Finding tech support outside the school

• By Julie Sturgeon
• 03/01/01

There’s an old business philosophy K-12 school districts today need to heed: When the going gets tough, the tough get out. Business analysts rake in big bucks telling their clients to stick to their core missions and outsource the rest.

Districts Taking the Plunge

Thomas Diggs certainly was no stranger to that philosophy when he agreed to apply his 45 years of systems experience to the Detroit Public Schools reform effort that began with dramatic front-page headlines in early 1999. Appalled at student performance rates, Michigan’s state legislature dismantled the sitting Detroit Board of Education and ordered that city’s mayor to appoint a new crop of leaders. These leaders in turn anointed a CEO and granted him authority to approve new budgets, new directions, and new hope.

They needed it: Of the 11th-graders tested in the 1997-98 school year, 80.7 percent failed to meet state standards in math; 68.3 percent in reading; 86.8 percent in science; and 70.6 percent in writing. If that weren’t enough, according to Detroit News reporters, the reform team simultaneously needed to round up tens of millions of dollars in school bond money to repair decaying schools. The team scurried out to examine 15 non-academic departments ranging from payroll to busing to squeeze money and mental energy for the school system’s 21,000 employees.

“If it was not part of the core competence -- education -- we marked it to consider outsourcing. We got to IT and said, ‘Ahh, goodness! We’re not IT guys,’” Diggs says of the search. Outsourcing the entire shop -- computer room, LAN, WAN, applications, and help desk -- was a no-brainer in these dire circumstances.

Detroit Public Schools, the 11th largest school district in the country, joins excellent company as leaders in this business-mirroring movement. The New York City Board of Education in October 2000 handed TekInsight the responsibility to provide hardware, software, and services to build, maintain, manage, and support its enterprise network infrastructure, which includes more than 1,200 locations and 150,000 users. That was a $3.9 million contract. The Dayton (OH) Public School system awarded Broadwing IT Consulting a $19.1 million opportunity to plan, implement, and manage all facets of that district’s IT infrastructure serving 22,000 students in 58 facilities. And although changes to the final RFP mean his numbers are outdated, Diggs’s team originally threw out $90 million to allow Compuware to solve its problems.

“Within five years, the computer industry predicts $100 PCs, distributed computing to replace big irons on the premises, and plenty of killer business hosting centers,” says Marshall Toplansky, chief marketing officer at TekInsight. “Over time, the amount of technology you need on site will be very small. Districts may not even want to own the actual desktops the kids and administrators use because the depreciation curve is much steeper in computers than cars.”

Why They Do It

That’s merely the start of a long benefit list for districts that outsource. Among the most popular:

- Outsource companies free internal resources to concentrate on tasks that offer greater value to the schools.

- Outsource companies offer a cadre of experts with their ears to the ground, preparing for the next change in the wind.

-Experts roll out plans in a faster time table.

- Outsource companies let administrators off the hook to compete with higher-paying private companies in a futile effort to hire qualified, skilled professionals. (“From an IT expert’s perspective, school systems aren’t a path that lets them further their professional career, so districts are extremely handicapped when attracting quality,” Jeff Lackey, president of Broadwing IT Consulting, says bluntly.)

- Districts can hold outsiders’ feet to the fire faster and with less fuss than when dealing with employees.

- An outsource company brings a hybrid vigor to the process of thinking outside the box. “The beauty of having different companies bid on services is that all have a slightly different approach. You evaluate a broader set of alternatives than if you brainstormed just in house,” Toplansky points out.

Unfortunately, many administrators don’t realize the full impact of these benefits on their districts. “Schools drive a higher technology need than even the private sector. Corporations need data, voice, screens, and e-mail. Schools need those elements plus video, higher-end bandwidths, and wireless technology,” says Brent Flaugher, the Broadwing business consultant who landed the Dayton Public Schools contract for his company.

Still, he admits, outsourcing remains a less-than-easy sell to this audience. Control becomes the hang-up. “Not many schools make the case that they can provide better technology than outside firms, but they do say they want to maintain control,” he reports. Lackey chalks it up to an overall lack of business exposure. “In Corporate America, black-and-white decisions on revenue, cost of service, gross profit, and bottom line contribution are the accepted norm of what you need to do. In the education sector, those dynamics are not as ingrained in the funding and procurement processes,” he adds.

Found Money

The most common ways to fund such contracts, Toplansky claims, involve either a straight reallocation of money from inside salaries to outside bills, or using a bond issue to rent the technology for a set dollar amount per student per year with back-end services thrown in as part of the deal. As a twist, some systems like Plymouth Canton Community Schools in Michigan buy the longest-term warranty on equipment to take advantage of the outsourcing firm the manufacturer assigns to cover the deal.

“It’s all about redirecting your thinking,” Flaugher says. “A lot of schools say they can’t afford a contract because they have a set $10 million budget, for example. But rearrange classrooms from a teacher-student ratio of 14-to-1 to 15-to-1 and suddenly they have the money. Or consider replacing textbooks with the computers. They’re difficult decisions only because they break tradition.”

Detroit Public Schools redirected the monies it shelled out for 85 employees and contractors toward a single vendor. He received the CEO’s thumbs-up when number crunching revealed the swap saved the system approximately 10 to 15 percent. Then Diggs discovered even more potential money in his wallet when he remembered the e-rate program; he currently waits to hear in April on his request for funds to cover data connection, Internet access, network maintenance service, building wiring, Ethernet switches, and, of course, vendor management.

Thinking outside the box in New York City’s case takes the outsourcing concept to a new arena. This board has asked TekInsight to create a revenue-generating business out of the new Internet applications the firm builds for it, then split the profits between the entrepreneurs who take that risk and the school system. “They’re basically telling us to come up with a creative way to make money from this portal so we can defray the cost of building it,” Toplansky explains. Obviously the district stands to gain strong benefits from this approach; its viability on the win-win scale, however, remains to be seen.

Dayton officials constructed an RFP demanding that the fee go down each year of the three-year contract. It also spelled out 10 deliverables the company had to meet in that first year, beginning with a documented network upgrade plan in 90 days. Flaugher takes it in stride. “We committed to implement various technologies that will make it less costly for us, therefore less costly to them,” he says. One of the biggest tricks up his sleeve involved aggregating the system’s servers and moving them to Broadwing space in Cincinnati, 60 miles away, to sidestep sending technicians barreling across the district at all hours. Dayton profits from the freed square footage. The reports Broadwing will run also point to waste in the system: Repairs to obsolete equipment that chew up available dollars typically go unnoticed during in-house operations.

Implementation Steps

Districts that wait for their IT manager to step forward with an outsourcing plan quickly will find themselves behind the times. Superintendents usually need to lead the charge, Flaugher says: “The school tech guy in many cases is more reluctant to change the status quo.” Pride and prestige often clog progress, too -- and Flaugher should know. He was a classroom teacher, then the technical coordinator at a local school for 14 years.

So everyone who wants to follow in these footsteps must start at square one, experts unanimously agree: Appoint a chief information officer. “If you’re an alcoholic you have to recognize you have a problem before you can solve it,” Lackey says. “Schools have to recognize that they need an advocate to set the vision and manage the plan.” Think of it as protecting your intellectual capital and maintaining control of your destiny.

Step two is to examine your current IT costs on a deeper level than producing a receipt for the computers the district bought this school year. Staple this budget sheet to a list of the district’s IT goals defined from a nontechnical point of view. For instance: We want a library management system that allows electronic card catalog in every classroom. We want Internet access at five desktops in every classroom. We want teachers to access a help desk without requesting the principal’s permission. The entire package will give outsourcing companies a concrete foundation to build a realistic bid that accomplishes more than price savings.

Next, plan to visit the outsourcing firm’s headquarters, as well as drop in on at least one of the company’s current clients. Diggs met with three of Compuware’s references, probing for anything surrounding the outsourcing firm’s methodology, start-up issues, transition plans, and how that corporation measures performance. The answers helped this chief information officer hammer out details advantageously when he took a seat at the negotiating table this February to finalize the deal. “And it’s critical to have a good contract attorney who understands the IT environment,” Diggs adds. “There’s a lot of money on the line.”

A three-year contract wraps up the package with perfect timing. Anything less and you can’t realistically expect the firm to produce notable savings, Flaugher says. A longer term invites stagnation. “In three years, there will be more technology introduced that we don’t know about today,” he explains. “If I’m locked in too long, I can say, ‘Sorry, we didn’t put that in our contract. Your tough luck.’”

Which, of course, takes districts right back to the dilemma with which they currently wrestle. “It’s simply a case of schools saying, ‘IT is not our core mission. If that’s what the outsourcing firms do every day, they should be able to deliver it better and cheaper than we can,’” Flaugher repeats.

Julie Sturgeon is an Indiana-based freelance writer with experience in educational issues.