DAILY INSIGHT: Another total cost of ownership crossroads

By Gordon K. Dahlby, CIO Advisor

One of the skills of the best CIO/CTOs is that of short- and long-range planning and budgeting. Today and the near term will challenge even the best. CIOs are at the crossroads of another total cost of ownership (TCO) intersection. Over our decades of working in the educational technology space we have experienced wave after wave of new end-user devices, each with its own unique advantage over a previous generation or model series. However, most units were an incremental change from the previous units. Even low-cost laptops and the first tablets/convertibles were of a similar theme. CIO/CTOs used calculations on the viable useful age of the units and the software it would support to develop a replacement budget. It is true that some districts used the budget to determine what could be replaced as schools tried to ramp up the student-to-computer ratio, but that is another story.

In that “simpler,” mostly personal, computer era, which would encompass most of our readers, the full expense of owning a PC unit was generally calculated to be four to five years, with some budgets pushing a five-plus age. App (nee software) licenses were generally transferable with the exception of the OS. Into the TCO, of course, CIOs also factor in energy usage, installation and maintenance labor. Gartner and CoSN have done quite a bit of work in this space. CoSN’s TCO resources were a significant addition to the K-12 CIO’s tool chest. They include a comprehensive checklist of areas to consider. Many of the considerations were transferable to laptop and tablet/convertibles with traditional OSs. Oh how things have changed. Three developments cast a shadow on the TCO work and planning: consumer devices in the school environment, ultra-low-cost units, and smartbooks/e-textbooks. This is not to cast a pall on OLPC efforts, as that effort is mostly geared toward education endeavors.

Innovation is good. It is something to be celebrated. However, the CIO in K-12 is now facing a wave of technologies with many unknowns and new considerations. Consumer slate and mini-slate devices in this space include, of course, the iTouch and iPad series, Android and Windows slates. One might include phones, but only a few schools are buying smartphones with limits on the use for students. The TCO of these units is hardly a case study as of yet. The iPAD, for example, will soon enter its third version in roughly three years. Is this an indication of longevity or another point in time where compatibility of apps with OS changes will be an increasing issue? It will indeed be interesting to see what the industry comes up with an expected lifespan and the annual maintenance estimates. Many here have already noted the high learning curve of trying to manage and standardize these consumer devices. Android devices have similar issues of an unknown useful lifecycle. In this built-for-consumer device space, weekly announcements of tens of thousands unit purchases and deployments are popping up. It will be interesting to monitor the TCO data that flow from these brave CIOs. Some schools are moving to leasing agreements even on these lower cost slate-style units. Splitting out interest and maintenance agreements from the hardware leasing is often difficult and may or may not be required by your district.

Along similar lines, the ultra-low cost units present a similar set of unknowns. Examples are the Chromebook and consumer class netbooks. Perhaps there will reach a point where the low cost makes the units a commodity so low in comparable expense that replacing broken units will be a standard solution versus the parts and labor for a repair. The ultra-thins, such as Apple’s Air and Lenovo’s Ultrabook, are not low-cost units nor solely designed for a consumer market, but durability will weigh on the minds of many CIOs as they search for data to use to project into their planning.

The third issue might, in many ways, be the more complex. I fully support moves that will bring us closer to a realization of the living textbook as originally described by Tim Berners Lee. Hypermarked “books” with enunciations, definitions, models, simulations, multimedia and digital manipulatives will take books for schools to another level of interest and allow students to individually and quickly go deeper or to broaden their understanding of a topic. Smartbooks may soon incorporate ways for students to check their understanding with instant feedback and logic-based links that will bring to the student the resources they need based on different inputs. Smartbooks for science might also be paired with near field probes that will gather experimental data and place into a format for students to analyze, for example. It’s hard to call them textbooks or e-textbooks. It is a multi-billion-dollar marketplace.

Why is this part of a CIO/CTO’s total cost of ownership? I think it will for a couple of reasons. First is that in as much as the move to digital resource “books” or smartbooks are likely driven by our partners in curriculum and instruction, the beginnings will be seen as a technology event. The observation of the iBook/iAuthor announcement was by Apple and not by Pearson or McGraw Hill might be a leading indicator. If viewed as a technology, the maintenance, management and replacement cycle of the hardware devices that hold these smartbooks and e-texts will fall in the CIO’s lap. An early question for the C-level team will be, how will TCO rules and planning be applied to the soft side—the apps and the smartbooks/e-texts. We are all familiar with textbook budgeting that has historically been too small. Stories of eight-year-old textbooks are not uncommon. Some schools have not been able to afford a 1:1 ratio of textbooks. That is less likely to be acceptable any longer. It will be very interesting to watch how the soft side costs are marketed to K-12. Are smartbooks a yearly lease to the school or a perpetuity purchase? Reading the EULA and smartbook licensing agreements will be critical to your TCO planning. Add to this any books and references added by the teacher-librarians. Will your technology team absorb the budget allocations or will your team divide responsibilities or will your district use a central planning team for the curriculum technologies? The other very interesting part of your new TCO and budget planning is where in the school budgets these different parts come from. In some states there is a wall of separation between hardware and soft wares. In some states, there is a value threshold on what constitutes a capital budget purchase. As these consumer devices fall in cost, expect them to fall below that threshold. Often the monies are not transferable. If you have already addressed these new TCO issues, it would be great to hear from you with a link to your revised plans. There is no one correct answer. Sharing different models will be valuable. Comment below, or send email to me at gdahlby@gmail.com.

Just to make things even more potentially murky, CIOs will be watching two added scenarios to be played out. One is for the publishing company to begin to provide its own Kindle Fire-style tablets with its own smartbooks integrated. This will allow them to not have to pay a third party a distribution fee that may add significant percent to the end-user costs. While students currently carry individual textbooks in their bookbags, one might envision multiple e-smartbook readers from different publishers with unique and proprietary formats. The other scenario to follow is a furthering of the epub standards to embrace non-proprietary standards to allow a wider open market for the host devices including possible virtual devices sitting in the cloud in digital student lockers. We do, indeed, live and work in interesting times. There is a need to bring more clarity to the total cost of ownership at this time of transition, especially in this time of constrained budgets.

Dr. Gordon K. Dahlby is an educational consultant.