Understanding and Calculating the Total Cost of Ownership
/ James Penny
Executive summary
In a recent procurement exercise, using the Gov.uk Digital Marketplace[1], a Local Authority with responsibility for 200 schools educating 66,446 pupils, chose to move all their schools to the Bromcom SaaS MIS. By doing this they were able to reduce their annual costs by £2million. Over five years this returns £10million into school budgets. Examining the per student per year costs, we generate the following values:
SIMS TCO – £32 per pupil per year
Bromcom MIS TCO – £6.36 per pupil per year
"The Bromcom MIS provides an 80% reduction in overall cost"
The average annual per-student cost across Primary and Secondary schools was reduced from £32 per pupil per year to £6.36 per pupil per year. A saving of £25.76 per pupil per year.
However we look at the savings, they are significant.
An average Primary School budget in England is c.£1.2million[2], making the collective annual savings close to the budget of two Primary providers.
Using the TCO calculations to look at the impact on individual schools; an average Secondary school in the LA will save £23k PA.
- Outside London, the starting salary for a Teaching Assistant is c.£17k PA
- Outside London, a Newly Qualified Teacher starting salary is c.£25k PA
According to research by BESA[3] a typical Secondary school spends £180k PA on resources – the £23k saving represents a potential 13% increase in that budget.
By aggregating the purchase across the LA and making the move to a SaaS-based solution, new opportunities are opened for schools to improve the learning experience of the young people they serve.
TCO checklist
In order to build a full TCO model for an on-premise Client/Server SIMS solution, the following line items need to be included:
- The cost of the core MIS – The whitepaper explores how the current core SIMS software needs to be supplemented with additional ‘Bolt On’ solutions to provide the functionality that schools now expect from their MIS
- The cost for on-premise server hardware with a five-year lifecycle including power, cooling, and facilities management
- Backup and Disaster Recovery (DR) costs for the on-premise solution, including regular tests of the DR solution
- The maintenance, management, and technical support for the on-premise hardware
- A Remote Access solution to support staff to access the MIS data when not on the school site
- Costs for updating the solution in the Client/Server model
- The cost of 3rd party ‘Bolt Ons’ to support additional functionality and services
- The cost of supporting the 3rd party ‘Bolt Ons’
In addition to these costs, the vast majority of schools require an MIS Support contract which is generally serviced by a third-party company. Whilst support is also required for the Bromcom MIS, they offer a dedicated Support Service that is closely aligned with the in-house development team. This makes solving issues quick and efficient and can often lead to new features being suggested and implemented very quickly.
Any 3rd part ‘Bolt Ons’ will also need discrete training. Often, schools sign a contract for a discrete data analysis solution that pulls data from the various 3rd party systems as well as the core MIS. This needs to be added to the overall cost for the MIS.
Worked example – 120 schools comparing a Client/Server SIMS model with the Bromcom SaaS MIS
This example uses the average school sizes as published by the DfE[4] and shows that across a mixed estate of Primary, Secondary, All Through, Special, and Nursery provision, the average saving is just over £27 per pupil per year.
This yields an annual saving of £1.151million. The solution costed is the Bromcom One Stop Shop with the Finance module included.
Value for money – more than cost
It is easy to see the procurement of a Management Information System (MIS) as being driven simply by cost.
With pressure on budgets, the opportunity to reduce cost is a compelling reason to look at change, and as the headline figures show, significant savings can be achieved. But a big change, such as moving to a new MIS, is driven by several factors. It is balanced against the overall value that can be gained from a change of this nature.
The Bromcom Software as a Service (SaaS) offering not only provides excellent value for money when compared to traditional Client/Server applications, but it is also a catalyst across a value chain that unlocks further efficiencies and savings within a school, LA or MAT.
Before we look at the cost savings in more detail, we should not forget that the way data is used in education has changed significantly over the past ten years.
There are teachers in our classrooms today who can still remember that their personal mark book was the single point of truth for how well pupils were performing. That data was used to write reports and examine previous performance, typically over the past term and, in some cases, an entire academic year.
Modern MIS systems have revolutionised the way data can be captured, analysed and used to inform the learning path for individuals, groups, classes and cohorts. Teachers can compare the performance of pupils in different subjects and help to build a detailed picture of strengths and areas for improvement. With analysis tools and the Vision-X solution for inter-school data analysis fully integrated in the Bromcom MIS, data can be examined across a group of schools. Vision-X even allows data analysis of schools not operating Bromcom, as long as permission is granted.
As we look at the TCO picture it is useful to quickly reflect on how MIS systems have developed and how two main approaches have supported the explosion in the use of data. The two distinct models for MIS development that have emerged are, driven by the underlying technical architecture of the solutions:
Model 1: Maintain the core MIS functions, developing as needed to provide the latest statutory dataset returns[5] required by Local Authorities (LA) and the DfE. Support an ecosystem of third-party companies to write ‘Bolt Ons’ which add additional functionality and create an ‘MIS ecosystem’. Using Application Programming Interfaces (APIs), third-party companies extract data from the core MIS into their solution and then manipulate that data to provide additional ‘functionality’. The market for these ‘Bolt Ons’ has developed rapidly. A recent review across the ‘Bolt On’ landscape by Bromcom identified in excess of forty-five different systems that provide additional features required by schools that are not included with the core SIMS MIS. Typically, a Secondary School might have as many as six to eight ‘Bolt Ons’ all with a separate contract, support requirements, and training needs.
Model 2: Maintain the core MIS functions, developing as needed to provide the latest statutory dataset returns[6] for LA and DfE and then add integrated feature sets into the MIS that negate the need for multiple ‘Bolt Ons’. This model removes the need to exchange data using APIs, removes the need to support multiple different applications, removes the need to hold relationships with multiple third-party providers, and means that a single data set can be used across the MIS for analysis.
Understanding the TCO calculations
These two models have significant implications for the overall cost of ownership.
Model 1 has developed because the SIMS solution is based on a traditional ‘Client/Server’ application model. In this model, an application is installed on a user (client) device – Laptop or Desktop – whilst the database that holds the data is installed on a server that is visible to users across a Local Area Network (LAN). As the user interacts with the application the data on the server is updated. If new functionality is required with this model three things must be accomplished:
- Update the shared database on the server to allow new data to be stored, this has to be done by every school running SIMS on their network
- Update the application on every client device. The updating of the application can cause user downtime and the whole process can take several hours
- Update ‘Bolt Ons’. If there are six ‘Bolt Ons ’compatible with the system, then six updates are needed, as well as the core system, with any issues needing the technical team to contact the third-party supplier help desk. More often now, the third party ‘Bolt Ons’ are moving to a SaaS model. If this is the case, then the third party will update their SaaS offering to take account of the core system update which can make updating easier.
By default, this model does not allow users to access the MIS when they are not connected to the school Local Area Network. For remote access, the IT support team must set up some form of Remote Desktop Service (RDS). This can be on the Local Network with users accessing remotely alternatively, a Cloud-based RDS solution could be employed, like the Azure RDS service[7]. Using a service like the Azure RDS or hosting the SIMS server in Azure, or equivalent, does not make the MIS solution a Cloud solution, it simply facilitates access to the Client/Server architecture remotely. Both a LAN-based RDS solution and an Azure (Cloud-based) RDS solution require significant technical skills to set up and manage to ensure that access is secure, and the necessary memory and storage are correctly allocated. Under this scenario, additional backup and disaster recovery solutions are also recommended.
Model 2 is based on Software as a Service (SaaS) principles that are part of the globally accepted Cloud model as defined by NIST[8]. SaaS development also uses an Agile methodology which was developed to support rapid iteration and development of software. The SaaS model is a fundamentally different architecture to the Client/Server model. The ‘application’ is hosted in a Cloud environment and users securely access the application from a web browser. There is no application installation on user devices. Updates to the underlying database are made without interruption to the user experience and multiple iterations can be rolled out rapidly. This model drives all mobile-based software and any application that is accessed via a web browser. It is the de-facto model for software in the 21st Century, with very few exceptions. It was designed to be cost-effective and create minimal disruption to end users. The recent COVID-19 pandemic has shown how important remote access to education systems is. The move to SaaS-based applications removes many barriers, allowing education to continue if the physical site cannot be accessed.
Total cost of ownership
Based on the above narrative, calculating the total cost of ownership to run an MIS solution requires several elements to be considered if the true cost is going to be understood. For a successful Client Server model to work (Model 1) an organisation needs:
- The capability to host the shared database on servers that are accessible to users via a Local Area Network (LAN)
- The maintenance of secure backup with enhanced Disaster Recovery and Business continuity plans that are regularly tested
- To maintain, manage, and update all servers being used to deliver the solution
- To create a remote access solution – often via adding a Remote Desktop Solution (RDS) either on the LAN or using a Cloud alternative. Either approach will incur additional costs and additional support requirements
- A technical support team to ensure that the application updates are successfully deployed to client devices
- A technical support team to liaise with the third-party ‘Bolt On’ providers to ensure they are working as needed when updates are done to the core system
- Training for users on how each ‘Bolt On’ works in addition to the MIS training
- Integration of the MIS user information with the digital ID management solution – This is normally Microsoft M365 or GSuite in education, sometimes a combination of both is used. Often an additional third-party solution is deployed in this model to achieve secure integration. Digital identity is a critical aspect of managing Cyber Security and should be one of the key areas of risk review and management for all schools.
Data analysis also needs to be considered. Some ‘Bolt Ons’ will write data back to the core MIS and some will not – most applications do not write back for several reasons, including security concerns. This can potentially cause ‘islands’ of data to emerge, meaning that multiple GDPR arrangements need to be in place. All this can make meaningful analysis cumbersome and reliant on a small number of gatekeepers who understand how to manipulate the data into a form that can yield important information. Often the answer to analysis is to introduce an additional specific application that can act as a data warehouse to extract data from the various systems and then apply analysis to that dataset. By design, the data being analysed will not be in real-time.
When comparing costs, it is therefore important to include all costs for the bulleted items above when compiling the TCO for a Client/Server MIS.
In Model 2 – the Bromcom SaaS MIS – the price for the MIS includes:
- Costs for the infrastructure
- Secure Backup and Disaster Recovery
- All maintenance and updates to infrastructure as needed
- Secure remote access is by default/design through a web browser
- All software updates
- Incorporated functionality traditionally considered ‘third-party’
- Training on the MIS across all features and functions
- Sophisticated data analysis with Power BI visualisations
- Full integration with M365 and GSuite allowing for secure Digital Identity management[9].
Digital identity is a critical aspect of managing Cyber Security and should be one of the key areas of risk review and management for all schools
Understanding the costs
Having identified what needs to be included in the TCO calculations it is important to reflect that historically, the total cost of ownership for a Client/Server SIMS solution has been difficult to calculate. Historic LA-wide aggregated procurement agreements and licensing models for the Client/Server core software meant that not all costs are easily visible; some were paid via delegated funds that an LA spends on behalf of schools. Costs for technical support and hardware systems sit within various budgets and the approach can vary by LA and even between schools. Some LAs offered bundled services that included MIS support, RDS solutions and support for site-based hardware and other software, not related to the MIS, for a single annual fee. Some LAs moved to a ‘Traded Services’ model where the historical LA-supported service moved to become a stand-alone business underpinned by an inherited customer base.
The net result was that comparisons between a Client/Server solution and a SaaS solution were often not made on a ‘like for like’ basis. License costs for the core MIS were compared with the SaaS solution costs which have significantly more features included, features that had to be added as ‘Bolt Ons’ to the Client/Server solution, significantly increasing the cost. We should also factor in the models that have grown up to support and train schools in their use of the MIS. Historically, some LA’s had MIS support teams that specialised in the SIMs Client/Server solution. Many of those organisations then also became ‘Traded Services’ under local government reforms further complicating the picture. Over the past five years, Bromcom have worked with many of these organisations to accredit them as support partners, ensuring that schools have as wide a choice as possible.
It quickly becomes clear that being able to understand the total cost of running a historic Client/Server solution is a significant challenge. For many, the Academy programme shone a light on the full costs for the first time. When schools transition to Academy status, they take responsibility for all their costs. Only when this occurs, historic arrangements for SIMs licensing, and the associated support and running costs, become clear. In the LA context, being able to bring clarity to the TCO is a significant challenge and requires a deep and detailed understanding of the areas where schools are spending their budget, as well as the ability to work across organisational silos to engage in meaningful dialogue.
An example of TCO – cost reduction
In the following example we have taken the actual figures from a LA procurement exercise that used the Gov.uk Digital Marketplace[10] and shared the TCO for the legacy Client/Server SIMS approach against the TCO for the Bromcom SaaS-based solution.
The LA in question has 200 schools split between 182 Primary and 18 Secondary. There are 66,446 pupils across the phases. Assumptions have been made about costs for ‘Bolt Ons’ based on experience with similar schools, whilst the costs for running the IT infrastructure include the maintenance and management as well as costs for a remote access solution. These comparisons ensure the analysis against Bromcom’s SaaS MIS is ‘like for like’. The solution that has been costed is the Bromcom One Stop Shop, with the Bromcom Finance solution included. Traditionally, the SIMS license included the core MIS and access to the FMS software. Interestingly there was no reduction in the licensing cost if a school decided to use a different finance package.
Considering all costs outlined in this paper the Client/Server SIMS solution costs an average of £32 per pupil per annum. This is broken down as £45.80 per Secondary pupil and £18.20 per Primary pupil. The disproportionate cost for Secondary pupils is because their use of ‘Bolt Ons’ is greater as well as the cost for running their infrastructure is higher, based on the size of the schools with the related size of the underlying database and the number of 3rd party ‘Bolt Ons’ used.
The Bromcom MIS costs £6.36 per pupil per year. This is broken down as £6.24 per Secondary pupil and £6.48 per Primary pupil. The equity in cost between phases is achieved via the efficiencies of the SaaS model where infrastructure is optimised to reduce costs where applicable.
The saving per pupil per year is £25.76. The SaaS-based solution, therefore, delivers an 80% saving against the SIMS Client/Server solution.
In summary
Building a full total cost of ownership model across a Local Authority is a challenging task. It requires a detailed understanding of how the traditional SIMS Client/Server model operates and how the costs for running IT hardware need to be factored into the discussion. The TCO model crosses organisational and budget boundaries meaning that multiple stakeholders need to be engaged in the discussions. Long standing vested interests can also be a factor with the challenge of change being seen as a barrier. As we will explore in the second and third whitepapers, the migration from legacy systems is a well tried and tested journey and training staff in a new system is also not as daunting as it may appear.
[4] DfE – Schools, pupils and their characteristics