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Procurement >> Buying Power
2/3/2006
Technology product procurement can be a daunting task for a college or university—especially a smaller institution—to accomplish alone. Perhaps this is why these schools are tackling it by banding together.
Even if you’re not a diehard Beatles fan, you probably know the song, With a Little Help from My Friends. Perhaps nowhere is the message of this classic tune more applicable than in the world of IT procurement for higher education. When it comes to purchasing technology, a little help from your friends is the key to economies of scale, which frequently net schools the best bargains available. Simply put: Buying in bulk can offer significant advantages.
Over the years, a number of consortia have experienced these benefits firsthand. In the Midwest, the Wisconsin Association of Independent Colleges and Universities (www.waicuweb.org) buys laptops as a unit, and distributes the hardware among its 20 member schools. In Appalachia, via the Maryland Independent College and University Association (www.micua.org) and the Pennsylvania State System of Higher Education, educators do the same with other technologies. In fact, each of these academic federations spend millions on technology every year. But without the consortium approach they’ve adopted, the individual schools that comprise each of them would be spending a great deal more.
Should schools in your region explore such consortium purchasing models? To explore the realities of technology purchasing consortia, Campus Technology sat down with prominent leaders of two such organizations: the Claremont University Consortium (www.cuc.claremont.edu) in California, and the Massachusetts Higher Education Consortium (MHEC; www.mhec.net). While Claremont is a relatively small consortium consisting of seven schools, MHEC is mammoth, comprising 83 schools and more to come. Across both consortia, many campus leaders hail the pros of the collaborative buying approach, while some are keenly aware of the cons. Still, there’s no disputing that consortium buying has changed the face of procurement forever. Perhaps two heads really are better than one.
Living Large
Good deals come in spades for the Massachusetts Higher Education Consortium. The organization, a consortium of 83 schools across Massachusetts and most recently Rhode Island, is one of the largest academic consortia in the country. Since it was founded in 1967, MHEC has brokered $1.7 billion in contracts. Last year alone, the group negotiated nearly $180 million in deals—more than 80 separate deals with nearly 600 vendors. Notably, more than half of the consortium’s overall expenditures last year were on technology. As MHEC Chairman Jake Bishop puts it, “technology is our anchor.”
MHEC tech deals break down into four major categories: a $66 million deal for computers, peripherals, memory, and hard drives from CDW-G (www.cdwg.com); a $16 million deal for telecommunications networking devices such as hubs, routers, racks, and fiber optic cable; a $13 million deal for printers from Canon (www.canon.com), Xerox (www.xerox.com), and Toshiba (www.toshiba.com); and a $4 million contract for software from Microsoft (www.microsoft.com), Adobe (www.adobe.com), and others. Add in an $800,000 contract for mailroom equipment and a new contract for outsourced document shredding and, as Bishop states, it’s clear that technology really is the anchor at MHEC.
Campus Technology: Jake, what are the unique challenges
inherent in buying IT as a group?
Bishop: One of the things we need to be concerned
about is the life expectancy of our equipment. Technology is changing so fast
that you can’t do long-term contracts because as soon as you put one in
place, new technology comes out. We allow for tech refresh by keeping contracts
short—no more than one year. This way, we can stay agile and make sure
we get the best of the best for all of our constituents. When we do bid, we
ask vendors to make offers for complete product lines. We don’t go out
and say we want Model X; we tell them that we want them to bid Brand Y. So far,
the strategy has proven to be flawless.
What is the greatest key to your system’s success? Once a contract is in place, we step aside and the schools deal directly with vendors. In order to facilitate this, everything g'es through a portal created by Supply Guys [www.supplyguys-hardware.com; based in Hadley, MA]. In the past, we were spending about $50,000 a year to print contracts on paper and send them through the mail to the schools. Now, because we have the contracts online, we’re printing fewer and fewer paper copies, only for those who still insist on them.
E&I Going Strong
No story about procurement consortia would be complete without mention of the Educational & Institutional Cooperative Purchasing (www.eandi.org). The organization, known commonly among purchasing managers as E&I, uses the combined purchasing power of more than 1,500 member organizations to lower costs on a wide range of products and services. It also provides members with access to a diverse portfolio of contracts for just about every product under the sun.
Most recently (late last year), E&I inked a deal with schools in the California State University system, a federation of 23 comprehensive and polytechnic institutions across the Golden State. The first contract issued by E&I under this agreement was through OfficeMax (www.officemax.com) for significant discounts on office products.
Tom Fitzgerald, CEO of E&I, notes that other contracts were expected to follow rapidly as 2006 gets underway. “E&I’s strategic approach to purchasing will enable new efficiencies for the entire CSU system,” he says. “We’re excited to be working so closely with [them].”
Yet, the CSU system isn’t the only academic body to be making headlines with E&I these days. Merrimack College (MA), a small liberal arts school with limited ability to compete against larger Northeast institutions for good prices, recently signed up to take advantage of cooperative pricing. Since then, the school has benefited from contracts with vendors who sell everything from technology and scientific equipment to furniture and graduation gowns.
Other big wins for E&I include a new contract with the Stevens Institute of Technology (NJ), and a contract extension with the Committee on Institutional Cooperation Purchasing Consortium (CICPC) which, through 2008, includes 11 Big 10 universities and the University of Chicago (IL).
The E&I effort was launched in 1934 by members of the National Association of Educational Buyers, which just recently changed its name to the National Association of Educational Procurement (NAEP). For additional information, visit www.naepnet.org.
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