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Business Officer Magazine

All for One, One for All

Institutions of all stripes find that banding together in consortia and collaborative relationships to combine their resources holds multiple benefits beyond cost efficiencies.

Catalyst for Change - The Economic Downturn Reshapes Higher Education

By Sandra R. Sabo 

*Five years ago, administrators of California's state universities talked about jointly developing a payroll personnel system to replace their individual aging legacy systems. They all agreed the idea made perfect sense—but no one pursued it.

Until now, that is. California recently launched a systemwide effort to develop one payroll personnel system, rather than funding efforts at separate campuses. Not coincidentally, the state faces a sizable budget shortfall for FY10, estimated at $6.3 billion by the Center on Budget and Policy Priorities.

Many institutions have long-standing academic collaborations to provide more value to their students, including articulation agreements, cooperative courses, and joint study abroad programs. Now they're focusing as much, if not more, on administrative collaborations that promise cost efficiencies.  

READ AN ONLINE EXTRA about the Collegiate Retail Alliance, "Forging a Strong Chain," in Business Officer Plus.

“Because of the economic crisis, the pressure is on to be more collaborative,” says Stan Nosek, former vice chancellor of administration at the University of California, Davis (UC Davis). “And when people are in survival mode, they're more willing to put aside obstacles—like politics or turf battles—and consider things they wouldn't before.”

Since 2007, for example, UC Davis has collaborated with city, county, and state agencies on emergency management—something it hadn't done earlier. Pooling resources has enabled the various entities to enhance their training, purchase more equipment, and apply for federal grants to make their funds go even further. The university and the city are considering other potential areas for collaboration, such as sharing police, fire, or other services. 

Nosek observes, “We have fleet vehicles, and so does the city. We have to do maintenance on our street lights, and so does the city. Are there ways to leverage our time and resources and do something together that will be a plus for all of us? Those conversations are all on the table right now.”

A New Emphasis

Even long-standing collaborations feel the pressure to do more. “With the economic meltdown, collaboration is a growth industry,” says Phillip DiChiara, managing director of the 15-year-old Boston Consortium for Higher Education. “What's interesting is that things we didn't do a few years ago, in a different economic environment, are again under consideration.”

The 15 members of the Boston Consortium range in size and focus from the Berklee College of Music to the Massachusetts Institute of Technology. Their common element is geography; all but one are located within five miles of the others. Other consortia mirror state systems (think California or the State University of New York) or athletic conferences composed of similar-sized institutions. Still others, regardless of their size or enrollment, find common ground in the services they provide to students, faculty, and staff.

Every higher education institution, for example, needs a library. That fact prompted 10 public and private educational institutions in Colorado and Wyoming to form the Colorado Alliance of Research Libraries more than 30 years ago. Although the alliance has always done some joint purchasing, its members have recently turned their attention to sharing electronic books and eliminating duplicate purchases.

“With all the budget cuts, there's greater emphasis in that group to collaborate. We're all trying to get out of our own boxes and collaborate more, primarily to save money,” says Patrick Burns, vice president of information technology and interim dean of libraries at Colorado State University (CSU) in Fort Collins.

More Than Money

Saving money was certainly a driving force behind the creation in 1957 of the Committee on Institutional Cooperation (CIC). Back then the presidents of the Big 10 schools and the University of Chicago decided to pool their resources to purchase a sophisticated telescope that would otherwise have remained out of reach for individual schools. In time, the CIC initiated cooperative purchasing on behalf of its now-12 members and today manages contracts worth tens of millions of dollars for items as different as mattresses and test tubes.

For many a consortium, cooperative purchasing makes perfect sense, says Barbara McFadden Allen, CIC's director. (See “Power Shopping” in the February 2009 issue of Business Officer.) She explains, “Most of the time, aggregating your purchases gives you greater purchasing power. You reduce the cost of each item by buying more, and you can also get the best possible maintenance contracts and customer service from vendors.” Allen estimates that CIC's campuses collectively save more than $5.5 million annually by pooling their purchases.

“But,” she quickly adds, “there's more to the story.” When CIC asks for feedback from its stakeholders, it hears about not only the cost savings achieved through the consortium but also more intangible benefits related to networking and relationship building.

“Communities of peers exist all across CIC,” Allen continues. “They meet together, benchmark their own strategies, build their expertise, and do rapid learning from each other—and you can't put a dollar value on that.”

The Boston Consortium has 22 facilitated communities of practice—including chief human resource officers, energy managers, and institutional researchers. In those meetings of like minds, says DiChiara, administrators share information, act as an early warning system for one another, learn to avoid duplicating another institution's error, and frequently undertake shared projects of mutual benefit. Because this professional fulfillment occurs within the higher education environment but outside the confines of one's own institution, people feel freer to put forward new ideas.

“If you limit your view of what consortia can do to group purchasing or library sharing, you're severely undervaluing the collective resource,” DiChiara believes. “We don't merely search for common ground among our members, we try to innovate. The consortium offers a safe place to experiment.”

See sidebar, "Five Success Factors." 

Areas of Activity

Of course, innovation and experimentation are fraught with the risk of the unknown. That's something cash-strapped institutions might otherwise shy away from if they weren't sharing the burden of risk through collaboration.

Here's a sampling of how colleges and universities are working with one another—and with other organizations, both public and private—to improve their outcomes and achieve more.

Health and safety. The Virginia Tidewater Consortium for Higher Education, located on the Atlantic coastline, recently sponsored a full-day exercise that simulated the arrival of a hurricane. The scenario began four days before the hurricane's landfall and concluded two weeks after, which challenged participants to prepare rapid responses while weighing the long-term effects of their actions.

The consortium's 15 members include community colleges, private colleges, state universities, and a national defense college. One of the universities developed a realistic video, featuring a meteorologist from a local TV station, that tracked the progress and strength of the approaching “hurricane.” In addition to deciding what to do as individual institutions, the teams collaborated on issues such as coordinating closing times and selecting a site to house evacuated students.

“For colleges in close proximity, it just makes sense to figure out what you could be doing better together, especially in the event of an emergency,” says Lawrence Dotolo, who has been president of the Virginia Tidewater Consortium since 1975 and also serves as executive director of the Association for Consortium Leadership.

As a result of the hurricane exercise, for example, the Tidewater Consortium is considering the purchase of a large generator so each school doesn't need to make that investment on its own. The consortium is also awaiting news on a federal grant that would enable its member institutions to greatly enhance their emergency preparedness levels.

Grants from the state government have enabled the Five Colleges of Ohio—a consortium of private liberal arts colleges—to conduct specialized environmental safety trainings. The first $50,000 grant educated faculty members in the science, art, and theater departments about pollution prevention. Thanks to a second $50,000 grant, the Five Colleges are conducting training on environmental best practices and EPA regulatory requirements.

Administrative operations. An $840,000 grant from the Andrew W. Mellon Foundation financed the largest and oldest project of the Five Colleges of Ohio: a joint library system operated by four of its members.

“On their own, it was cost-prohibitive for the colleges to join the statewide library consortium. By merging library systems and hiring a single systems manager, they could be more efficient and effective,” recalls Susan Palmer, the consortium's executive director.

In the first 10 years, the libraries' combined collection nearly doubled in size, reaching 2.2 million volumes. The four colleges maintain separate physical collections and individual library Web sites but have cooperated on collection development, cataloging of government documents and serials, and library information literacy.

That first project encouraged two of the colleges to merge their library technical services departments. One college orders and catalogs all monographs from the major vendor while the other orders and catalogs materials from all other sources. Music scores and audio CDs are all cataloged at one college. The two colleges are working to streamline other processes and increase consolidation of operations.

All five members of the consortium share the costs of renting an off-campus facility for storing about 100,000 lesser-used books and employing a part-time staff member. Two consortium members have also established a “floating collection,” so books stay at the borrower's college until requested by someone at the other college.

Despite its bookish beginnings, the Five Colleges of Ohio has become what Palmer describes as “an all-purpose consortium that focuses on what's needed most.” For example, all five colleges—and the consortium itself—now use the same auditing firm. That not only saves money but also prompted the auditing firm to conduct group workshops related to the new Form 990 requirements.

Five members of the Boston Consortium cocreated and now operate a small but growing auditing function. By doing so, they lowered costs on their individual audits and diminished the audit firm's learning curve for working with higher education.

“Under the umbrella of the consortium, those schools coemploy three full-time auditors, which saves them a significant sum,” explains DiChiara. “They built a separate business unit, while another set of schools went in a different direction entirely: They simply did a joint RFP. But it all works.”

To DiChiara, these diverse outcomes illustrate a consortium's strength. He notes, “It's very rare that all schools will want to do precisely the same thing. So collaboration is not necessarily about a single solution but rather multiple solutions—maybe even superficially antithetical ones, if they help some schools operate more efficiently.”

Recruiting. Like most consortia, the Tidewater Consortium always gives its members the opportunity to opt out of any project. When it comes to jointly recruiting students, however, few decline to participate.

“Because we're a geographic consortium, every school has its own niche. That means they're not really in competition for the same students,” says Dotolo. The consortium recently hosted a one-day program to explain provisions of the GI Bill to military personnel; each member institution had a presence at the program but didn't have to bear the full cost of sponsoring the program on its own. 

The Tidewater Consortium also operates Virginia's largest college access program, which aims to generate interest in postsecondary education among populations that traditionally have not pursued it. “We take our message to places other people may not go, such as social services agencies, unemployment commissions, homeless shelters, and prisons,” Dotolo explains. Both the military and educational access programs, he adds, “show how schools can work together for a good cause and save money in the process.”

Technology. Beyond its 15 institutional members, the Tidewater Consortium has two affiliate members—the local PBS station and the local cable provider. Together, they operate a 24-hour television channel that delivers higher education programming to approximately 435,000 homes. Some of the informational and educational programs promote individual colleges, while others address general topics such as professors' expectations and characteristics of successful students.

The Five Colleges of Ohio, whose operating committee comprises the colleges' chief financial officers to manage administrative and financial affairs, has purchased equipment that enables videoconferencing among faculty and staff at two or more sites. The CIC can also connect its 12 members via high-definition video, thanks to the fiber-optic network they have co-owned and operated since 2006. Faculty use the network to deliver long-distance courses, and researchers rely on it to transmit large volumes of data.

“That project started as a cooperative purchase of some network assets but quickly turned into a joint asset that is faster, has more capacity, and provides a platform for additional leveraging that is beyond anything one school could have purchased individually,” says the CIC's Barbara Allen. “By linking together, each school spent less to get a much more powerful network.”

The $1 million-per-year price tag on a national Internet connection certainly seemed out of reach for educational institutions in Colorado, even though the state government, K–12 school systems, local and regional libraries and museums, and both public and private college and universities have shared Internet access since 1986. The solution was to share even more, by collaborating with similar institutions in Utah.

“That 2005 collaboration resulted in tremendous savings, as well as providing better service and more capacity collectively than we each could have afforded individually,” says CSU's Patrick Burns. “Now we're expanding that concept of Internet aggregation to four states instead of just two.” The Colorado Internet Aggregation project is run by the National Center for Atmospheric Research, one of five federal entities participating in the collaboration.

Software. On behalf of other educational institutions and government agencies, CSU took the lead in purchasing a statewide license for geographic information system software. Likewise, the Five Colleges of Ohio saved money by negotiating group licenses for mathematics and chemistry software programs.

One group of institutions went so far as to jointly purchase a software company. Ten years ago, five universities purchased RATEX, a for-profit company whose inventory management software they used in their campus stores. They also founded the nonprofit Collegiate Retail Alliance (CRA), which has grown to include 25 stores that use RATEX software, plus 40 stores that use different software.

“By forming an alliance, we created a virtual chain of college bookstores that can achieve back-end efficiencies and have greater clout with partnering vendors. It is just smart business,” says Roger Reynolds, director of the bookstore at Brigham Young University in Provo, Utah.

Perhaps the most ambitious undertaking in the software area is the Kuali community, a consortium of educational institutions dedicated to developing open source systems. (See related article in this issue, "Going for the Bold.") Costs are based upon an institution's size; members range from small colleges to community colleges to research institutions. Some members also dedicate technical support staff to the project.

“Many people thought it was too much risk and too good to be true, but we thought it was a good way to leverage our limited resources,” says Stan Nosek of UC Davis, an early adopter of the Kuali Financial System project.

“The software is designed by higher ed and for higher ed, so it's better at meeting our needs,” adds CSU's Burns. Plus, CSU saved several million dollars when it implemented the Kuali Financial System last July. Burns estimates his campus would have spent about $5 million for an off-the-shelf product, compared to the $2 million it expended as a partner in the software's development.

The Cutting Edge

Such a wide range of projects reflects the diversity of collaborations within higher education. Each group has varying needs, a unique culture, and a different tolerance for risk, leading Five Colleges' Susan Palmer to observe, “Every consortium has to find what works for it.”

Operating a library together has worked for the Five Colleges of Ohio, and sharing business systems may work, too. All five colleges are investigating the concept and its potential savings and service improvements. Palmer says, “Combining additional systems is a long-range vision; we'd likely start by moving to the same vendor.”

One emerging CIC project relates to storing the vast amount of data research universities accumulate but rarely delete. One of its members is spearheading the effort to analyze sharing in technology services and access to a data storage center.

After many years of data gathering, the Boston Consortium appears close to launching its Health Management Initiative (HMI), a major effort to better control health-care costs by expanding the social contract with insured employees. In short, the universities would pay for more preventive care and medications, in the hope of decreasing more costly hospitalizations.

“Over the next three years, the consortium plans to spend $24 million—and $8 million of that represents incentives to employees providing a three-year yield of about $46 million,” says DiChiara. “It's a win for the members, a win for the faculty and staff, and a win for the carriers if we succeed in raising practice standards.”

Behind HMI are years of discussion, research, analysis, and planning, much of it handled by staff at member institutions. “If you're serious about collaboration, don't get involved unless you're also serious about spending staff time and money,” DiChiara advises. After all, he observes, the word labor appears within the word collaboration for a very good reason.

SANDRA R. SABO, Mendota Heights, Minnesota, covers higher education business issues for Business Officer.


Five Success Factors

Money may be tight right now, but you may never find a better time to initiate a new collaboration or take an existing one to a new level. “When times are good and money is flowing, people are more competitive. They want the biggest and best for their campuses,” says Barbara McFadden Allen of the Committee on Institutional Cooperation. “Now, with resources so tight, people are more motivated to collaborate in order to bridge a gap or get a service they need.”

Here are five tips for structuring a collaboration that has a good chance of success.

1. Build on trust. The Boston Consortium for Higher Education operates on this simple premise: Dialogue leads to relationships, relationships lead to trust, and trust leads to opportunity. In other words, don't expect to launch a successful collaboration based on a few conversations.

Fortunately, colleges and universities already have an edge in this area. “We in higher ed tend to be fair, ethical, and transparent about the things we do. That existing culture fosters trust and enables it to deepen over time,” says Patrick Burns of Colorado State University.

2. Find the common ground. Identify the problems facing most, if not all, of the potential collaborators. Pursue the opportunities, no matter how small, that offer the potential for the biggest payoff.

“That may sound obvious, but you'd be surprised how often people start creating a solution for a problem no one really has,” says Allen. “That's frustrating and not particularly strategic.

3. Keep the playing field level. “Make sure every member has an equal say, no matter what the size of the institution,” says Lawrence Dotolo of the Virginia Tidewater Consortium for Higher Education. It helps if all members pay the same dues and if the people participating from the member institutions consider themselves peers.

“When we've struggled with collaboration,” notes Allen, “it's often because there was an uneven distribution of power and assets across the group.”

Phillip DiChiara of the Boston Consortium warns against pursuing projects dominated by managers who arrive with all the answers in hand. Such “knights in shining armor,” already convinced of the rightness of their solution, interfere with the collective ownership that true collaborations inspire.

4. Exercise patience. Resist the temptation to jump into a project as a justification for a meeting or an expenditure. Some projects require a lot of research or are simply not meant to be.

“If you don't do the homework, you risk dashing off and hitting a dead end. Then you have to go back and start all over again,” says DiChiara. “Generally, successful collaborations aren't sprints, but marathons.”

5. Let go. Although every institution has its own way of doing things, collaboration calls for an entirely new approach. That usually means ceding individual control in favor of the greater, common good.

“You have to move beyond wanting everything your way, customized to your personal preferences,” says Stan Nosek of the University of California, Davis. “By giving up a little, you can gain a lot more.”

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