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Building a Better Alternative to "Joe's $999/$899/$799 PC"

Mark Aseltine, Director, Provider Support Services, Information Systems and Computing
Christopher Bradie, Director, Computer Sales Services
Donna M. Milici, Director of Planning, Information Systems and Computing
Ira Winston, Executive Director Computing, School of Arts & Sciences and School of Engineering

University of Pennsylvania
Philadelphia
Pennsylvania

Technology Distribution Redesign Project: Abstract

The Technology Distribution Redesign Project (TDRP) team was created as a short-term task force charged with outlining a strategy to develop an integrated, easy-to-use model for hardware and software acquisition that aligns with Penn's technology objectives. Jointly sponsored by the Vice Presidents of Finance and Business Services and the Vice Provost for Information Systems and Computing (ISC), the cross-functional scope of the project entailed revisiting the traditional technology procurement support roles of the campus computer store, purchasing group, and central information technology organization.

The team agreed on two underlying principles: first, that a web-based model was essential for reducing infrastructure, providing consistency in communicating information, and delivering services to the Penn Community; second, that the success of the web interface would rest on the existence of a self-funded organization responsible for the ongoing management of the services necessary to support the model. The team�s proposal suggests that the combination of the electronic interface and the managing organization will overcome the challenges that exist as a natural result of Penn�s decentralized structure, fragmented internal processes, and changes in the external market.

The outcomes of the team�s efforts thus far provide evidence that cross-divisional leadership in strategic computing initiatives ensures campus wide buy-in and can result in incremental savings and improved service offerings that align with both the University�s technology objectives and overall mission.

This document summarizes the TDRP team�s findings and concludes with suggestions for action items related to the successful implementation of the strategy.

Origins of the Process: Marketplace Challenges

In 1997 the Computer Commodities team was created to focus primarily on discount structures, ordering methods, and procurement for desktop computers. The team was led by Acquisition Services with the assistance of Purchasing Group Inc. (PGI), an outside consulting firm. The group�s efforts resulted in purchasing agreements that provided pre-negotiated discounts for departmental customers and also created various web-based information mechanisms.

At the conclusion of the initial phase of the team�s work, it became clear that there was a need to devote more effort to ongoing management of vendor programs and to improved communication about recommended products and preferred vendors. In addition, there was a significant amount of feedback from the campus that an effort to develop a more comprehensive strategy, including software licensing, was needed. Finally, in the external environment, there are an increasing number of new suppliers offering diverse services such as enterprise-wide site licenses, leasing programs, e-commerce, and build-to-order systems. The following are examples of the challenges impacting the Penn community:

�With computer products becoming more of a commodity, the number of suppliers, products, and available services continues to increase. As a result, there is greater difficulty for the end user in obtaining consistent and reliable product information to understand the available optionsparticularly as they relate to both their acquisition cost and their impact on support issues and Penn�s technology standards. To better manage this dynamic, there is a strong need to provide a consistent message to the end user community.

�Individual departments and their local computer support providers have autonomy in their purchase decisions. The varying levels of expertise among the staff results in a broad range of support needs: there are those who are largely self-sufficient and need only to have a mechanism in place that allows them to procure goods; in contrast, there are those who rely on the University and its central support services to obtain guidance and direction; finally, there are others who require that their transactions be facilitated from pre- to post-sale support.

�Suppliers offer multiple ways of acquiring their goods and services. Multiple (and potentially conflicting) computer vendor agreements exist throughout the University. We identified examples where an identical system configuration could be obtained at different price points depending on whether an end user purchased through a VAR, the campus store, the vendor�s web site, the University�s central contract, or the manufacturer�s sales agent. There was no guarantee as to which of these sources would provide the end user with the lowest cost at any given time, nor any organized process to monitor the procurement at that level to ensure an optimized solution.

 

Internal Needs Assessment and Organizational Analysis: Weaknesses and Opportunities

In order to develop a comprehensive solution, senior managers from across Penn�s schools and administrative centers participated. Computing directors from Arts and Sciences, Engineering, Law, Medical, Dental, and Wharton schools represented the needs of their faculty, staff, and student purchasers, and helped define a strategy that was consistent with their IT acquisition and support models. From the administrative areas, directors from ISC, Business Services, Acquisition Services, and the Penn Health System examined current processes and assessed opportunities to improve services.

The team members engaged in an exercise called a SWOT Analysis (Strengths Weaknesses Opportunities and Threats). Representatives from Acquisition Services, ISC, and the Computer Connection each presented an internal "self analysis" of their respective organizations; the remaining team members, from the schools and the health system, provided feedback and shared their perspectives. The goal was to conduct a constructive exercise that would review areas where the central support organizations excelled, those where a need for improvement existed, those where new options were available, and those where restraining forces might arise.

The team then turned its attention exclusively to the areas that were identified as weaknesses and opportunities. To remove the possibility of being constrained by organizational barriers, the data was summarized without identifying the specific support organization. This was key to the success of the exercise because it encouraged the group to take joint ownership and responsibility, rather than assign blame. With the organizational headers removed, the data was categorized into six specific areas. These are listed below, along with examples of key relevant issues:

�Management of expertise and human resources

�Development and expansion of services offered

�Dependency on existing infrastructure

�Financial resources

�Partnership opportunities

�Marketing and communication

From this exercise, the team learned that the challenges faced within individual units were more universal than suspected. Understanding this dynamic was a milestone in recognizing the importance of working toward a common vision.

This exercise revealed that there were constraints under the existing model that challenged Penn�s ability to respond to the dynamic needs of the changing marketplace. Maintaining current service levels was increasingly difficult, and responding to the need for expanded services would require significant investment. It became clear that a new strategy was needed, and that the current organizational structures should be reconsidered in order to develop an improved solution.

Value Propositions and Co-Marketing Initiatives

Early on in the process, the team agreed that computer-related products were distinct from other types of commodities for a number of reasons, including narrow vendor margins and the inability to mandate the use of any particular product, brand or platform. As such, the ability to leverage buying power to achieve lowest-possible cost was inherently limited.

Though it was not possible for Penn to mandate the use of a particular product, the team concluded that the University�s endorsement of vendor product lines had significant influence in shaping customer buying decisions. In exchange for this endorsement, Penn would require the vendors to meet certain criteria, including access to second-level technical support, special training opportunities, and provisions for revenue generating activities to fund technology related initiatives. It was agreed that the University and the vendors would pursue a value proposition that went beyond leveraging buying power, by seeking to co-market and co-support goods and services that would better align vendor objectives with the overall technology goals of the University.

In short, the goal of co-marketing is to transform vendors� standard programs and offerings into a customized solution tailored to the Penn community, while simultaneously generating a source of revenue that can be used to support centralized technology initiatives.

Benchmark Exercise: Exploring Precedent in Peer Institutions

The timeframe for benchmarking was short. Because of the relative newness of TDRP types of initiatives in the higher education channel, there were a limited number of institutions with relevant precedents. Parallel organizational structures and similar population demographics were the primary factors in identifying universities for the benchmarking process. Harvard and MIT, which engage in two very distinctive structures, were selected as the focus of exploration. To this end, TDRP team representatives from the schools and administrative centers visited both institutions and met with their senior managers responsible for procurement, retail management, and IT oversight.

The Harvard model idealizes the campus retail center as the primary outlet for technology-related procurement and related support services. The campus store, help desk/call center, on-site support service, and break/fix repair organizations work underneath the same umbrella within the central IT organization. In contrast to the Harvard model, MIT has discontinued its traditional retail procurement model in favor of a web-based, direct purchasing process, while maintaining a walk-in service center devoted solely to customer service-related functions and end user consultation.

While neither the Harvard nor MIT model was entirely appropriate for Penn, each institution provided insight into how Penn might develop its strategic direction and contained elements that would be desirable in a newly developed system. Specifically, the team determined that it was important to maintain direct control over technology support services and that a portion of the University’s activities should generate funding to support those services. Based on these two principles, the team directed its efforts to develop a structure that would support the objective.

The Desirable Model for Penn: Reducing Infrastructure, Leveraging Expertise

Using the information from the SWOT analysis and the observations from the benchmarking exercise, the team considered several possible scenarios for delivering services. Topics for consideration included outsourcing the Computer Connection’s management to an external agent; transitioning all distribution services to a web-based reseller; and supplementing an on-site retail store (whether University-operated or managed by an outside entity) with a web-based distribution. The team felt that none of the three scenarios adequately addressed all of the concerns identified in the SWOT analysis.

Further discussion among the team members led to several conclusions. Below are some of the highlights:

•It is desirable for Penn to reduce or eliminate infrastructure wherever possible by relying on the distribution services of vendor partners. Simultaneously, the University must retain responsibility for establishing and managing the parameters that will map vendor programs to Penn’s standards. Vendor programs must be monitored and guided on a continual basis so that they work in concert and align strategically with Penn’s overall technology objectives.

•An on-site customer service center is necessary to meet the requirements of the end user community and to ensure Penn maintains its influence in shaping the campus technology strategy, particularly as more vendors move toward a direct-business model. In addition, the varying degrees of customer expertise in Penn’s distributed support environment necessitates that a central agency be responsible for proactively managing pre/post transactions services and communicating consistent messages to the University community. The service center should showcase demonstration equipment, provide stations for web-based ordering, and maintain an inventory of peripheral equipment and software to support walk-in sales. This organization should also be responsible for the management of vendor programs as well as their associated marketing and communications.

•Development of a seamless, easy-to-use, web-based interface is important for the effective communication of clear and consistent messages to the University community. A single point of entry where comprehensive product and pricing information (along with standards and recommendations) can be easily obtained is desirable. Although having the web system interface with the University ordering and billing process is a critical pursuit, such an endeavor should not inhibit the progress of designing an electronic repository of information in the interim.

From this discussion, the concept of creating a "virtual store" under the auspices of a newly organized customer service center emerged.

Team Recommendations: Articulating the Strategy

The recommendations below reflect the conclusions resulting from the TDRP process:

Objective:To develop a reliable delivery mechanism that is EASY TO USE

Strategy: Develop a web-based interface that will provide end users (both administrative and faculty/staff/students) with a common point of entry for information and procurement tools. The goal is to integrate a number of independently maintained web sites into a single path for the information. In addition, the procurement component should be developed in concert with campus e-commerce initiatives.

Rationale:

•Provides a centralized source of information for product sources, offerings, discounts, and alternatives

•Offsets distribution infrastructure costs by relying more on the distribution services of the vendors

•Organizes options and prioritized solutions for customers to assist in their decision making process (i.e. helps brings a unified front to a decentralized environment)

Expected Result: Improved customer service experience and incentives for purchasing recommended products at the lowest cost, making "Joe’s $999 $899 $799 PC" much less appealing

Objective:To pursue customized programs that will be VALUABLE TO THE COMMUNITY

Strategy: Pursue co-marketing initiatives which endorse vendor programs that have been customized to align with campus standards and that will support revenue-generating activities.

Rationale:

•Tailors generic vendor programs to Penn’s specific environment in order to better fulfill customer needs

•Supplements volume discount pursuits by providing sources of revenue to fund desired centralized services

•Reduces support costs by encouraging a standardized technology

Expected Result: Ability to generate sources of funding and work toward support-cost reduction

Objective:To develop a model that will SUSTAIN CENTRAL SERVICES

Strategy: Restructure the campus computer retail center into a customer service organization responsible for the ongoing management needed to develop and sustain successful vendor programs.

Rationale:

•Minimizes infrastructure costs associated with technology distribution (box pushing, etc.), re-deploying resources to focus on value-added services

•Establishes an on-campus center to provide customers with pre/post transactional services

•Provides an agent to work with the end-user community, IT services, and centralized purchasing to ensure goal alignment and successful program implementation

•Ensures that a knowledgeable intermediary is available when intervention is required internally or with vendors

Expected Result: Improved management and allocation of University resources

Organizational Support Structure: Outline for an Integrated Model

Collaboration across the key administrative departments involved is critical to the success of the proposed model. It is essential that Penn speak with a unified institutional voice when negotiating and partnering with vendors. It is also important to provide an uncomplicated entry point for campus users, with the supporting infrastructure behind the scenes. To this end, the team developed a diagram that outlines the respective roles and responsibilities of each administrative center and also illustrates the strong connections that need to exist among the groups. (See Appendix A).

Information Systems and Computing will continue to work with the user community to set the strategic direction for campus technology by defining standards, providing strategic direction, and evaluating available technology options. Acquisition Services will continue its role in negotiating contracts that are consistent with the University’s technology objectives while ensuring proper compliance with the requisite terms, conditions, and procurement-system implementation necessary for the effective implementation of the vendor programs. In concert with Acquisition Services and the University e-commerce team, the campus store will develop an e-commerce solution that will supplement the retail center. It is anticipated that over time, the ratio of walk-in sales will decrease in favor of the web-based system. The campus store is tasked with using innovative methods to encourage use of the web-based system as the preferred ordering mechanism.

The team’s recommendations call for restructuring the campus computer store to eliminate as many of the non-value-add infrastructure processes as possible (e.g. maintaining large inventory and related delivery services) in favor of creating a service organization focused on managing and implementing vendor programs. The source of funding for the organization would stem from the revenue resulting from sales-related activities that it would continue to provide. In short, the newly created organization would manage the "entry point" into the integrated system.

Responsibilities of the newly organized service center are to include:

  • Accountability for the effective operation of the web-based system and associated vendor-direct delivery processes

  • Facilitation of pre/post sales customer transactional services

  • Management of relationships with technology vendors including oversight of co-marketing agreements, software site license programs, and initiatives on behalf of schools/centers

  • Operation of an onsite retail transaction center with a select inventory of peripheral hardware, software, and accessories available for purchase

  • Administration of front-end user interfaces and back-end data analysis related to technology procurement to better leverage purchase decisions

  • Communication with legal department and other officers charged with ensuring compliance with University’s established terms and conditions

  • Interaction with end user community and IT services with the goal of ensuring goal alignment and support of Penn’s overall technology objectives, initiatives, and projects

  • Communication with campus community to market and encourage usage of the system

  • Proactive facilitation and advocacy in situations where intervention is required internally or with vendors

  • Regular review and assessment of programs and services to ensure alignment with campus needs

    • Summary and Conclusion

    In summary, the recommendation of the TDRP team is that Penn harness the power of web-based information sources and ordering tools within a single, self-funded organization charged with integrating the functions of customer services, communication and marketing of information technology standards, and computer vendor program management.

    Having developed consensus from the team members, the TDRP initiative has moved into "Phase II" implementation. A subset of the team, comprised of members from the administrative centers, has been chartered to carry out the recommendations that were established in the larger group. Work with our major vendors on co-marketing agreements, development of a newly-designed organizational service center, and designs for a web-based ordering solution are targeted for implementation by July 1, 2000, the beginning of Penn’s new fiscal year.

    Acknowledgements

    University of Pennsylvania Technology Distribution Redesign Project Team:

    Abe Ahmed, Acquisition Services, University Purchasing Agent for Computer Products

    Mary Alice Annecharico, School of Medicine, Executive Director, Computing & Information Technology

    Mark Aseltine, Information Systems and Computing, Director, Provider Support Services

    Christopher Bradie, Business Services , Director Computer Sales Services, TDRP Team Leader

    Jeff Breyers, University of Pennsylvania Health System, Director, Technology Purchasing

    Janet Lind, School of Medicine, IT Senior Project Leader

    Robert Michel, Acquisition Services. Director, Acquisitions Services

    Donna M. Milici, Information Systems and Computing, Director of Planning

    Pablo G. Molina, Law School, Director of Information Technology Services

    Don Montabana, Interim Director for Computing, School of Dental Medicine

    Ira Winston, Schools of Arts & Sciences and School of Engineering & Applied Science, Executive Director for Computing

    Deirdre Woods, The Wharton School, Director, Computing

    Excecutive Sponosors:

    Dr. Kathryn J. Engebretson, Vice President, Finance

    Lee Nunery, Vice President, Business Services

    Dr. James O'Donnell, Vice Provost, Information Systems and Computing

    Additional thanks to:

    Helen Anderson, School of Engineering & Applied Sciences, Sr. Director, Computer Ed. & Tech. Svcs.

    Isobel Cashman, Schools of Arts of Science, Director, Desktop Computing

    Gerard McCartney, The Wharton School, Executive Director, Computing & Information Technology

    Dr. Felice Tilin, Director, Leadership Development

    Marie D. Witt, Associate Vice President, Business Services

    Special thanks to the following & their colleagues for sharing their expertise & experiences with us:

    Joanne Hallisey, Manager, MIT Computer Connection, Massachusetts Institute Of Technology

    W. Tod Hadley, Manager, Client/Vendor Services, Harvard University

    Frank Urso, Director of Technology Services and Printing & Publications, Harvard University

    Appendix A: