See also: CIO Profile: The Open University's David Matthewman on the business of education
 - CIO Profile: OU's David Matthewman pioneered home banking

The Open University, the UK's centre for flexible higher education, is at a crossroads, as 18-24 year-olds look for less costly ways to prepare for their careers.

It has a head-start, compared to many traditional universities because it already embraced digital communications with its students and digitised learning materials for them to study remotely.

Based in Milton Keynes, arguably the UK's newest city, the OU head office looks more like an IT campus than a seat of learning and it relies heavily on powerful systems that form the hub of the business.

OU CIO David Matthewman was brought in last year to upgrade these systems so that they could cope with the changes in the UK education market. Although he operates now in a public sector environment, his background is in the commercial sector and he can't help but see the challenges presented to the OU at the moment in terms of a business addressing a market.

As with many CIOs of businesses emerging from a recession, the first task is to manage costs. Core to this is deciding whether to continue to run the university's systems on the home-grown technology that has supported it up to now, or to invest in standardised IT provided by established suppliers

He says: "It's all about controlling business-as-usual spend. Through that we'll be looking to commoditise as much as possible. We'll be challenging the notion of whether running systems, in-house is the right thing to do here and there. We want to squeeze the commodity in the business as much as possible.

Matthewman has to build flexibility into the systems he runs, because it's not clear yet what the education market will look like in the years to come.

His vision is to put the financial levers in the hands of his internal business partners, so that as their specific part of the OU changes, they can throw those levers with as little recourse back to IT as possible, and they can get on and run their part of the business.

This leaves the IT department free to focus on developing the differentiating parts of the OU.

Matthewman's team isn't big as a proportion of OU staff and the 250 people within it have to support 5,000 staff at the headquarters and another 7,000 associate lecturers who deliver the learning to its students all over the country.

Most of the desktop estate is Microsoft based, with 700 Macs.

It's not hard to guess that when Matthewman talks of squeezing the commodity in the business, he is referring to cloud services.

He's an advocate of the procurement model, having had a hand in the development of the G-Cloud initiative in central government headed up by Bill McCluggage, deputy government CIO at the time. Mattewman thinks there may be a case for back office functions to be migrated to cloud services.

He says: "One of our first ports of consideration would be things like HR. If we can get the right kind of provision, the right kind of price and the right kind of service then I can see no reason why we would want to manage those sorts of services when we can just get someone to do that for us. Price has to be the key consideration."

Other infrastructure projects include a move to Windows 7 and Microsoft Link, the software company's unified communications offering.

By integrating this system with the university's Sharepoint middleware, Matthewman is removing the need for telephones on the desk and a PBX in the back office.

All users will get a handset that plugs into the USB port of their laptops. Matthewman is using Siebel and SAS to support this move.

Perhaps the biggest concern though is the root and branch review of the university's core systems, which up to now have been bespoke and in-house developed.

Matthewman says: "If you imagine a continuum, from commodity software through to configured, customised and bespoke, I think the OU at times has got used to a whole new category there, which is almost couture systems."

The review, called Systems Futures focuses on two core applications. One is around the student management architecture. Matthewman explains how this is built to manage the whole student journey, from the process of signing up to a course, getting the course delivered, booking into tutorials, all the way through to deciding what level of award they should get.

"Essentially that's the core strand of our business –our line of business system," he says.

The other core system is used to manage the courses themselves and is concerned with the creation of course materials and the development of each course curriculum. Without dismissing the value of the course creators' craft in education, Matthewman refers to this system as the production line of the business – a symptom of his willingness to frame the OU's environment in business terms.

A third strand of the Business Futures project is around a reasonable-sized loans company that the university operates to provide some students with the funds to buy the courses they need.

That's a lot of scope to deal with all in one go and Matthewman joined a company that, through natural wastage did not have a report team for him to manage. He has now recruited a senior team to help him deliver this transformation:

 - Gareth Charles has been brought in as programme director from BBC Worldwide, a long-time business partner with the Open University
 - Vikky Hackman was brought in from Barclaycard to become director of service delivery
 - Sue Platt, formerly of BGL Group has followed Matthewman from there to take the post of director of systems development
 - Adrian Wells, who was an existing member of the OU team has had his efforts managing core systems recognised by being named director of infrastructure.

These senior employees have a wide spectrum of experience to help Matthewman cope with a project of this size and complexity.

The question for Matthewman is whether these functions are best supported by bespoke code or provided by third party technology providers.

He says: "We've now reviewed all core governance processes within the organisation and our business partners understand how to get things done. We understand the core requirements and are about to start dialogues with vendors in the next three months.

Even though there has been a lot of talk about cloud services, Matthewman admits his research has lead him to realise how few vendors can offer what he sees as true Software as a Service.

Much of what is on offer is on-premise solution and he thinks the industry has a way to go here in terms of maturity of the proposition.

He says: "The key thing I'm trying to avoid — and many cios will have been through this in their careers — is getting to a very deep set of requirements that actually no provider can then match."

He will also have to manage the expectations of the university staff, which is used to getting made-to-measure systems built just for them, to more standard fair.

This will be balanced though by a number of transformational initiatives designed to enhance some of the courses and bring in new students. Science courses will benefit from digital simulations of experiments, Matthewman promises.

This will remove the need for physical glassware and make these elements of science courses more transportable overseas.

He says: "The big question is how we teach science in a virtual way but still make it really valid. Science experiments at school didn't always go well is my recollection and it's a case of when you virtualise things it's easy just to make them go well, in which case, you may as well just show a video."