Tuesday, February 26, 2013

Critical Future Role for R&E networks is to fund university IT departments to help reduce costs

I have doing some consulting work for a number of R&E networks around the world and the most common issue facing all of them is the looming financial constraints facing their institutions.
 As reported in the Chronicle  of Higher Education campus networks are being squeezed as demand rises and budgets shrink http://bit.ly/X8vh3s .  The explosion of wireless devices, cloud computing, research computing and services for dormitories are putting increased pressure on most campus IT departments.

A number of R&E networks are starting to address these problems of their member institutions by offering hosting services, outsourcing network support functions etc.  But two important areas where R&E networks can play a critical role in helping their member institutions is by deploying in depth content delivery networks and integrated WiFi/4G solutions.  One of the biggest costs for many IT departments is transit or commodity Internet. Diverting this traffic to integrated content delivery networks can reduce transit traffic by as much as 90%.   In North America Netflix can represent 50% of the traffic on some campuses with large residence student population. The other big cost center is managing the hundreds, if not thousands of WiFi hotspots and integrating these with new 4G services from commercial carriers. Several R&E networks have expanded Eduroam to local restaurants and coffee shops, while others are offloading local Wifi/4G management and making it a national service across the country.

But I think the most important area  where R&E networks can play a critical role is to fund IT cost saving measures at member institutions.  The local IT staff have probably the best knowledge where savings can be obtained if they had sufficient money to invest in new technologies and management systems.  Funding of IT departments at institutions by R&E networks does not require a massive infusion of money from government.  We already have such a capital/cost saving model in place called  the University President’s 1$ billion Challenge Green Fund.  The $1 Billion Green Challenge Fund provides funding to universities and other nonprofits that finances energy efficiency upgrades on campuses. Harvard, Stanford, and other leading universities in Canada and the US have  committed over $65 million to finance upgrades in energy efficiency at participating institutions. The Challenge is inspired by the exceptional performance of existing revolving funds, which have a median annual return on investment of 32%. Revolving funds are often part of a  university endowment program or publicly traded entities.

Although many revolving funds are focused on energy efficiency such as building insulation, new boilers etc, there is no reason why this same model could not be used to fund investments in reducing IT costs on campus.  R&E networks could also establish revolving funds in partnership with institutions where cost savings enabled by the R&E network, described above, could be used as a source of revenue to be shared with the IT department and the R&E network, rather than the current model of further taxing membership budgets at the institutions.

Another variant on this concept  I have proposed is a “refundable” membership model where both the institution and R&E network jointly explore cost saving scenarios and share in their benefit.  Refundable membership models acts as an incentive for the institution to explore and find these cost savings.

In the coming years institutional IT departments and R&E networks are going to have to find new business models, as they will be under increasing pressure to reduce costs, despite the growth in demand for their services.  Charging institutions fee for service or flat membership fees is unlikely to be sustainable in the coming years.

$1 Billion University Green program launched - CIO and NRENs could be big beneficiary

R&E Network and Green Internet Consultant.

email:     Bill.St.Arnaud@gmail.com
twitter:  BillStArnaud
blog:       http://green-broadband.blogspot.ca/
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