The following interview is with Bob Weinschenk, CEO of SIPX. Launched in 2012, SIPX has partnered with a wide variety of content publishers and postsecondary units to simplify digital rights management for students, faculty, publishers and institutions. In this interview, Weinschenk discusses the areas in which service providers are most valued, and those where partnerships are placed under greater scrutiny.
1. What are the most common challenges a service provider faces when entering the process of partnering with a higher education institution?
In any market where there’s a service provider — and this is just generic and transcends the higher education market — you really have to be aware of what other products are in the market. Are you really going to come in with yet another product and yet another interface and yet another service that any end customer has to go in and learn? The first thing is understanding where you fit in the ecosystem. Are you trying to take over the ecosystem or, in the case of SIPX, are you trying to bring the valuable slice into that ecosystem and … be as interoperable as all other possible solutions? I think that was a generic problem that we faced — and I think any other service provider faces.
Relative to higher education, … the challenges I see really come around budgets and constraints. In the for-profit world, it’s very easy to put together a cost analysis. … What I’ve seen is, in higher education and postsecondary, the budgets are just shrinking; there is more and more pressure on institutions and hence it’s not quite that simple of a decision. …
What I found is that you have to come in with a very, very, very clear proposition. It has to be cost effective and it has to be interoperable because this is a very, very, very fragmented market. There’s a lot of people that have little bits and pieces of the puzzle.
2. What kinds of services are postsecondary leaders and faculty more adamant about keeping in-house?
There are a few common trends we’ve seen, but I can’t say there’s any one trend that fits all. There’s some of the bigger research universities that have one set of problems, there’s a bunch of the niche-ier colleges and universities that are struggling just to go in and to bring educational materials to students. And then you’ve got the community colleges and some of the for-profits that are going after very, very, very different market segments. … At the end of the day, most of the services — and, actually, those that we provide — are really critical to the students’ ability to go in and be educated. Without course material there’s not a lot of education going on. So, what we’ve seen is the biggest concern from most universities in general is, “What is your failsafe plan? How do you ensure to me that your service is up, meets all of our needs and you’re never going to get that phone call from your president, ‘What happened to that particular service?’” …
So, on the element about keeping [services] in-house, anything that’s mission critical — that is, if it goes down, the university stops functioning — is a top-tier question from any library, any institution.
When you start moving down the food chain, most of the universities that I’ve seen are very happy to go in and outsource. Their budgets are getting cut … or are just getting more managed both from the people perspective as well as capital equipment. Who wants to go and buy a server nowadays? It’s a depreciable asset and three years later it’s worth nothing. … What I’ve really seen in most universities is not wanting to bring in anything that’s not mission critical inside the university. So, it’s been kind of a demarcation there.
3. Conversely, what kinds of administrative and academic services are postsecondary institutions looking to outsource to service providers?
Well, there are some things that actually surprised me, and they may go a little against some of the trends I just mentioned. We see that some universities are looking to outsource some things I certainly consider mission critical; either a learning management system or an integrated learning management system. Really, that’s where students are interacting with professors, they’re getting assignments, they’re getting all sorts of information transfer back and forth, and yet there’s a robust business in outsourcing that.
But usually what we found is, if it is mission critical — and especially relevant to privacy, there’s just such strong sensitivity not just in the consumer markets around the pertaining privacy (it really is critical), but in law the ability to keep students’ information private — that tends to be another demarcation. … If this private information has to exist, most universities are substantially more comfortable keeping that internally, so that’s yet another factor. Once you start moving private data outside, and if something goes wrong — and we’ve all seen, over the last year, some of the biggest ecommerce companies in the world have had transgressions and have been compromised — when you start seeing that by companies like Adobe … it really starts to cause people to think twice about what their data policy is and what the repercussions of that policy are relative to outsourcing that capability or keeping it in-house. So, it’s a challenge.
In the academic market, one thing I have certainly learned is that no two universities are the same. … There’s certainly some common trends, but every university has its own personality. Even though I’m new to this, after two years of meeting with universities, I have yet to be able to take two of them and say, “Boy, this one looks like that one and maybe he’s the same way.” It actually makes it quite fun for my staff because when you go in, and you can take some of the top-name universities that you all aspire to go to or have our children go to, and yet they all operate very, very, very differently. They all have that very fun and unique personality.
4. Is there anything you’d like to add about some of the challenges of finding your ideal partner in the higher education space and the services for which institutions are looking to external providers?
From a partnership perspective, one thing we did find is that the postsecondary or the higher [education] space is unique in the fact that there are many, many, many service providers that do provide bits and pieces of the overall solution. There are some areas where one company or another has a dominate market position, but unlike … consumer electronics, whether it be a hardware or a software, there tends to be a dominant player, maybe a number two, might be a number three, but that’s usually it and that’s the entire market. Here, what we’ve found is to go in there and really be able to provide a comprehensive solution, it hasn’t been partnering with one or two other companies; it has been partnering with six to eight to nine companies to really be able to bring that comprehensive solution. So, it’s a market that is fragmented. I think the good news is that there’s a lot of choices available for institutions to choose different pieces of the puzzle.
On the other hand, interoperability [is a problem]. Whenever you have four or five pieces of client software or infrastructure that are trying to be interoperable — and the term ‘trying’ is really important here — as soon as something changes, by default, there is a probability that something breaks. I’ve been very surprised to see how sensitive, because of the fractured market, how sensitive the solutions are such that if somebody changes what seems to be an innocuous, harmless interface or a command … something that you wouldn’t expect to bring down an entire system, all of the sudden there’s an outage. That’s something that has been very, very surprising to us.
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