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IT outsourcing hasn’t lived up to its promise

Two years ago today the WCC community said goodbye to the College’s in-house IT staff. The current WCC administration outsourced the entire Information Technology staff. The reasons they provided for the IT outsourcing move included cost-savings and improved service. To date, WCC hasn’t cashed in on either.

The WCC administration has never come clean regarding the $26.2M no-bid contract with Ellucian. Although the Administration claimed that Ellucian was the only firm that could provide this service, that’s simply not the case. Managed service providers are a dime-a-dozen. The real issue with this contract is the way it was (or wasn’t) negotiated.

The deal was made in secret over a period of months. There’s no indication that the WCC administration negotiated the cost of the contract. With Ellucian being the only firm the College considered, there was no pressure on Ellucian to provide the best possible pricing. Since price was not the primary consideration, then the likelihood that the contract saved any money is vanishingly small. The taxpayers of Washtenaw County have been stuck with a huge bill for IT services that cost more than what the College was paying when it maintained its own in-house staff.

Still looking for the savings on IT outsourcing

Initially, the WCC administration said that the contract would save WCC about $600,000 per year. At the end of the 2019 fiscal year, the IT budget was $8.1M, with an actual expenditure of $7.6M. This was the last year in which WCC maintained its own IT staff. In June 2020, the IT budget was $9.1M with an actual expenditure of $8.7M. For the first 11 months of FY21, the IT budget was $8.1M with an actual expenditure of about $7.7M. Final numbers for FY21 will not be available for several months, but the actual IT expenditure could be about $8.4M.

The IT budget doesn’t count the nearly $1.5M the College has been required to spend on technology upgrades this year. Or the $1.75M it plans to spend next year on IT upgrades. So much for savings.

In possibly the most ham-fisted move related to the outsourcing deal, the Board of Trustees voted to approve an employee buyout of IT staff who chose not to accept employment with Ellucian. They approved the deal without knowing how much it would cost the taxpayers. Originally, the administration projected that as many as two-thirds of the WCC IT staff would return as Ellucian employees. Of the 31 employees on the payroll on July 31, 2019, all but 5 took the buyout. That vastly inflated the cost of the outsourcing deal. The buyout ended up costing the College more than $2.3M.

The wasted website

Prior to the Ellucian deal, the Administration spent literally millions of dollars and tens of thousands of hours of staff time on a bespoke WCC website redesign. The new website was about to go live when the administration announced the IT outsourcing deal. Ellucian specifically excluded website operation and management from the WCC deal. End result? The administration trashed the website redesign, then spent tens of thousands more to replace it with a shoddy imitation.

The service hasn’t improved either. I’ve talked to many faculty and staff members who’ve expressed extreme frustration over the lack of support they’ve received since the IT staff was outsourced.

I bring the issue of the IT outsourcing up because it appears as though the WCC Administration may be planning to outsource other groups on campus. The IT outsourcing cost the College literally millions more in actual expenses, wasted resources, and missed opportunities for savings.

Washtenaw County voters elect the Trustees to provide oversight of the tens of millions of dollars the taxpayers provide each year. The next outsourcing move is likely to impact employees who are not as mobile as the IT staff was. Nor is the next outsourcing deal likely to result in a buyout for the affected groups.

Outsourcing is an absolute mistake, in terms of both cost and quality of service. If reducing the budget is the primary goal, paring down the size of the WCC administration offers a better return. This time, the Trustees should not blindly accept the administration’s assertion of saving money. After all, outsourcing the IT staff resulted in millions more in IT expenditures and $0 discernible savings.

WCC does not have a revenue problem; it has a spending problem. It’s time for the Trustees to address that.

Photo Credit: Rob Swystun, via Flickr