Cover Story - Privatization

Finding New Customers on Campus

Businesses in North Carolina are finding new clients in an unexpected location — colleges that have been forced by lean economic times to outsource many services they once performed for themselves. When budget are tight, colleges are concentrating their resources on mission centric functions like instruction, libraries and laboratories. They figure that everything else, from food services to landscaping, can be supplied cheaper by the private sector.

“We prefer to concentrate our internal resources on enhancing the learning environment,” explains Roger White, dean of financial and administrative systems at Davidson County Community College. His college contracts with outside businesses for a range of functions that includes bookstore operations, food service, physical plant and campus security. “Many of these types of services can best be handled by people who specialize in them.”

Bookstore management is one area where many institutions are finding value in outsourcing. On that score, Central Piedmont Community College, like DCCC and others, works with Chicago-based Follett Corporation. Other institutions, such as UNC-Wilmington, have turned to retail giant Barnes and Noble to run their campus bookstores. By doing so, they are able to benefit from the companies’ huge economies of scale, extensive textbook buy-back programs and sophisticated inventory management systems. Students benefit greatly, administrators say, typically receiving better services at more competitive prices. The college itself also wins, offloading management burdens while pocketing a handsome commission on sales. “We’re guided by the notion that we should take advantage of any opportunity to stretch tax dollars as far as we can,” says Tony Zeiss, president of Central Piedmont, which also contracts with venders for security, housekeeping and parking services. “Anytime it makes sense to privatize, we privatize.”

That’s not to suggest that colleges are simply washing their hands of responsibility when it comes to ensuring services are delivered in a manner consistent with the institution’s reputation. “We look closely at the outcomes we want,” explains DCCC’s White, who says the college reviews all contracts annually. “We evaluated our (in-house) bookstore operation against an outside service and found we could better allocate the capital we were devoting to our textbook inventory into building construction and other projects.”

 But not all outsourcing arrangements lend themselves to smooth transitions. In the case of DCCC’s arrangement with a private firm for building maintenance and HVAC services, a number of propriety software systems and controls were put in place that cannot be supplanted by another vender. “You want to partner with someone for the long term and not have to switch venders every few years.”

For the past decade, DCCC has maintained a working relationship with Loss Prevention System, a Clemmons company whose security guard division provides unarmed policing for the campus. “The economics of it make a strong case,” according to Larry McClelland, president of the 20-year-old firm. Screening, training, licensing and supervising such services can be expensive for a small college to handle internally. “Just the liability insurance alone is hefty enough,” he says. “We pay the same rates charged for law enforcement officers.”

Not all institutions embrace outsourcing with great enthusiasm.  After using venders to provide an array of management services, including part of its technology help desk, Wake Forest University now manages all but its campus food services internally. “My general feeling about outsourcing is that it is a straight business decision,” says John Anderson, Wake Forest vice president of finance and administration. 

Anderson says private companies, from Big Six consulting outfits to smaller local firms, regularly approach him with offers to handle Wake’s strategic planning, marketing, advertising and more. “There’s something in my mail box everyday,” he says with a chuckle. For the most part, Anderson keeps Wake’s options open, noting that today’s educational institutions must behave with more business acumen than in years past. When it comes to decisions on outsourcing, he advises college leaders to ask themselves two central questions: “Can the university save money, and does it feel comfortable putting the service in someone else’s hands?”

The question of cost savings is typically the easier to answer, Anderson says. The other involves a serious examination of the college’s brand identity and business culture. “The question of value is going to be relative to each institution.”  — Lawrence Bivins

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