Published Online: June 14, 2010
Published in Print: June 16, 2010, as The Negotiation

Features

Districts Employ Creative IT Purchasing Tactics

—iStockphoto/Jesus Conde

Employing Creative IT Purchasing Tactics

In Minnesota, school districts are reaching out to other government agencies, forming alliances to step up their leverage and drive down technology prices.

In Portland, Ore., teachers are using wireless devices and Internet-based telephone technologies produced by vendors that, before the recent recession, weren’t affordable for education clients.

And in Seattle and Charlotte, N.C., chief information officers looking to save money under tightening budgets are exploring adding or refreshing on-site computers with virtual-desktop technologies that were obscure five years ago, putting pressure on vendors to offer better deals for established technologies.

“It’s kind of a good time to be buying [technology],” says Susan B. Johnson, the chief information officer for the 134,000-student Charlotte-Mecklenburg schools in North Carolina.

No one is disputing that securing the money to buy and install new technologies—or even to maintain old ones—remains a hefty challenge for districts. But there are opportunities to be had, CIOs say, and recognizing them can turn unrealistic initiatives into realistic ones with the proper homework.

“I can’t emphasize enough about planning, partnerships, and doing the research that you need,” says Tom Brenneman, the interim executive director for information technology in the 20,000-student Blue Valley school district, located in the Kansas suburbs not far from Kansas City, Mo.

“If you choose one particular technology, there’s probably 20 different vendors that offer that technology,” he says. “And which one is best? Which one will fit your needs today and in the future?”

Peter Dale, the director of contract administration for the 678,000-student Los Angeles Unified School District, adds, “You want to create win-win scenarios for [vendors] and for the district.”

Tips

1. Know what you need. Is it specific, such as 1,000 USB drives, or general, like installing wireless Internet across all district campuses? The more general your project is, the more likely you are to want to submit a "request for proposals" instead of a "request for bids."

2. Don't specify brands. Branding obviously eliminates competition, but it can be tougher to avoid than you may think, particularly when you're dealing with technologies that are sometimes considered synonymous with a certain manufacturer.

3. Keep an open mind for alternatives. Sometimes a vendor might propose a different solution from what you envisioned.

4. Don't be afraid of dialogue. Keeping companies abreast of potential future initiatives can help them better understand your needs.

5. Look for partners. You might not have as much money as you used to, but neither do other schools. Teaming up with neighboring districts or nearby colleges can help drive down prices.

6. Think of services as a commodity. If vendors aren't willing to budge on the price of a piece of hardware, they might be willing to upgrade the level of service they can provide.

Increasing volume is the simplest way to get more hardware at a cheaper per-unit price, but it’s difficult to generate volume in a down economy. And while smaller districts for years have turned to contracts negotiated by their states for their technology needs, larger districts are beginning to also seek out more state and local partners to help boost the volume of their transactions.

In Charlotte-Mecklenburg, for example, Johnson says there is consistent dialogue between technology departments of the public school system, the University of North Carolina at Charlotte, and the city’s Central Piedmont Community College.

“You look for birds of a feather who might have some money at the same time,” she says.

Schools in Minnesota, meanwhile, have united with other branches of the state government to form the IT Standards and Resource Management program, or ISRM, under the state’s Office of Enterprise Technology. The program sets information-technology standards and procurement procedures across state agencies, local governments, and education systems, with the goal of lower prices through a higher volume of transactions.

“It just grew out of need here,” says Patrick Plant, the director of technology for the 40,000-student Anoka-Hennepin district, who is ISRM’s K-12 representative. “To my knowledge, it’s pretty unique.”

While Anoka-Hennepin—Minnesota’s largest district—would receive a substantial “educational discount” on many of its purchases, Plant says, “virtually 100 percent” of its IT purchases are still made through the joint contract. That’s in part because, even with its sizable enrollment, his district can’t compete with ISRM’s leverage, and also because there’s an understanding that ISRM’s educational customers will be given cheaper pricing.

Driving Costs Down

While looking beyond district boundaries can push up volume, exploring alternative solutions to a technology can save money both by decreasing on-site responsibility and increasing competition.

For example, the Seattle public schools’ chief information officer, Jim Ratchford, says his department will pilot a virtual-desktop strategy for the 46,000-student district. If the pilot program is successful and cost-effective, virtual workstations—which connect an on-site monitor to a computing hub at a remote data center—will begin to replace traditional on-site computers.

Johnson from Charlotte-Mecklenburg says her district is eyeing a similar initiative. Implementation of virtual workstations, she says, could help reduce costs in future negotiations for computers and network systems.

While Johnson says she prefers to stick with a few select vendors to simplify maintenance and technical support, she acknowledges that to cut costs, districts have to be willing to listen to all comers. Most CIOs appear to agree, even if a district is so big that there’s a fine line between exploring options and becoming burdened with too many different manufacturers.

“We always as a school district try to stay away from branding [a certain] type of technology,” says Themistocles Sparangis, the chief technology director for the Los Angeles Unified school system, the nation’s second-largest district. “Sometimes, there are good solutions out there, and we don’t want the procurement process to get in the way of getting the best value or best service.”

The reality is that many vendors may be hungrier than ever to compete in the education sphere, according to school technology officials.

Nick Jwayad, the chief information officer for the 46,000-student Portland schools in Oregon, says he sees that firsthand through his district’s wireless Internet and Voice over Internet Protocol, or VoIP, network, purchased from San Jose, Calif.-based Cisco Systems Inc., and the district’s online-content-management system, from Seattle-based Red Dot Corp. “The softness of the market has really served us, in that we’re able to buy commercial products and engage with vendors we would otherwise not be able to afford,” Jwayad says. Even with their own financial troubles, schools are seldom subject to downsizing of the same scale and speed that can capsize private-sector clients. And the recession has also made providing cutting-edge technology an appealing option from a public relations standpoint, say several CIOs.

“There’s an aspect of social responsibility, and many companies buy in to that,” says Ratchford from the Seattle schools, who recalls when a vendor equipped a videoconference room for $23,000 with equipment he expected to cost $50,000.

“They understand that we don’t necessarily have deep pockets,” he says. With new technologies, Johnson says, it may even be beneficial to push vendors to see schools as a way to reach future consumers early, in anticipation of better times ahead.

Technology companies, from their perspective, see schools acting with increasing scrutiny as they try to squeeze as much out of their budgets as possible. “You have to be able to understand the problems schools are facing,” says Rick Herrmann, a manager of U.S. sector public initiatives for Santa Clara, Calif.-based Intel Corp. “There’s no single path [in how companies deal with schools], but there’s probably a best path.”

Evaluating 'Reverse Bidding'

Meanwhile, CIOs say, it’s important to keep an open a mind, just as their vendors do.

For Johnson, in North Carolina, that means nearly always putting out a “request for proposals,” a process in which vendors respond to a particular technology challenge with detailed—but often differing—plans of action, rather than a “request for bids,” in which the buyer sets the specifications for a project and typically awards the contract to the lowest bidder.

For Brenneman and other CIOs, it means a willingness to consider leasing technology when buying isn’t an option. And for Sparangis and Dale, it means investigating an emerging “reverse bidding” process, in which vendors are able to view one another’s bids during an online auction-like event over a time frame that usually lasts a couple of hours. As Sparangis describes it, it’s like eBay, except the seller is making the offer.

The Los Angeles district is running a pilot program to determine whether reverse bidding truly lowers prices, Dale says. But the process is so new that the software currently used to run it is managed through an outside company. And while other districts are paying attention, having an open mind is one thing, but risking money on an unproven strategy is quite another.

“We’ve only done one reverse bid, and it wasn’t for technology-related items,” says Stephen Davis, the Blue Valley district’s director of budget and business operations. “I think a lot of people are taking a watch-and-see approach.”

Vol. 03, Issue 03, Pages 38-40

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