Migrating services to the cloud in higher education is happening at a faster rate than ever before. According to Tribal’s CTO, Mike Cope, this is primarily because the sector’s appetite for risk has changed as education institutions seek solutions that provide the most up to date capability, for the maximum number of use cases, whilst also providing enough flexibility to adapt to increasingly frequent business changes.
However, another driver is an improved understanding of the financial models for cloud technology in education, and a change in focus on what ‘return on investment’ (ROI) means in ‘cloud terms’. Mike summarises:
Three years ago, if CIOs tried to make the case for a cloud option, there was usually pushback from finance. This really isn’t the case today...
The operational and business continuity gains that ‘cloud-first’ strategies deliver means that ‘cost savings’ are no longer considered a driver, Mike continues:
Email is a great example of this: five years ago, most universities had exchange servers on premise to support third party email providers. Very few institutions do this now. It just works to have this service in the cloud. It costs more, but there are many, many advantages.”
Indeed, as cloud solution offerings mature, so do provider’s pricing/cost models and industry’s understanding of them, which is helping universities and colleges to make the business case for change more effectively. We recently interviewed CIOs and IT leaders in HE and FE settings to get their insights into the changing financial business case for eductech in the cloud…
5 CIOs share their thoughts on the financial business case for moving edutech to the cloud
Gareth McAleese Head of Enterprise Applications and Data at Ulster University, explains why you have to consider the total cost of your operations in your financial model:
Cloud isn’t cheaper in raw balance terms, and it can be quite complex to break down the costs to cost centres and different departments etc. But over the four years that we’ve been moving services to the cloud, it has dramatically transformed many of our processes. User experience (for staff and students), accessibility and ease of use have all been significantly improved."
For John Hemingway CIO of Durham University, any financial model also needs to factor in the reliability of the service:
With the move comes resilience and availability. These are key drivers as institutions wake up to the idea that commercial providers can support their applications better and more cost-effectively than internal teams can.”
Seven years into the digital transformation at Kingston University, Tiger Wang, Head of Digital Applications and Portfolios, shared his insights into the longer term costs which could help you calculate a more complete ROI:
“It requires significant upfront investment to re-platform on premise services to the cloud. It’s the equivalent of your seven-year cycle of investment – all in one go. So you need to think about calculating your ROI over seven years as well. If your institution isn’t prepared to do that, it’s a very difficult sell. You need a leadership team that is aiming for total transformation.
Based on our models, we’ve seen a £1m a year saving over three years: It required £8million up front investment to migrate our Data Management System, but over the seven-year lifecycle, it did work out cheaper.
A key part of understanding this business case is looking at the finance model and determining what it would look like if you continued to invest in on premise solutions to meet your business demands - then compare it to the cloud.
Our last major spend on applications was seven years ago, and many of those investments are now reaching end of life, so we’re looking at whether to move those applications to the cloud, and in most cases, it’s a ‘no brainer’. When looking at the financial impact, we’ve moved away from ‘project investment mode’, to a continuous investment and OpCap [operating capital] approach. We’re driven by product improvement to ensure service improvement.”
However, benefits versus cost is still a consideration for many institutions at the beginning of their journey, particularly when it comes to prioritising the roadmap for migration, as Paul Dewhurst, CIO of Blackpool and The Fylde College, who is responsible for the college’s recently refreshed Digital Strategy, explains:
Of course, license cost is always a barrier for FE, in a way that it often isn’t for HE. And it’s worth noting that many cloud providers keep changing their licensing model, with no form of appeal, which can mean your application becomes unaffordable if you’re not careful about it!
At present, it is difficult to make the case for moving our Student Information System to the cloud. Currently Tribal ebs runs on Oracle, and whilst Oracle skills are expensive, the migration path from on premise to the cloud isn’t straightforward. It’s also working well on premise, accessed easily via VPN/VDI, and it’s a back end system, so our students wouldn’t get benefit from migrating this solution. Right now, there are other things that we can prioritise that give us more significant operational benefits and customer experience improvements.”
Peter Ashton CIO of Liverpool John Moores University (LJMU) concludes with a similar point about the necessity of investing when the time is right for the institution:
Our legacy technology footprint is on premise, and because of the efficient total cost of ownership (TCO) of these systems, there is no great imperative to move to the cloud. We’re doing it gradually…”
If it’s the right time for your institution to move services to the cloud and you’d like to understand more about building the business case with insights and advice from the CIOs featured in this blog, download our CIO Guide To: Building better student relationships – in the cloud.