The End of Higher Education Discounts
There was a time when higher education IT leaders could reasonably expect deep discounts on hardware and software purchases. When it came to how much an institution wanted to pay for technology, the negotiating mentality of some CIOs was once: “We start at zero.” IT/corporate partnerships were strong, and universities were good places for developing, implementing, and refining products. But the days of deep discounts for higher education are long gone.
What can you do when changes come about that result in major cost increases? Do you simply renew your licenses and buy the same, more expensive products? Do you look elsewhere? How do you make these decisions?
Moving IT operations to the cloud brought with it many perceived benefits to higher education, including increased flexibility and ease in expanding storage or processing capacity, reduced demand on central IT resources to manage regular upgrades and maintenance, reduced need for physical space, enhanced cybersecurity, and a more predictable cost model and cost control. Even better, many of these transitions came at drastically reduced prices for institutions of higher education as compared to their counterparts in the private sector.
Recently, pricing models for these services have evolved as corporations respond to market influences (the pandemic was a big one) and investor demands. While higher education has seen a huge dip in discounts on technology products, as well as price increases and service level changes, campuses continue to struggle with increased budget scrutiny as enrollments decline and general operating costs grow. The pot isn’t getting any bigger.
In the past few years, we’ve seen numerous examples of these types of changes. The unlimited file storage in the cloud disappeared, forcing campuses to develop storage plans and cost models to support them. Similarly, virtual meeting software’s added features and corresponding price increases caused some schools to reconsider their contracts and seek other platforms, often ones already paid for as part of larger tech environments. Similar changes increased costs for hypervisor, learning management systems, data management systems, and more. Many networking and security vendors have both reduced higher-education discounts and substantially increased list prices. The list goes on and on.
How To Deal with Price Increases
What’s the best course of action for an institution when faced with major technology price increases? At a high level, it’s always important to evaluate the alternatives, optimize resources, and ensure that technology spending aligns with your organization’s overall goals. But making these decisions is often complex and nuanced. Here are a few suggestions for how to focus your decision-making to put your institution in the best possible position:
Be Clear About Your Needs and Goals
It is important to understand your current usage data or metrics. Are you using all the features you are paying for? Is the technology meeting current needs? Is there a path that will accommodate evolving needs? Stakeholder input is critical here. Make sure you involve stakeholders in any assessments of your current services as well as alternatives. Remember that not all change is growth.
Understand the Competitive Landscape
Invest meaningful staff time in researching alternatives and analyzing market trends. What other products are available? What is on the horizon? How does your current product align? Leverage your network of IT leaders (through community groups within organizations such as EDUCAUSE and Internet2) to get input on what has and hasn’t worked at universities like your own. Don’t forget open-source software when considering the competitive options.
Assess the Impact of Price Increases
Is the price increase in line with market trends, or does it feel disproportionate? Will this increase significantly affect the IT budget or impact business operations?
Assess the Cost of Change
Compare the cost of the price increase to the cost of making a change. In addition to the direct costs of purchasing and implementing something new, what is the impact on disruption to operations, employee downtime, running in multiple environments, and long-term maintenance?
Plan Your Exit Strategy
Do this as part of the selection of each new technology and work your way back through the service catalogue. Consider this as part of basic business continuity planning. Vendors close and merge and even the most robust vendors terminate products regularly.
Consider the Power of Aligning with Others
Are you part of (or could you form or enter) a consortium with other institutions that might increase your ability to negotiate a better deal or influence the product’s direction so that you can realize more value? Many companies force larger service bundles or shift product direction away from what matters to us in higher-ed—and expect us to pay for what we can’t or won’t use. User groups or associations can often have influence with vendors and be effective in representing the needs of our community. There are many consortia who have done this successfully, such as Internet2 and NERCOMP. Both offer their members discounts on technologies. And if you are part of an alliance of schools, also consider sharing technology resources and even staff talent with other institutions.
Use Your Relationships
Our executive connections can often help you negotiate better terms. Build and foster those relationships so you can influence direction long before a problem arises and so that the relationship has a strong foundation when a tough conversation is required. Be active in communities of practice so you might hear about potential risks long before they reach you. Vendors might offer discounts for long-term commitments, bundled services, or volume purchases. Consider whether multi-year contracts or prepaying for services in advance might offer savings. Of course, you should also be cautious about entering into long-term contracts. Evaluate whether you can realize the benefits without restricting your team’s prospects.
Collaboration Yields Better Results
If you’re unsure of the best course of action, consulting with a trusted mentor, technology advisor, or business consultant might help clarify which options will align best with your specific needs and goals.
Higher education IT leaders may not be enjoying the same steep discounts we came to enjoy over the past few decades, but that doesn’t mean that you must accept drastically higher costs or reduced services. A little creativity, collaboration, and critical thinking can go a long way as you strive to provide the best solutions for your campus. Remember: you’re never in this alone.
This post was authored by Executive Strategic Consultant Cynthia Golden, who advises clients on strategic planning, organizational assessments and development, educational technology planning and assessment, CIO executive advisory services, and IT governance design and implementation; and Vice President Jon Young, who provides consulting related to information security, privacy, IT and data governance, policy development, risk management, compliance, disaster recovery and business continuity, network design and architecture, organizational transformation, and funding.
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