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Emerging Trends in Technology

The Application Service Provider Model in Higher Education
University Business, May 2005

U.S. colleges and universities are challenged to contain and even reduce technology costs while at the same time responding to the expectations of the "New Millennial Generation" to upgrade administrative systems, support online course management, and provide as many online services as possible. Prospective college students searching for the right college expect to be able to register online, find information about academic programs and services on the web, communicate with faculty and admissions counselors electronically, and even apply for and receive financial aid online. Once enrolled, this Internet-savvy generation expects to check grades, access a myriad of courses, and monitor their financial and personal records online.

While all of these expectations are reasonable, online services are not simple or inexpensive. Colleges must offer e-services to remain attractive and competitive but are hard pressed to maintain current hardware, software and the required range of professional expertise needed to install and support these services. In the January/February 2005 EDUCAUSE Review, Brian Hawkins, president of EDUCAUSE, makes the controversial case for new models in delivering higher ed services. Hawkins notes:

We in the higher education community need to "get over" our traditions, our histories, and our many excuses for why we should try to replicate each other's resources.... The times and the conditions call for new models and innovative means for facilitating collaboration .... colleges and universities need to outsource to ... other higher education institutions--similar to the arrangement among Cabrini and Neumann colleges and Drexel University.

Business and industry recognize
the value and efficiencies of ASP
arrangements and are entering into
"outsourcing" relationships.

Drexel has been at the forefront of higher education IT organizational and service transformation via an Application Service Provider (ASP) model based on the concept of mutual strategic collaboration. Drexel's role as a service provider was first discussed by Drexel President Constantine Papadakis in a Philadelphia Inquirer interview in 1996. An application service provider simply provides application access (e.g. e-mail) over the internet to other institutions. ASP arrangements enable organizations to have access to essential applications and services without the expense and burden of owning and operating the assets required to run those applications.

Business and industry have long recognized the value and efficiencies of ASP arrangements and are increasingly entering into contractual or back door (e.g. dot-coms such as Expedia, Orbitz, Staples, Amazon) IT application "outsourcing" relationships. A recent report by the Gartner Group states that by 2010, the market share of IT utility providers will be within 29 percent of the total IT services market. John Hagel and John Seely Brown, in an article titled "Your Next IT Strategy" (Harvard Business Review, October2001), write that "Companies will in the future buy their information technologies as services provided over the Internet rather than owning their own hardware and software."

The implications for higher education are evident since a majority of the 3,500-plus colleges in the United States have fewer than 2,000 students. These schools cannot afford to make costly, recurring investments. They frequently cannot afford to upgrade equipment, acquire expensive academic and administrative software, and provide the staff necessary to support IT systems. The wide scope of professional skills necessary to administer servers, manage complex databases, do web development, and provide training and support to users is a constant, often losing, battle. Partnerships, like the many Drexel has developed, provide colleges with the opportunity to experience the quality and breadth of a comprehensive research university's IT services.

Drexel's model is straightforward and based on institutional "choice" normally at the president or board level. There is no attempt to reach a consensus about issues, directions, solutions, or strategies. It is a matter of identifying a service or problem which needs attention, explaining Drexel's solution, and letting the other college leadership decide if the approach will work for them and if so, proceed with implementation as quickly as possible. The partnership has not changed the culture, values, and visions of partnering institutions. However, it has changed the way "things get done." Drexel, in effect, has become the infrastructure for partner schools and provides the model for back office business practice and process management.

For example, when Cabrini College (Pa.) was confronted with the decision to either upgrade its current administrative system or obtain a new one the natural question was could Cabrini leverage the ASP model (Drexel through prior arrangements was already providing e-mail, WebCT course management, web hosting, help desk and other services) in the administrative area: finance, purchasing, human resources, payroll, and student information? Cabrini's president appointed a college-wide committee to investigate possible providers.

In addition to Drexel, presentations were made by a number of commercial third parties. Having had a positive experience with Drexel on the academic side, the committee unanimously chose Drexel as the provider for administrative services and applications. Cabrini made changes to its business practices and Drexel implemented the complete suite of the SunGard SCT Banner administrative system in less than one year.

Today, Drexel provides services ranging from IT leadership, staffing and strategy to the provision of course management and SAP academic software applications, Internet2 research network connectivity to the 14 universities in the Pennsylvania State System of Higher Education and complete corporate ERP services. Drexel's IT services touch over 40 educational institutions in one way or another.

For example, SunGard SCT Banner ERP services are provided to Cabrini College and are currently in the implementation stage at Medaille College (N.Y.). Drexel provides the WebCT course management application to Pennsylvania area schools such as Cabrini College, Rosemont College, Neumann College and Wilkes University, as well as distant schools such as Medaille and Cumberland University (Tenn.).

The provision of SAP software for academic use to business colleges includes institutions as far reaching as the University of Texas at El Paso to the University of North Dakota. Other institutions served include the University of Maryland Salisbury, William Patterson University (N.J.), Georgia Southern University, Bryant College (R.I.), University of North Carolina Greensboro, Indiana University, Georgetown University (D.C.), Bentley University (Mass.), Clark Atlanta University (Ga.), Clarkson University (N.Y.), Edinboro University, Lincoln University, and Arcadia University (all Pa.), and SAP education in the United Kingdom and Russia.

Lastly, an often-overlooked benefit of the ASP model is in the software application vendor arena. Vendors do not have the resources to visit the 1,000-plus small colleges that make up the majority of U.S. higher education, make sales presentations and respond to costly requests for proposals. At the same time, their software products have a short shelf life before the next wave of upgrades, added functionality and new competition. Leveraging business relationships via the ASP model to deploy already developed products to new markets is an effective and efficient use of vendor resources.

Today, Drexel has ongoing relationships with a number of vendors including SunGard SCT, Hyperion, WebCT, Microsoft, Sun and Oracle. Vendors are able to generate additional income without the high cost of sales, reaching markets that were not previously viable. Furthermore, such benefits are not solely limited to the vendor. Efficiencies in sales, contract negotiations, and related vendor support are often passed down through deeper discounts benefiting both Drexel and partner schools.

The model Drexel has developed can and should be replicated by other universities. While providing ERP administrative applications service and support is complex, some of the other services are much less complicated with immediate and significant benefits. Projects such as assisting partner schools with increased web development and usage, email, policy and procedure development, online course development, faculty and staff training, implementation of virus protection, and improving customer relations and support through help desk functions can be implemented quickly and easily improving both responsiveness and user experiences. This instills the trust, confidence, and internal support required to undertake more complex projects such as student and financial administrative services.

The partnerships Drexel has established are reflections of what major technology companies are doing across the globe. The value added for Drexel's partners is that they have access to world class IT services and resources while avoiding the daunting costs and requirements of managing the assets required. Colleges with limited resources will increasingly be compelled to examine creative efficient ways to manage in a world of growing technological complexity. While commercial partners are available, the cost of those relationships is, most often, prohibitive as well as binding for a long term. Partnering with another college or university has the advantage of being based on trust, shared commitment and understanding of higher education's mission, goals, and problems. Services can be provided more economically for everyone involved with such nonprofit partnerships. Schools can work together with each benefiting in a variety of ways, some of which are clearly defined and anticipated, and many others that are unexpected and have far-reaching beneficial implications. The opportunity is clear--Drexel has shown new models for the delivery of IT services can work--it is now up to other leading universities to step forward!

John A. Bielec is currently the vice president for Information Resources and Technology, and Chief Information Officer at Drexel University (Pa.).

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