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Tue, Apr 10, 2007 16:42 EDT

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Posted by: Rich Kogut in Soapbox Topic: ArchitectureBlog: CIO Knowledge Space
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When groups of higher education CIOs get together to discuss proposed initiatives, a debate almost always ensues as to whether higher education really has different needs than commercial enterprises, needs that require unique solutions. Do we love reinventing the wheel or are we really innovating? Are we ahead of industry or behind in the way we run our information technology? I’ve come to the conclusion that there are at least two major fundamental differences in the way IT operates in the different worlds. The first is business cases. Both sets of enterprises have interest in reducing in costs of IT in its utility aspect. However, strategic investment in IT works differently. Businesses can directly tie IT investment to future revenue and profit streams. The cost of a new application is weighed in terms of new business that can be generated. Even things like adding a server and hiring a UNIX systems administrator can be justified by an (oversimplified for discussion purposes) argument that every additional server directly supporting customer transactions generates $N dollars of revenue, as long as the profit margin is there, after buying hardware, hiring people, etc. Most universities are not only non-profit, but also non-elastic. If a university wants to expand its customer base (i.e., number of enrolled students), it can only do so slowly and over a long period of time. Except perhaps in the fund-raising arena, there is no additional revenue that can be generated, and therefore no short term business case for adding new services. There is a long term business case however, as over time, a university’s reputation and therefore its ability to attract top faculty and students will be impacted positively or negatively by the available IT services as compared to competitor schools. The long term nature makes it exceedingly difficult for a CIO to make the case that any specific investment in IT has to be made “this year”. The result is often a bust and boom cycle, where IT investment is shortchanged many years in a row until the situation becomes so obviously compromised that a huge burst of IT investment ensues to catch up, and then the whole process repeats. This first fundamental difference between industry and higher education mostly relates to planning and budgeting, and, although interesting, is probably just a fact of life that university CIOs have to live with. Another difference, one
Rick, great article and lots to think about from both a public and private sector perspective. One of my target areas for my next CIO position is higher education. Several years back I was a finalist for the CIO position at Iowa State University and I’ve applied recently for the CIO position at the University of Wisconsin. I’ve held CIO and CFO positions in the private sector and public (Federal & State) so I share your appreciation for the cultural differences and the impact of lacking the profit motive.
Here is a thought, what does your university or college think about the growth of Phoenix University. Probably not liked, but a key issue for higher education is the budget crunch being experience by state and private schools alike. What if a university, focusing on its truly differentiating capability, for Iowa State I felt it was Agriculture, developed a first rate distance learning capability and marketed it. I think Iowa State had around 2,000 Ag students and they could have had 10’s if not 100’s of thousands of virtual students from around the world. I think the result would meet the goals of a land grant college and generate millions of additional revenues for the school.
Love to chat about this some more if you want. Bill
Rich has some good points. Do do have some minor quibbles.
Some universities are tuition driven and are often highly responsive to fluctuations in enrollments and competitive positions. In many ways, these universities are as focused on the market in the short run as many businesses, leading to short-term project priorities and pressures.
Our focus is also not on growth or pure profitability, but in the quality of our product (the student). The success our students have in the market and how well we are getting them through the system is a motivator for short-term initiatives.
We do not have a ruthless quarterly focus which does give us some leeway in terms of schedules and projects. Since I come from a corporate background, at times I do miss the quarterly focus. It can sometimes bring much needed clarity.
A certain percentage of our customers (students) love to hack into us. And since we have more open security schemes as Rich points out, we tend to have to go much further in novel security approaches than corporations.
I think the biggest difference is in our customer base and the range of services we have to offer. We have students that eat, sleep, socialize, attend sporting events and go to school, so we have a lot of services that need to be provisioned quickly and work properly. In this regard, we're more like a destination resort or a Disney Theme park.
I concur with Rich that we are "bottom-up" not "top-down" entities. Projects are rarely motivated by top-down pressure, but bottom-up pressure. Normal hierarchical instincts don't always work.
I will point out that we do have one thing in common with corporations. We have fiefdoms as strong as any I've seen in large corporations. This does create interesting politics from time to time.
Henry Kissinger is thought to have put it aptly:
"University politics are so brutal, because the stakes are so low."
Vince Kellen
Vice President (CIO), DePaul University
Vince is right about the fiefdoms in higher ed. The interesting thing about higher ed is that the fiefdoms don't always follow organizational lines, and the power of a particular player is often different than what you'd expect from their position in the org chart. This makes the budget process interesting, to say the least.
I do find that we get both bottom up and top down pressures, which leaves IT sort of getting squeezed in the middle. Balancing between the pressures and working with limited resources, higher ed IT shops are often an interesting mix of the extremely sophisticated and the bandage-and-bailing-wire. When I worked in private industry, those IT departments tended to be much more consistent in the quality and complexity of the infrastructure they developed.
Thomas M. MacKay
Assistant Director of IT
Christopher Newport University