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Published in Print: July 18, 2012, as With New Technology, Districts Face Crucial Question: Buy or Build?

With New Technology, Districts Face Crucial Question: Buy or Build?

New IT talent, trends add wrinkles to the digital dilemma

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About a year ago, Boston was searching for a way to roll out a new school selection process. Traditionally, parents were sent a 28-page brochure outlining the criteria for choosing their children's schools, or they could access a clunky website.

That same year, Boston had welcomed to its city offices a small group of fellows from Code for America, a new organization based in San Francisco that sends young computer programmers to work in government for a year, using their skills to help solve problems. Working with the fellows, Boston decided to build a Web application for school selection.

Hiring an outside contractor would have taken the 56,000-student Boston public schools at least a year and cost up to $1 million, Jennifer Pahlka, Code for America's founder, recalled during a speech at a recent conference. The fellows built a Web application, called Discover BPS, to serve the entire district's school selection process. They did so in three months. Excluding the $150,000 fee Boston paid to host the fellows and pay for their stipends, it cost the city nothing.

Boston got a good deal on transforming an outdated process, but its experience points to a broader question districts regularly face: To buy or to build? Officials must weigh whether to develop new software in-house or pay a vendor to provide it.

School districts have made such decisions for years, but the cost, speed, and accessibility of developing technology, and the increased demand for software services in the classroom, have changed the decisionmaking calculus. So too have dwindling budgets and cuts in personnel that make hiring skilled programmers difficult.

"It's a newer generation of questions that have been going on for a long time," said Karen Billings, the vice president of the education division for the Software and Information Industry Association, or SIIA, a trade association based in Washington.

Some educators and administrators are using the new Web landscape to build their own applications and software, bypassing the typically costly and lengthy procurement process. But some skeptical industry experts say they are doing so with widely varying degrees of success.

'Rethink Assumptions'

In recent years, entire consumer industries have been upended by Web-based services like Netflix, Amazon, and Groupon, companies taking advantage of the speed and low cost of developing software. The public sector, including education, has been slower to seize such opportunities, technology experts say.

As Ms. Pahlka pointed out in her March speech, at the South by Southwest Conference in Austin, government spends $140 billion on technology per year, compared with the $2 billion a profitable company like Apple pays its developers. Schools spent an estimated $7.5 billion on software and digital content in 2010, according to a survey by the SIIA.

"A very small team of talented people can deliver something very valuable in a short amount of time," said Joel Mahoney, the Code for America fellow who led the Discover BPS work and a former chief operating officer for a hotel-search-engine service. He is now a technology strategist for the nonprofit group, which raised $2.9 million in 2011 from foundations and the private sector, and has since received $1.5 million from Google. This year, Code for America placed 26 fellows in eight cities. It is also working on a similar fellowship with the White House around federal innovation.

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"More than the software itself, Code for America is an example that we hope will shake up the procurement process and get people in city hall and education to rethink assumptions about the costs of software," Mr. Mahoney said.

In education, where much of the spending power lies with state and local governments, there are many barriers to district-developed software. Many states, for instance, prohibit schools from using cloud-based services,which allow digital information to be stored remotely. There are requirements for spending on technology, textbooks, and supplemental educational services. Procurement often favors larger, more established vendors.

"States are designed not to allow innovation to happen," said Nigel Jacob, a co-chairman of Boston Mayor Thomas M. Menino's Office of New Urban Mechanics, a group focused on innovation and technology solutions within city government that worked with the Code for America fellows.

It's also difficult for school districts to pry exceptional programmers away from bigger salaries in the private sector. For instance, Ramona Pierson says she made $60,000 a year as the director of education technology for the 41,000-student Seattle schools, a job she took in 2003 because she wanted to develop software for schools. Previously, she had earned considerably more working in neuroscience technology.

"People with my kind of skill set cost too much," said Ms. Pierson. She left the school district in 2007 and went on to found SynapticMash, a learning-management company sold to PrometheanRequires Adobe Acrobat Reader for $10 million in 2010, and, more recently, education technology company, Pierson Labs.

Homegrown Software

One of the most striking examples of a district shunning the private sector in favor of building its own software is the 3,150-student Tomah Area school system in Wisconsin. Since the 1990s, Paul Potter, Tomah's director of technological infrastructure, has developed seven software and information systems for the district.

One of his early applications started as a way for schools, which were geographically dispersed, to make food requests of the central kitchen. Unhappy with antiquated products on the market, Mr. Potter, who holds a software-engineering degree, created one that worked in Windows.

Since then, the software, called Infinity, has evolved into a modern, Web-based course-management system used by students and teachers in Tomah and other nearby districts. Mr. Potter developed several other applications for Tomah around tasks like content management, accounting, and assessment, with names like Raptor, Snapdragon, and Sundance.

By developing everything in-house, Mr. Potter can make constant changes to the software based on teachers' needs.

But there is debate over the importance of customizability. While an in-house approach offers faster and more direct communication between developers and teachers, it may lack sophistication and scope, some experts argue.

Some educators point out that employees with Mr. Potter's distinctive sets of skills can potentially save their districts large sums of money. Tomah Superintendent Cindy Zahrte estimates her district saves $12 per student by using Infinity and not having to purchase from an outside vendor. Those savings can expand beyond Tomah, which allows other districts to buy Infinity to use on their own.

But the potential savings can run into policy hurdles. As part of a $15 million effort to make collection of student data more uniform throughout Wisconsin, Gov. Scott Walker, a Republican, mandated that all school districts use the same student-information system, to be provided by one vendor. After first being denied, Tomah eventually earned a waiver allowing it to use Infinity, but other districts interested in using that software were not granted the same waiver.

(The bid process for the contract is currently suspended, according to a June 19 report by the Associated Press, amid allegations that an economic-development agency promised one vendor a tax break if it won.)

"Why does it have to be one vendor? There's nowhere else in the world of computing where that happens," Ms. Zahrte said.

Vol. 31, Issue 36, Page 15

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