Nearly a half century ago, everyone grasped the advantages of using mainframe computers for business. Yet few organizations in the early 1960s could afford those machines, which could cost millions of dollars. Some enterprises got creative, latching onto shared services, such as the now-defunct Tymshare, to access slices of applications and processing power.
Other imaginative groups created IT cooperatives to share pricey systems. A few of those IT co-ops continue to thrive today, offering the latest technologies for their members, from software as a service to open source. At the same time, they share the risk among all members, who are users and owners rolled into one.
That combined user/owner role makes running an IT co-op somewhat unique. Lake St. Louis, Mo.-based National Information Solutions Cooperative Inc. (NISC) has delivered IT services to rural utility and telecom cooperatives since 1963. CEO Vern Dosch says while most companies seek to increase shareholder value, IT co-ops “focus on products and services, because for our members, that’s the ROI.”
Issues Big and Small
Naturally, co-op members don’t have identical business needs, so their perceptions of value will differ. Washington School Information Processing Cooperative (WSIPC) in Everett, Wash., has served 280 of the 295 school districts in the state since it was founded in 1967. Director Sue Furth says data collected by the co-op might mean one thing to district superintendents analyzing curricula and another to state legislators planning budgets.
Job function differences aren’t the only tension built into the IT co-op model. There are also vast discrepancies in size within a co-op’s membership. WSIPC, for example, has to deliver relevant IT services to districts as large as 30,000 students and as small as 75. NISC supplies software and services to more than 510 members, including a Georgia utility with about 150,000 meters and one in Montana with about 900.
Doug Rembolt, vice president of shared services at NISC, says there are three ways his organization smooths out the natural friction among the co-op’s varied constituents. First is through committees comprising members elected by their peers. Monthly committee meetings are held to discuss common issues, such as the billing software NISC members depend on to deliver their 8 million invoices per month.
Next are routine joint application development sessions, where members hammer out the specifics of software design — from detailed user interface issues to the connectivity problems related to deploying smart utility meters. Finally, there’s the annual NISC conference where all issues are aired.
Basic shared services, such as billing for NISC or budgeting for WSIPC, are the very reason IT co-ops exist. But successful co-ops aren’t stuck in the glass-house era in which those application requirements were conceived. At NISC, Brad Mollander, lead software engineer, is overseeing the unveiling of a social networking site for members that’s intended to improve communication and build a knowledge base about NISC software and services. The site now has about 900 users, and he expects it to have about 5,000 by the end of this year.
Jeff Simons, IS director at WSIPC, says his co-op runs software-as-a-service applications from its 16 managed data centers for all 280 districts. This ensures top performance while enabling him to cut costs by employing only three database administrators to manage the software centrally.
That ability to deliver advanced services at a low cost is what initially brought IT co-ops to life. However, squeezing nickels isn’t their true benefit, says Dosch.
He says co-op members understand the value of investing in technology for the long haul. He points to the recent shift from proprietary tools to Java and open-source technology, a process that took years but now better prepares NISC for new services and makes it easier to recruit young talent. And, Dosch argues, it’s the right combination of technology and talent that will make co-ops part of the IT landscape for another 50 years.
Hall is a freelance writer in Oregon. Contact him at [email protected].
This story, “Sharing IT Resources and Risk” was originally published byComputerworld.
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