Insight | September 14, 2016

How University CIOs Can Study for Cloud 101

By Jonathan Selter

The use of cloud services is the single most transformational issue in higher education IT. Universities have begun using the cloud for specific, commoditized services­―email, for example―but many are behind-the-curve in their cloud strategy or do not have an enterprise approach to the cloud. As universities increasingly move IT resources to the cloud, there are seven key considerations for CIOs to keep in mind.

Moving to the cloud is becoming a necessity.

University CIOs no longer have the option of choosing whether or not they will transition to the cloud. With an eye toward driving customers to subscription-based pricing, critical OEMs are forcing the hand of university CIOs by offering new products or capabilities only in the cloud or taking a cloud-first approach to rolling out new versions or functionality. University CIOs must decide how, when, and under what terms―but not if―the university should transition to the cloud.

It is critical to sequence the cloud transition.

Universities on the leading edge of cloud utilization have succeeded through a gradual approach to cloud transition. SaaS-based applications are a common first choice for cloud transition, while provision infrastructure for sensitive, core data, such as HR and financial data, is often sequenced at the tail end of a cloud transition. Even within SaaS-based applications, universities might choose to transition student email before faculty email, or email in general before more mission-oriented applications, such as LMS. Although a cloud transition will not happen overnight, or within a single fiscal year, a gradual approach does not necessarily mean a slow approach; universities have moved the entirety of IT infrastructure to the cloud in as little as three years. Working with university leadership and executive IT governance, CIOs should determine a timeline for cloud transition and define an evaluation process for service line cloud readiness. Whether they are based on value, security, auditability, accessibility or other factors, an objective set of cloud transition criteria can help CIOs justify cloud service decisions to the broader university community.

Security is paramount, but not for the reasons you think.

Cloud security should be a top issue for universities, but CIOs should not allow security concerns to inhibit a campus cloud transition strategy. The greatest cloud-related security risks that universities face result from distributed staff entering into service agreements with less-than-reputable cloud service providers (CSPs). Under a traditional annual licensing model, local users typically don’t have the budget or procurement authority to purchase enterprise software or other complex IT products on their own. With delegated purchasing authority and subscription-based pricing, however, a senior administrator within a large school or department can charge monthly CSP costs to a departmental purchase card. Depending on the service, CSP, and contract terms, these local agreements can create security risks, particularly when the CIO’s office has no visibility into their creation.

As cloud services proliferate, university CIOs should work with executive leadership to ensure there is proper governance and oversight of IT procurement. In most cases, however, a properly negotiated cloud contract with a major cloud service provider that is managed by the central CIO’s office will bring no greater security risk than locally-hosted services. For most centrally-managed cloud services, change management―getting IT staff and executive leadership comfortable with security in a cloud environment―will be a far greater challenge for a university CIO. CIOs must overcome cloud security fears from campus leadership, broader campus IT and CIO’s office staff to push a cloud transition forward. Getting out ahead of any potential resistance is critical.

Universities must negotiate appropriate contract exit clauses.

For CIOs with a more advanced cloud transition strategy, failure to plan for contract termination, exit, and data reclamation is the greatest oversight in their initial cloud migrations. For universities on the front end of a cloud transition strategy, the lack of a viable exit plan is the largest impediment to moving complex, critical systems to the cloud. Universities should not accept the boilerplate contract termination language that is typically found in most cloud service contracts. CIOs should develop standard language for contract exit and data reclamation and negotiate university terms into any cloud agreement.

Market research and corporate due diligence is also critical. More established and experienced CSPs have priced their offerings on the higher end of the market. CSPs that are newer to the market can offer price advantages, but might not be experienced enough to create a sustainable product and present a greater risk of bankruptcy and other finance-related service interruptions. University CIOs must evaluate each service provider, and if the university chooses to use a lower-cost, middle-market CSP, ensure that termination, exit, and data reclamation are well defined before the contract is signed.

The cloud can help speed operational change.

Doing business in a cloud-based environment is dramatically different from standard IT operations with primarily on-premise infrastructure. Rather than viewing cloud-related operational change as an obstacle, university CIOs should use a cloud transition as an opportunity to push through needed operational change and make their organizations more agile. Enterprise application customization is a prime example. IT leaders have long recognized that extensive system customization leads to excessive downstream maintenance and upgrade costs, but university CIOs are typically under pressure to maintain legacy functionality and customization, with little support from above to say ‘no’ to academic and departmental user needs. A cloud transition can act as a forcing function for CIOs to limit customization and adopt off-the-shelf solutions. In fact, for SaaS-based cloud services, customization might not even be possible. Rather than fear user backlash from a potential loss of functionality, university CIOs should embrace the opportunity to retrain the campus community on CSP-defined workflows and reporting.

A cloud-based model creates workforce issues.

A CIO’s IT organization will look dramatically different before and after a cloud transition. The post-transition CIO’s office is a business unit that manages a set of IT initiatives and coordinates a complex set of contractual vendor relationships. CIOs should expect to add a variety of positions― contract managers, vendor managers, pricing analysts, business analysts and project managers, etc.―in the new cloud environment. At the same time, a cloud-based CIO’s office will have less need for traditional IT skill sets, such as server, storage, or network administrators. Overall, the cloud-based IT environment will require a smaller IT staff, as CSPs assume a portion of the university’s traditional IT workload.

Managing the IT workforce during, and immediately after, a cloud transition is perhaps the most complex cloud-related challenge that a CIO will face. During the transition, some staff redundancies might persist, as both legacy and cloud systems will be operational. As the university phases out legacy systems and completes its cloud transition, CIOs must adapt the workforce to the new cloud environment to avoid perpetuating staff redundancies and outdated skillsets. Retraining, early retirement, and attrition are among the HR tools available to CIOs; depending on the culture and needs of each university, severance might be an option in certain circumstances. At the outset of a cloud transition, CIOs should collaborate with executive and HR leadership on a human capital plan that aligns with the university’s HR strategy.

The cost savings from a cloud transition might not accrue immediately.

University executive leadership can view the cloud as a magic bullet that can reduce the operational cost of IT with no impact on service levels. For most universities, moving to the cloud will, in fact, reduce cost, but CIOs must understand where savings come from, and when they accrue, to appropriately manage university expectations. The largest source of cloud-related savings is capital cost avoidance; universities with cloud infrastructure do not pay for new data centers or for hardware refreshes. Universities with data centers that are at or near capacity, or with data center facilities in their campus master plans, should aggressively move to the cloud to eliminate future capital investment in new data center capacity or facilities. For universities with existing data center capacity, the path to savings will be longer. Strictly based on annual operating costs, cloud cost performance is mixed―cloud-based and on-premise operating costs are similar―and operational savings from a cloud transition is heavily dependent on each university’s unique IT environment. Moreover, transitioning to the new cloud cost structure often requires a net reduction in IT staff. Because universities―and state universities in particular―often prefer to manage staff reductions through attrition instead of severance, CIOs in the midst of a cloud transition can see near-term cost increases while managing down to new target staffing levels. A detailed cloud business case and cost model, although difficult to construct (e.g., because of the difficulty in estimating resource needs in the cloud), is a critical tool for CIOs to plan their budgets and manage executive expectations.

University CIOs must embrace the cloud, but a cloud transition can be a difficult and disruptive transformation in a university environment. They key to success is planning. From human capital, to procurement strategy, finance and budgeting, and university IT governance, addressing the considerations described above requires a rethinking of how IT is organized and delivered across campus and a concrete vision for the future of IT.