Universities are driving the need for IT consumption-based pricing models more than any other market segment. This is natural given the unique characteristics of their IT environments. First off they are at the forefront of the IT consumerization movement driven by new generations of students and work habits. With one fourth of the undergraduate population and half in most graduate programs changing every year, one can easily understand why this is the case. While BYOD has emerged in the enterprises over the past few years it has been a commonplace in higher education since campus networks were built in the 80s. When public cloud-based applications emerged college students were the first to embrace them and driving some to a prominent position in the industry. Facebook comes to mind.
It is not just students that make the universities very different than other markets. On many campuses you find different layers of IT functions and associated decision making. You have the central IT like all enterprises do. But then you have some lines of business having their own IT function either at the college or department levels. Most major research centers have their own IT groups especially if they house a supercomputing facility. Some grant-funded projects make their own separate decisions on IT services unique for such projects or for very short terms needs.
So what are the pricing models the higher education market is asking for? The answer is of course consumption-based pricing models but the devil is in the details. A simple subscription style “all-you-can eat” model may not be sufficient in most cases (and it is not really consumption-based after all, is it?). We see these in traditional enterprise applications that are converted to a SaaS offer. A utility style “pay-as-you-go” model while provides most flexibility might not have the cost predictability the universities require (remember long distance phone service?).
Additionally, there is a need for a more granular distinction of the user population. Just treating everyone as knowledge workers and offering traditional site licenses may not be feasible for large state universities.
The ideal model is one that provides the basic feature-set of a service at a flat rate and low enough cost that could be offered as an entitlement service by the central IT group to everyone on campus and provides premium features in different packages on an opt-in, pay-as-you-go, basis by individual colleges, departments, faculty and even students. In asynchronous applications like email, file sharing or document management simple versions of such models are available (e.g., paying a premium for additional storage capacity). In synchronous applications like video-based collaboration this is more significant and harder to accomplish but doing so is essential for these services to be widely adopted and become pervasive tools in teaching and learning environments.
If you’re interested in more information, this week’s Cisco Town Hall on the changing models if IT consumption in the public sector is now available on-demand.