January 10, 1998
In September the Executive Council recommended that the CSU pursue negotiations with the four companies that proposed the creation the California Education Technology Initiative (CETI). To guide the Systemwide Internal Partnership in its efforts to develop a partnership agreement acceptable to the campuses and other key CSU constituencies , Chancellor Munitz asked the presidents of the twenty-three campuses to let SIP leaders know what issues were of concern to their respective campuses, and what for each president would constitute an “ideal deal”.
Over 300 comments were received from twenty campuses in reply to the chancellor’s request, about half of them identifying issues of concern. For the purpose of this report, statements addressing like concerns have been clustered into common issues (italics), and related issues have been grouped into broad categories (boldface). The relative level of concern is indicated by the total number of issues and of comments related to those those issues (noted in parentheses).
Following is a report on the status of these issues as the partnership plan takes shape. Attached is a copy of the CSU Principles which have guided the SIP team in its negotiations with the industry partners. Also, the CETI website at http://ceti.calstate.edu provides additional information.
Technology and Support (22/82)
Flexibility: Flexibility in implementing the technology associated with the Technology Infrastructure Initiative (ITS-TII) is of concern to many campuses. In this context, flexibility includes choice of hardware and software, scheduling of campus acquisition and implementation in accordance with campus priorities and timetables, and willingness to adjust plans to accommodate changes in available technology.
Exclusivity in the provision of ITS-TII in-scope goods and services should not mean that campuses have no choice among platforms or products, or that products must be purchased from the partnership at greater cost to the campus. Several campuses expressed concern about the negative effect the partnership would have on relations with existing vendors who are currently major benefactors of specific campus programs.
Status: Agreement has been reached with the industry partners on the following points:
There are provisions for campus specific riders in the Master Services Agreement (MSA) between the CSU and the partnership for the types and levels of products and services to be provided to the CSU and its campuses. These riders are intended to provide each campus flexibility in choices and implementation schedules.
The CSU will provide exclusivity to the CETI partnership for the purchase of technologies and services within the scope of the ITS-TII (found on web). The total cost of ownership for these goods and services will be at the best available prices equal to or better than market price. There is a mechanism being developed in the MSA to make frequent assessments to ensure price performance.
Within technology standards adopted by CSU brand choices for workstations (desktop, laptop, printers) and other products will be provided by the partnership. For instance, the plan calls for the partnership to support three desktop platforms as CSU standards-- Wintel, Macintosh and Unix.
There will be no exclusivity to the partnership for technology goods and services which are defined as outside the scope of the ITS-TIIs scope. However, the partnership will have the right to compete for CSU business outside the scope of this initiative infrastructure buildout.
Flexibility will be emphasized. Modifications to the MSA and the campus-specific riders will be made as necessary to meet requirements for changing technology, performance, and price using agreed upon benchmarks. At a minimum the MSA will be reviewed annually.
Relationships with vendors who have existing contracts with the CSU will be honored for the duration of the current contract, unless there is agreement for the partnership to buy the contract out.
Gifts and grants hardware and software will be encouraged. There may be some negative impacts, but these are anticipated to be minimal.
Support Services and Service Levels: Campuses want assurance that the quality and quantity of technology-related services (voice, data and video) currently provided at no direct cost to individual faculty, students and staff are not reduced as a result of the partnership. The MSA needs to incorporate mechanisms for evaluating performance and for assuring that goals are met and timetables adhered to. Preference was expressed by several campuses for retaining face-to-face desktop support in addition to remote/on-line technical support.
Status: Agreement has been reached with the industry partners on the following points:
Within the MSA a means for the CSU to review and validate partnership price/performance services and products is being developed. Those basic services currently provided to students, faculty and staff at not direct cost to the individual will continue. This varies from campus to campus, therefore, the partnership will honor these campus differences.
As part of the ITS-TII build out, the partnership plan will provide 24 hour X 7 days help desk services; standardized desk top training in basic information technology skills development; and other user support services. The plan being developed will include a physical presence on each campus. In fact, for the most part the plan will utilize existing CSU personnel.
The partnership’s success will be judged by its responsiveness in meeting campus and systemwide needs and priorities.
Scope and Speed of the Infrastructure Buildout: Presidents expect that the partnership will enable the rapid build out of the inter- and intra-campus telecommunications infrastructure on all campuses and off-campus sites, and will quickly move to refresh the electronics associated with this infrastructure (including software) on a regular cycle. Preservation of legacy capabilities is an issue for some campuses. Five campuses would like to include faculty desktop refresh, student computing laboratories and administrative staff desktops in the scope of the baseline infrastructure.
Status: Agreement has been reached with the industry partners on the following points:
The baseline physical and network infrastructure will be built out for all campuses within three years of the start of implementation. Each campus’ buildout will be based on the specific scope work developed for that campus but against systemwide and international standards. of the buildou The
The initial buildout of the CSU’s technology infrastructure will include media, pathways, spaces, terminal equipment, six PBXs and an integrated systemwide messaging capability, all based on open systems standards. The partnership will secure up to $300 million of capital funding to be used for this purpose. The industry partners will guarantee the debt for this amount. Thus, the initial buildout will be accomplished at no net cost to the CSU and with technology that is most current and standard.
The infrastructure implementation plan will take into account legacy capabilities.
The partnership’s success will be judged by its ability to maintain and sustain the currency of this technology infrastructure. A refresh program for the electronics associated with this infrastructure is planned for a three year cycle starting in the fourth year. This refresh program will be provided by the partnership based on an up-to-date technology plan and will paid for out of the operating income of the partnership.
This initial infrastructure buildout does not include providing desktops and related software for all faculty and staff and student computer labs using the $300 million. The user services plan of the partnership anticipates the need for a desktop refresh program for faculty, staff and student labs. However, the ability to carry out this portion of the plan will depend on whether or not the current CSU expenditures and new revenue will be sufficient. The feasibility of accomplishing this will be clearer once the user services plan is completed later this spring .
Budget and Revenue (16/83)
Protection of Assets: Entry into the partnership should be contingent on protecting the CSU from financial risk and assuring that the campuses suffer no irreparable harm. Over half of the campuses emphasized the need to protect current resources and investments from redirection to the partnership, particularly in the event the partnership fails and is dissolved. Preservation of current revenue streams and sources (e.g., extended education, auxiliary business enterprises and alumni) is a principal concern shared by three quarters of the twenty responding campuses
Status: Agreement has been reached with the industry partners on the following points:
The partnership will acquire capital to fund the initial infrastructure buildout and the industry partners will guarantee that debt.
CSU will not be responsible for the debt associated with the initial infrastructure buildout.
CSU will retain the ownership of the physical plant infrastructure and will make access available to the partners according to underthe terms of the agreement.
Current campus CSUtechnology expenditures for services and products considered within the scope, reported by the campuses at $95 million per year, will be used to reimburse the partnership for providing these services and products, under the MSA.
Partnership revenue generating programs which impact CSU programs and mission must havemust the prior agreement of be approved bythe CSU. As part of the partnership plan a process to handle this is being developed.
Partnership revenue generation programs are intended to augment the existing revenue streams of the campuses (extended education, auxiliary business and alumni) and each industry partner. The current plan is to work with the CSU extended education, the auxiliaries and alumni to build on their strength and to mitigate against potential problems.
A major criteria for judging the partnership’s success will be its ability to create new revenues to advance the CSU mission and programs.
Incentives and Opportunities and Distribution of Rewards: To succeed, there must be incentives to interest all the partners, especially the campuses and individuals associated with the campuses, in participating in the revenue generating activities. About half of the campuses said the partnership should create new opportunities to market products and programs within and beyond the boundaries of the state. Four campuses argued that benefits to campuses should be proportional to their contributions to the partnership; i.e., the more a campus brings to new revenue producing ventures, the greater would be that campus’s share of the revenue generated. Two campuses expressed concern that they would not receive a fair share of new resources because their campus infrastructures are–thanks to prior investment of their own resources–already close to “baseline” capacity. On the other hand, three campuses stressed the importance of assuring equitable access to new technology resources and other partnership benefits for all CSU students; and one campus urged that the pace and scope of the infrastructure build out not be dependent on campus revenue generation.
Status: Agreement has been reached with the industry partners on the following points related to incentives to drive the revenue generating activities:
Sustainable revenue sources will be created by all partners.
The partnership will be eligible to compete for CSU business which is outside the scope of ITS-TII.
Agreement in principle has been reached on the following point with details re mechanisms still to be determined:
Revenue programs will be diversified and represent the mission and core competencies of each partner as reflected in the partnership’s financial plan.
A plan is being developed by the Systemwide Internal Partnership to provide incentives and rewards to campuses to participate in partnership revenue generating programs. Campus concerns about sharing benefits resulting from the partnership are being considered by a SIP task group charged with developing a plan to ensure that campus participation in revenue programs will benefit each campus in proportion to its efforts.
Equity of access to new technology resources and the timing of the infrastructure buildout are addressed above (under Technology and Support). The buildout and costs are not linked to a specific campus’s ability to generate revenue.
Governance and Control (11/30)
CSU Control: The issue of greatest concern is that the CSU retain control over its programs operations and assets, thus assuring priority access to the infrastructure for educational rather than commercial purposes. The partnership must be limited to a business relationship and not be conceived or developed as an organizational merger. Mechanisms must be adopted to assure that each partner assumes responsibility and accountability for living up to the terms of the agreement. Ownership of instructional products created in connection with joint revenue generating activities is of great concern to campuses, as is control over the marketing of these products. Retention of campus authority in matters related to physical plant changes connected with the infrastructure buildout is a strong concern of several campuses.
Status: Agreement has been reached with the CETI partners on the following points:
A for-profit, limited liability company (LLC) will be formed to conduct the commercial business of the partnership and on which the CSU, public representatives, and industry partners will serve members of the board.
A CSU auxiliary will be formed by the chancellor to act as its anagent to participate in the LLC. The CSU auxiliary will become an equity holder in the LLC.
All parties will honor the intellectual property rights of the creators of that property. Authority for content of academic programs will be vested in the respective campuses of the CSU and will continue to follow current practices with respect to academic programs and governance structures. Ownership interests of all intellectual property related to activities of the auxiliary or the limited liability company will be determined in advance.
for the CSU for a range of contracts and agreements for services and products provided to the CSU by the partnership..The infrastructure build out will occur according to plans approved by the CSU. Details of implementation will be negotiated on a campus-by-campus basis and incorporated into riders to the master services agreement. The initial scope documents werewill be given to the SIP representatives on December 8, 1997. Final, detailed plans are expected in early spring.
The CSU auxiliary will become an equity holder in the LLC.
Planning and Communication (11/30)
Campus Review and Input: Six campuses asked that mechanisms be established to enable faculty, students and staff to review and provide feedback on the details of the final partnership agreement. Three campuses felt that the period for campus review and comment on the partnership agreement–when it becomes available in final form–was too short. The draft plan should be made public immediately, and changes to be incorporated into the final plan–including the terms and conditions for each partner–should be made accessible as soon as they become available. Clarification was sought regarding the role Extended Education in CETI operations.
Status: Agreement has been reached with the industry partners on the following points:
A CSU advisory commission comprised of campus representatives and CSU constituencies will be formed to advise the chancellor on the terms of the LLC Operating Agreement and the service MSA between the CSU and the partnership business partnersand to generally monitor partnership performance on behalf of the campuses and the system.
In recognition of the complexity of this partnership and of the need to give campuses additional time for review and opportunity to provide feedback, Phase IV of the partnership development process has been extended. This process includes the –formation of the partnership in the form of a Limited Liability Company via an Operating Agreement, and the development of a Master Services Agreement between the CSU and the LLC, which sets forth the types and levels of services the partnership will provide the CSU. riders–has been divided into two phases and the timelines extended
The new target date is March 20, 1998 for signing the Operating Agreement which will establish the LLC and the Master Services Agreement formation of the partnership is to be complete.
In actuality only some portions of the MSA will be completed by the March date while the completion of campus-specific implementation the enablingriders and plans is expected will be completby June 30, 1998.
Planning Data: A number of campuses viewed the projected cost savings and revenue projections as overly optimistic. The reliability of campus data on which estimates of the cost of building out campus infrastructures are based was questioned, as was the valuation of CSU assets.
Status: A financial plan for the partnership has been developed. It is based on the following:
The projected revenues for technology products and services and network co-production in the partnership financial plan are based on market analyses, focus group sessions and discussion/agreement of all partners.
The CSU current campus expenditures of $95 million per year systemwide for technology services and products within the scope of the ITS-TII, used in the partnership financial plan, are based on data reported by campuses. As requested, a second round of gathering campus data was completed in mid-December.
The projected campus infrastructure buildout costs have been verified and modified as a result of the partnership planning the past four months.
Academic Values (7/26)
Academic Freedom: Over a third of the campuses stated concerns about the preservation of faculty control over the curriculum and of the tradition of academic freedom. A like number of campuses asked that intellectual property rights, as provided in the MOU, be explicitly recognized. One campus stressed the need for the partnership to make a commitment to preserving “what is special on each campus.”
Status: Agreement has been reached with the industry partners on the following points:
Authority for content of academic programs will be vested in the respective campuses of the CSU and will continue to follow current practices with respect to academic programs and governance structures. The CSU will not negotiate away any academic freedoms or control of curriculum content.
The provisions of the CSU Memorandum of Understanding, Unit 3, along with campus policies, are the basis for securing the intellectual property rights of the CSU.
Ownership interests of all intellectual property related to activities of the auxiliary or the limited liability company will be determined in advance.
Cultural Compatibility: Five campuses questioned whether the core values of the academic and corporate communities were sufficiently compatible, two of them citing exclusivity provisions in particular as contrary to the traditions of public institutions. Two campuses said campus and corporate management structures are incompatible, and two warned that the “baseline” technology standards adopted by the partnership may be incompatible with existing academic programs.
Status: Representatives of the CSU and the industry partners who have been engaged in developing the partnership recognize that there are cultural differences between the academic and the corporate world. They have pledged to pursue constantly the common ground that supports the CSU in achieving its educational mission and the companies in their organizational and business goals.
Agreement has been reached with the industry partners on the following points:
The programs and services offered by campuses will be consistent with CSU academic policies.
Agreement in principle has been reached on the following point with details re mechanisms still to be determined:
Agreement will be reached between the CSU and the partnership to operate the infrastructure.
Staffing and Personnel (5/20)
Employment Security: Protection of current CSU employees from adverse impact is an issue of concern to more than half of the campuses.
Status: Agreement has been reached with the industry partners on the following points:
CSU information technology staff will be retained by the CSU.
Collective bargaining agreements will be honored.
Management responsibility for CSU information technology staff will reside with the CSU.
Staff Development: The creation of new professional development opportunities for staff, especially IT staff, is the issue of next highest priority in the area of staffing and personnel. One campus stressed the need to develop a plan for dealing with salary inequities for IT staff.
Status: Agreement has been reached with the industry partners on the following points:
The partnership will provide baseline professional development programs for information technology CSU staff at a level determined by revenues. Out-of-scope professional development activities will be provided at campus request and at campus expense.
The partnership’s success will be judged by its contribution to personal productivity and its ability to create new tools and opportunities for faculty, staff and students.
Outsourcing: Conflicting positions were taken on the outsourcing of infrastructure-related work. One campus urged the partnership to assure capability to contract for human resources as needed; another recommended that campuses be designated as preferred partnership suppliers in order to minimize outsourcing to non-CSU vendors.
Status: As noted above, industry partners have agreed to honor existing collective bargaining agreements. Utilizing the personnel of the CSU is a key element of the partnership CSU User Services plan.
Legal Issues (2/9)
Involvement in Litigation: A fourth of the campuses expressed concern about the potential of the partnership for involving campuses and the system in costly legal actions, either in response to the exclusion of vendors from the market for in-scope goods and services, or as a recourse to enforce partner compliance with performance the terms, conditions and performance standards of the agreement.
Status: Agreement has been reached with the industry partners on the following points:
A CSU auxiliary will be established as the legal means for the CSU to share in equity ownership of a limited liability company. In part the directors of the auxiliary will be drawn from a CSU advisory commission comprised of the representatives of campuses and key CSU constituencies
A limited liability company (LLC) will serve as the entity for the formation of the shared equity ownership for the CSU and the commercial partners. The CSU auxiliary will have board representation on the LLC board.
State Approval: Recognizing the precedent setting nature of the proposed relationship of a public university with the private sector, four of the campuses urged that an agreement be finalized only after that Legislature and the Governor have formally accepted the partnership.
Status: The California State University has the authority to proceed on its own course of action. However, in light of the interest generated in Sacramento as reflected in the recent Legislative hearing on the partnership their acceptance is understood.
ATTACHMENT--CSU PRINCIPLES
Thomas W. West
Maynard Robinson
Technology Infrastructure Partnership
January 10, 1998