Enterprise resource planning (ERP) software is notoriously difficult to implement–and quite costly to boot. But it doesn’t have to be, as a group of five Wisconsin school districts has discovered. These five districts, now known as the Wisconsin Schools Consortium, have teamed up to implement a shared ERP system–saving costs and streamlining administrative processes all around. Here’s how they did it.

Their story begins two years ago. In a state known more for education decentralization, several school districts were faced with the “sunsetting” of their existing business systems. But rather than going it alone, as they had in the past, a few creative thinkers decided to explore the possibilities of sharing resources.

“We were all looking to replace our old ERP system, and it seemed natural to form some kind of exploratory group,” said Tom Wohlleber, assistant superintendent of the Middleton-Cross Plains Area School District, which serves about 5,600 students in 10 schools near Madison, the state’s capital.

Along with officials from the Verona Area School District and Oregon School District–combined, the three districts serve about 14,000 students in small-town or suburban Wisconsin–Wohlleber decided to approach the second largest school district in the state, Madison, about exploring a joint ERP system.

“Madison was of great interest to us, because of its larger size and close proximity,” Wohlleber said. The Madison Metropolitan School District serves about 25,000 students. At the very least, officials thought, pooling their resources might make sense if they could all get a better deal.

Wohlleber and fellow business managers Chris Murphy of Verona and Andy Weiland of Oregon met with Roger Price, assistant superintendent of business services for Madison. At first, Price and members of his Madison staff were skeptical. How would adding three more school districts impact their operations? Could their current IT staff and infrastructure even support a shared system?

But Price was intrigued. The district’s management team had always pushed for innovative solutions, provided they made the best business sense–and Price loathed the traditional, “that’s the way we’ve always done it” attitude.

Finding common ground

The new group decided the first thing it needed to do was identify and document each district’s critical business processes. That way, members could determine fairly quickly if their business processes were similar enough for a shared business and human-resource system.

To do that, the group brought in educational technology consultant Chuck Odorizzi of the Wisconsin-based consulting company Davidson Services. Odorizzi and his team had a proven track record helping dozens of schools across the country implement ERP and other technology systems.

Davidson consultants met with each of the Wisconsin school districts to document their specific business practices, identify their unique requirements, and clarify the “must-have” features that each district wanted in a new system. From this initial data collection, the consultants developed a list of prioritized functional requirements.

When district officials met to discuss the findings, they discovered that even though they had their differences, they also had enough common ground to explore a consolidated system.

Because of the complexity of the project, the districts asked Davidson Services to help prepare the request for proposals, or RFP. The RFP had to include three different options for deployment: first, a system installed in each individual district; second, a shared system hosted by one district; and third, a shared system that could be hosted commercially.

Once responses arrived from bidders for the job, each district scored and ranked the bidders independently. At a follow-up meeting, district officials selected the top three finalists. Each district picked the same top three contestants, although not in the same order. The finalists were Lawson Software, Skyward, and SunGard Bi-Tech.

Each finalist received a demonstration script to follow in a two-day presentation.

Because time was limited, the finalists were asked to focus on workflows that officials from each district had identified as critical. At the end of the presentations, district officials tabulated their scorecards and selected international computing company Lawson Software as the top choice for the job.

Show me the money

The process then turned to pricing and negotiations. It quickly became clear, district officials said, that a group purchase could provide each district with significantly enhanced software at a lower price than individual licensing.

But other hurdles arose.

“Our consulting group cautioned us that software costs are only a small part of the actual operating costs over a five-year period,” Murphy said. “And they were right–other factors like implementation, training, hosting, and service have to be factored in to get the real picture.”

Davidson recommended that the districts consider using a Managed Application Service (MAS) provider model–a new (and growing) trend within the ERP marketplace, and not just for education. Under this approach, the districts’ ERP software would be hosted and managed by a third-party MAS provider, who would take care of all implementation, support, training, and upgrades–all for a single fixed cost.

Odorizzi explained the advantage of this kind of approach.

“What we’ve found in a number of installations throughout the United States is that the majority of costs lie in the five years after the technology is in place,” he said. “It’s the little secret that no one wants to talk about. That’s why we make sure all of our clients go through a process of total cost of ownership, not just an analysis of the front-end cost of software–because ongoing support, patches, upgrades, redundancy, and training are normally underestimated and can throw off a budget by hundreds of thousands of dollars.”

Odorizzi added: “When new versions or upgrades become available, many school districts are faced with a tough decision. Either they keep what they have, and lose out on the new functionality, or they go ahead with the upgrade. If they upgrade, they run the real possibility of stressing out their internal IT department or, more than likely, outsourcing it at a significant expense, all of which is unplanned.” However, the use of a MAS provider “gives you a fixed monthly amount of what the technology will cost, including any additional hardware,” he said. “And you’ll always have the latest version. What’s more, because the MAS itself offers this service for a wide number of clients on specific software platforms, the cost is not nearly as much as you might think.”

After reviewing their costs and manpower requirements, the districts agreed this was the right approach. They selected netASPx, a Virginia-based MAS provider, to supply the hardware, installation, and operational support for the project. Under the consortium’s contract with NetASPx, the company will manage the often unpredictable and ongoing costs associated with upgrades and shifts in technology.

With their software, hardware, and system support in place, members of the group felt they had created the following clear advantages: (1) Minimized risk

  • Flexible architecture and hardware, with nearly round-the-clock support.
  • Fixed costs over a five-year period. (2) Improved service levels
  • Ability to meet K-12 processing requirements and state-mandated reports.
  • 24-7 access from any internet connection, within or outside each district. (3) Reduced total cost of ownership
  • Guaranteed 72-hour return to service in case of a catastrophic event.
  • Ability to add additional school districts and reduce overall costs. This last bullet point–adding school districts to the group–caught the eye of district officials.

    “In education, we don’t come across very many ways to actually reduce our overall long-term costs by adding other districts to the mix,” Weiland said. “Usually, we have some group buying power, but the ability to actually reduce our ERP costs over time was different [in this case].”

    Odorizzi played a major role in introducing this incentive during the negotiations. “Since we’re paying on a per-student basis, why not offer incentives to grow the consortium?” he asks. “It just makes good business sense.”

    With the selection of the software and the back-end implementation, the districts had one more hurdle to cross. Each of the districts would need to agree to a governing charter for the group. The Davidson Services consultants played a significant role in drafting the Intergovernmental Cooperation Agreement, which guides decision-making and management of the shared system.

    With the agreement finalized, the Wisconsin Schools Consortium was formed. Jumping in the pool

    Shortly after the consortium came together, the group came across an RFP from the Racine Unified School District, an urban district on the shores of Lake Michigan. Racine was looking for an ERP solution that would fit the needs of its 21,000 students.

    “We saw the RFP and said, ‘Hey, that sounds like us,'” Wohlleber recalled. “They were looking for something that we just solved. So we decided to reply to Racine as the Wisconsin Schools Consortium.”

    Dennis Barkow, director of information services for Racine, said he welcomed the information from the consortium.

    “Their responses were right on,” Barkow said. “They seemed to really know their stuff. So we included them in the presentations.”

    At the presentations for the Racine district, Barkow said the consortium’s knowledge and the depth of its solution really stuck out.

    “Here was a group of colleagues that were out there competing for our business, and they had the answers. They really knew what we were going through, because they do it, too. It’s their jobs. They understood it from the inside out,” he explained. “They were incredibly candid.”

    After the review process, Racine decided to become the fifth school district in the Wisconsin Schools Consortium. It joined the group in May.

    Racine’s implementation of the shared ERP solution is scheduled for this fall.

    Sharing success

    With the formation of the Wisconsin Schools Consortium, member districts are experiencing the following benefits:

  • The software runs on an open UNIX platform in a clustered environment, providing complete hardware redundancy while allowing growth in processor and disk space.
  • Negotiated costs include all application and system software patches and upgrades, allowing for enhanced functionality without incurring additional expenses or burdening the districts’ IT staff with integration “nightmares.”
  • Additional hardware or software that becomes necessary as a result of future software releases is included at no additional charge.
  • The use of robust software at a negotiated, reduced cost, which the smaller districts could not have obtained on their own.
  • Unique process flow and time-entry screens that are customized for each district. The ability to customize the process flow for each district while sharing the same solution was particularly important to the group. This way, the districts could align the new ERP software with their own business processes–and not have to conform as a group to a single way of doing things.

    Looking back on the process, Price said the differences between the school districts turned out to be far less than he originally expected.

    “You know, it’s kind of a funny thing,” he said. “With all the decentralization, we really began to think that we were very different. But when it comes right down to it, we’re not. We just have different issues and hot buttons to deal with. But we’re all in the business of trying to give our students the best education we can.”

    Consortium members had some advice for other district administrators who might be considering a similar project.

    “I think the key is to try and find colleagues outside your district and get to know them,” Wohlleber said. “The technology is out there, and it’s changing and improving rapidly. Make sure you get the right solution that fits your needs, because you’re probably only going to do this once every 10 years or so.”

    Murphy said obtaining independent help and advice was crucial to the process.

    “If you try and do this–and obviously we think it’s worthwhile–get a group or a person in your camp that’s truly vendor-neutral,” Murphy said. “Our consulting group helped out a lot, because they did this before. They really helped during the negotiations and ended up saving us a lot of money by structuring the deal in a certain way. They even acted as a referee on a number of occasions.”

    Another unique aspect of the Wisconsin Schools Consortium is the integration of the IT and business sides of the districts.

    “IT folks need to know that the suits are on their side, and the suits need to know that the IT guys want what’s best for the district,” Barkow said candidly. “We’re confident we got the best of both worlds; an open technology platform that will grow with us, and a great deal because of the buying power of the consortium.”

    Looking ahead, the consortium plans to add as many as two more school districts in the next year–but only if the fit is right.

    “We have to be selective, because everyone in the consortium plays a role in its success,” Price said. “We have to be convinced that any new district will do its share. Our governing agreement covers new members, but it’s still very important to us to have the right mix–we fought too hard to get this far.”

    John Peretz is a nationally renowned author covering a wide range of K-12 technology integration issues. He received his degree from the University of Minnesota School of Journalism and lives in Colorado.

    How to vie for a share of billions in new funding from the Gates Foundation

    As you can well imagine, June 15 was a magical day for education grant-seekers across the country: If you read the front page story in the August edition of eSchool News(“Ed to win with Gates, Buffett”), you know that billionaire investor Warren Buffett announced he would begin giving his fortune away to five foundations now, rather than waiting until his death. And, the recipient of the biggest chunk of his donation will be the Bill & Melinda Gates Foundation, which has championed education reform. What makes this gift so incredible is the dollar amount that will be added to the assets of the Gates Foundation on an annual basis. Although some articles have identified the gift as having a value of $31 billion, it’s hard to know what the actual amount will be at this point. That’s because Buffett has committed to giving a specific number of shares of Berkshire stock to the Gates Foundation and four others each year. The value of this gift will fluctuate depending on the stock’s value at the time. Based on its value today, the gift is worth about $31 billion–but if the stock’s value goes up, as Buffett has said he hopes it will, the actual value of the entire gift could be a staggering amount over the next few years.

    There is an interesting stipulation to this gift, which will have a significant impact on the grant-making potential of the Gates Foundation. According to Buffett, the Gates Foundation will have to spend, annually, the full dollar amount of his contribution–as well as the amount it is already giving from existing assets. This is somewhat unusual in the world of private foundations, as most foundations do not spend the entire amount of their contributions in a given calendar year. This stipulation will force the Gates Foundation to award larger gifts, give more grants, or a combination of the two. It will be fascinating to see what impact Buffett’s gift will have on the education grant-making of the Gates Foundation. If you visit the foundation’s web site, you’ll notice most of the grants that have been given to date are for large sums of money–and they are intended to have an impact on numerous schools in the same district or, in some cases, an entire state. There are few grants given to isolated schools serving small numbers of students.

    If you’d like to be one of the recipients of the new grant monies and you don’t come from a large, urban school district, I would encourage you to start discussions with your state education department. Try to come up with a statewide initiative that could impact all of the students in your state, not just those in your district.

    Review the values of the Gates Foundation and the letter from Bill and Melinda Gates that can be found on the web site, as well as the information that is included about the foundation’s education initiatives. You will see that the Gates Foundation is currently supporting high-school reform efforts, so be sure your initiative falls under this area of interest. Further reading of the information shows that the Gates Foundation is looking for strong partnerships between the private and public sectors, so a statewide initiative should have a nice variety of powerful collaborators involved. I would also encourage you to contact the foundation’s current grantees and ask them about their experience in securing funding.

    Keep your eyes and ears open over the next few months (and years) to see what changes might occur to the Gates Foundation’s grant-making activities in light of this new contribution. You might also want to take a look at the Susan Thompson Buffett Foundation, which, according to an article in Fortune magazine, plans to “expand into public education” as a result of the additional funds it will receive from Buffett’s decision.