic-design needs" of the program.

Additional complaints echoed in other corners of this compact, hillside
campus: The computer-science department grumbled about the maintenance of
its UNIX lab; business professors griped about slow response times for
fixing computer glitches and rapid turnover within the Collegis staff;
people in the communications department were annoyed that Collegis seemed to
be forcing upon the college a brand of software that professors felt was
inadequate for creating course World-Wide Web pages.

And nearly everyone, faculty members especially, winced at the realization
that the college was forking over about $700,000 a year to Collegis -- a
considerable sum for an institution that has sometimes had to put off buying
badly needed computers because fewer students enrolled than the budget
planners had projected for that year. Notre Dame's operating budget is just
over $22-million.

Such clashes are not uncommon for the small but growing number of
institutions like the College of Notre Dame that have decided to hire
outside companies to manage their information-technology operations.

While outsourcing can help colleges gain computer expertise quickly and
avoid the hassles of recruiting and retaining technical personnel, the
arrangement can also create problems of its own.

Officials of East Tennessee State University, for instance, say they've
generally been pleased with the strategic-planning and networking projects
that Collegis has undertaken since its arrival there 18 months ago. But the
company hasn't done nearly as good a job at training college personnel to
use a new telephone system, says Burt C. Bach, provost and vice-president
for academic affairs.

Putting outsiders in charge of the computer-users' help desk at East
Tennessee State also created some disruptions. People with computer problems
are no longer assured of getting service from the technician who knows their
department and its needs best, says Mr. Bach.

Collegis's way of assigning personnel "is more rational and efficient" than
the university's, he says -- but "we had not envisioned the cultural
problems." East Tennessee is paying Collegis $7.9-million over five years.

George Washington University, which uses SCT to manage its
administrative-computing systems, says outsourcing gives the university the
advantage of drawing on extra personnel from the company when the workload
demands it. But university officials have been frustrated when SCT takes
expert personnel away temporarily to work elsewhere.

"You have to make sure you're getting the resources you're paying for," says
Lou H. Katz, vice-president for business and treasurer. "If you don't speak
loud enough, people may get moved away from you." George Washington spends
nearly $6-million a year for SCT's services, which keep about about 50 SCT
employees on the campus.

In at least one case, problems between a company and a customer have
escalated into a lawsuit.

Golden Gate University, a Collegis client since 1994, renewed its contract
for administrative-computing and networking services for four more years in
1997. It also engaged Collegis to help create a distance-education program.
A year later, however, Golden Gate terminated the $7.2-million contract,
reportedly because its officials were dissatisfied with the company's work
in developing financial-reporting tools and unhappy with the company's
repeatedly transferring its computer experts away from Golden Gate.

Collegis filed a complaint against Golden Gate with arbitrators, demanding
$1-million in damages. The university, in turn, filed a lawsuit against the
company. Golden Gate and Collegis settled their dispute this past June. In a
three-sentence press release, the university acknowledged that the
company's" past efforts have been very helpful" in establishing the
distance-education program. According to Golden Gate officials, a
confidentiality clause in the settlement prevents them from discussing the
situation further. The college now manages its own information-technology
operation.

Collegis agrees that it had a problem with the contract, but says that the
issues were resolved and that, in the words of its chairman and chief
executive, Robert Lund, "we walked away friends."

Michael R. Zastrocky, an analyst who follows higher education for a
technology consulting company, the Gartner Group, says such conflicts give
pause to many institutions that might otherwise consider
information-technology outsourcing.

"There is still a lot of fear" among colleges about outsourcing, he says.
Because computing plays such a central role on campuses, officials are
reluctant to give up control. He estimates that fewer than 2 per cent of the
nation's 3,400 colleges and universities now outsource their
information-technology operations.

Collegis, based in Orlando, Fla., and SCT, in Malvern, Pa., are the biggest
outsourcing companies for information technology in higher education.
Collegis says it has 35 clients, nine of which it signed up this year. SCT
reports 21. Some colleges employ smaller outsourcing companies.

Collegis, known at the time as Technology Solutions Inc., was smaller and
under different management at the time the College of Notre Dame signed on,
in 1995. And while matters have never reached the lawsuit stage, the
relationship has been rocky from the start.

Only now, after rewriting portions of the contract to make it much more
specific about Collegis's responsibilities, do Notre Dame administrators say
they feel comfortable about the college's relationship with the company.

"It's an arranged marriage, and we've learned to love each other," says
Lucille Sansing, vice-president for academic affairs.

Still, some faculty and staff members are not smitten. Even administrators
who support the Collegis arrangement say Notre Dame's experience --
including some missteps and financial limitations on the college's part --
illustrate the difficulties of making outsourcing work.

If colleges think they can just hire an outsourcing company and then look
away, they are mistaken, says Carol Probstfeld, vice-president for
administration at Notre Dame, who guided the rewriting of the Collegis
contract. "That's not the reality."

One of the most important steps in starting out, say Notre Dame officials,
is to be as precise as possible about what you're looking for. That is
easier said than done, though. "If you're outsourcing, you probably don't
know what your needs are," Ms. Sansing says. "You just know you have needs."

Despite its location in the heart of Silicon Valley, the College of Notre
Dame was not especially wired in 1995. Fewer than 50 of its 200 full-time
faculty and staff members had computers on their desks. The campus had no
computer network or direct access to the Internet. Some of the computers in
the student labs dated from the late 1980s.

But the president, Margaret A. Huber, was eager to advance the computing
mindset at the college, as were a few tech-savvy professors. Having served
as president of a comparable institution, La Roche College, in Pittsburgh,
she knew that hiring and keeping qualified computing personnel were
headaches she didn't want. At a small institution like Notre Dame, which has
about 1,700 students, "you don't have the layers of people to worry about
the hiring and the training," Ms. Huber explains. That's especially true in
northern California, she adds, where the market for information-technology
workers is hot.

In its first four years at Notre Dame, Collegis did help get the college up
to speed. The company assisted in developing a computer network and oversaw
the wiring of the half-dozen or so buildings that house most of the
college's academic activities. It supervised the expansion and upgrading of
the computer labs -- there are now about 60 workstations, in four locations
-- and the installation of computer stations for nearly all full-time
faculty and staff members. It also assumed responsibility for managing the
college's administrative-computing system, and upgraded Notre Dame's
telephone systems.

But many of the other benefits the college expected from Collegis were slow
in coming. The academic liaisons that Collegis brought in to help professors
learn technology, for one, "weren't clicking" with faculty members, says Ms.
Huber -- either because the company's employees "weren't good clickers," or
because the professors resisted their approach.

Others here say they were disappointed that Collegis, despite being well
compensated, didn't help the college enough in developing its own long-term
plans for using technology. "What I really was hoping that Collegis would
come with was models from other institutions," says Gregory White, an
associate professor of mathematics and computer science. Knowing how other
colleges set up their computer labs or what sorts of elements belong in an
information-technology plan would have helped Notre Dame do its own planning
better, he says. With its limited resources and small roster of full-timers,
the college was hard put to locate expertise on its own.

Collegis also annoyed some professors in recommending that they all use a
particular brand of software, Web Course in a Box, to create sites for their
courses on the World-Wide Web. Faculty members found the product unsuitable,
and the college eventually chose a different program, WebCT, after Collegis
helped coordinate a faculty-led evaluation of several alternatives.

Ms. Probstfeld, the vice-president for administration, says the college
shares some of the blame for the software problem. "In the absence of us
planning, they were making decisions for us," she says.

Collegis, for its part, was stymied by the college's unpredictable finances.
Robert Snyder, the company's first site director on the campus, recalls that
during his first summer, he was delayed in buying and installing new
computers for the labs because a vice-president wouldn't release the funds
until the fall. Other officials later explained that the college had become
accustomed to spending tuition revenues only when it was sure that the
projected number of students had actually enrolled.

Mr. Snyder, who left after two years, is now pursuing a graduate degree in
Asian philosophy at the University of Idaho. His successor stayed 18 months.
The college's new site director -- its third in four years -- is Paul W.
Bishop, who held a similar position at Golden Gate and also was the
company's director of instructional technology.

Of Collegis's seven employees at Notre Dame, only one who started out four
years ago is still here. Mr. Bishop is looking for someone to fill the
academic-liaison slot, another post that has turned over twice.

Roger Goodson, chairman of Notre Dame's business-administration department,
says the turnover has been disruptive to faculty members, many of whom are
themselves struggling to master computing skills. Many also felt that the
company wasn't giving the college's fledgling computer effort as much
technical support or assistance as they had been led to expect.

According to Mr. Goodson, the expectations were high because the contract
with Collegis wasn't precise enough -- "loosey, goosey, and playful," as he
describes it. As he and others note, few of the proposed projects and
services included either specific timelines or measures for assessing
whether they were completed correctly.

"We were very unhappy with our agreement with Collegis" two years ago, Ms.
Probstfeld confirms. "We've come a considerable distance" since then.

As part of the renegotiated contract, completed a year ago, Collegis is
being asked to meet specific performance standards, such as responding
within five hours to complaints about the administrative-computing system
and within 24 hours to complaints about individual computers. The company is
also expected to insure that the computers in the four labs are operational
at least 95 per cent of the time.

"I realized I needed to be real specific about what I wanted" after talking
with Golden Gate and with Menlo College, another former Collegis client, Ms.
Probstfeld says.

At the same time, the college has adopted policies that will make it easier
for Collegis to do its job. A new policy for deciding which classes will be
held in computer labs, for example, should simplify the task of managing the
labs for open use.

College officials say they are impressed by the expertise of their newest
site director, Mr. Bishop. Unlike his two predecessors, he's knowledgeable
about Macintosh computers and UNIX systems, and that knowledge is helping
him win over key constituencies on the campus.

A former college employee himself -- he was director of computing at
Washington College, in Maryland, from 1984 to 1994 -- Mr. Bishop understands
the small-college culture and its limitations. Unable to proceed with some
additional computer acquisitions and the planned wiring of dormitories
because enrollment this fall didn't meet projections, he is pushing ahead
with other projects, such as additional training, that don't cost as much.

He is also spending a lot of time with the college's Technology Advisory
Council. Notre Dame is still developing its plans for using technology, and
"we need to help them do a better job of that," he says.

Mr. Lund, Collegis's chairman, acknowledges that the Notre Dame case has
been difficult. He came to the company shortly after two venture-capital
firms bought it, in April 1996, and changed its name and management.

Back when the College of Notre Dame was signed up, "our models weren't as
sophisticated or well developed as they are today," he maintains. Collegis
now employs about 550 people, about half of whom joined the company from
institutions where Collegis has taken over computer operations. The company,
which hopes to go public soon, offers stock options to some of its site
managers and senior employees.

For all of its problems, Notre Dame's president says she is still satisfied
that using Collegis makes sense. "I don't think this institution could do
the same thing for less money," Ms. Huber says.

Even critics of outsourcing acknowledge that contracting with a company for
technology services can help colleges like Notre Dame to avoid difficult
compensation issues, because the institutions are spared the problem of
having to offer higher salary ranges to computing professionals than they
provide for their professors. Many technology professionals earn far more
than the $53,415 average annual salary for a College of Notre Dame
professor.

Still, Mr. Goodson and some other professors contend that the college could
save money by phasing out Collegis -- which would eliminate the expenses of
the company's profit margin and overhead -- and developing more expertise
itself.

As for Ms. Friedman, with her nice new computer-graphics lab neatly tucked
away in a corner of the art studio, she is pleased. "It's a great set-up
now," she says, noting that students have room to design logos in pen and
ink, scan them into the computer, and then alter them using Adobe's
Photoshop software.

Well, mostly pleased. Collegis bought higher-end equipment than she would
have, she says. The scanner is so sophisticated that "it's a little hard for
beginning students to use."

And she's still mystified by the furniture -- polished wood desks that fit
together into a long oval, and an upholstered, rollaway chair for each of
the six computers. "They spent half the budget on the table system, which is
gorgeous," Ms. Friedman says. "But I would have rather bought two more
computers."
_________________________________________________________________
Copyright 1999 by The Chronicle of Higher Education

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