Be Nice Or Don't Play In the Education Space

In an effort to up purchasing power and drive standards, more and more states are centralizing IT procurement for education. The model they're using, however, goes way beyond a few districts teaming up to snag volume pricing. Created by legislation, educational service agencies (ESAs) provide varying degrees of integration and support services along with products. The result? Many view them as full-fledged VARs--including the vendors and school districts that might otherwise look to the private sector for such services.

To call ESAs a growing trend would be an understatement. With 44 states utilizing the model now and two more states mulling it over, ESAs are actually becoming the national standard.

"No question, purchasing [in K-12 education] is changing from the local-district model to the regional model," says Brian Talbott, executive director of the Association of Educational Service Agencies (AESA). The professional organization serves more than 550 ESAs as the national voice and provider of professional- growth opportunities, technical assistance, advocacy and research. "Whenever you can buy in bulk, you have savings. Some of the best pricing in the nation goes through an educational service agency," Talbott says. "At the same time, it unifies the direction. If everyone marches off on their own, there's no standardization or consistency."

Originally established in 1948 by the New York State Legislature, New York's Board of Cooperative Educational Services (BOCES) is among the longest-running and most successful ESAs. BOCES enables small, rural school districts to combine resources and access services that would otherwise not be affordable or available. There are 38 BOCES broken down geographically, with three to five BOCES making up each of the regional instructional centers. Although voluntary, membership is necessary to receive state funds, and is available to all school districts except the "Big Five"--New York City, Yonkers, Rochester, Buffalo and Syracuse.

Similar in structure, the ESAs in Pennsylvania are referred to as Intermediary School Districts and as Education Service Centers in Texas, to name just a few.

In general, ESAs function like nonprofit associations, receiving funding from taxes, and state and federal government grants, and then doing the IT purchasing and providing some services. Under the No Child Left Behind Act, ESAs can assist with teacher training, alternate certification, supplemental services, school improvement and technology.

All agencies are becoming more adept at commoditizing planned purchases for preexisting products like licensing renewals, desktops and networking gear. Usually, those purchases are dominated by large national hardware players--whether a vendor like Dell or large resellers such as GovConnection or CDW Government. The key for smaller solution providers is, of course, to make additional margin on professional services.

NEXT: But therein lies the rub...