Tech developer The University of Hawaii, which struck a deal with an Arizona company in June 1997 amid fanfare for it to provide a $4.7 million student-information system, may soon be taking over development of the project.
gets cold feet over
UH student-info
contract
With only one piece of UH's
$4.7 million package delivered,
Buzzeo decides it is getting out
of system development businessBy Tim Ruel
Star-Bulletin
The university's Board of Regents contracted with Buzzeo Inc. in part because of the company's expansion potential in Hawaii.
Included in the deal for the university was a 3 percent equity stake in Buzzeo which was intended to go toward the development of a $10 million, 30-employee regional technology center in Buzzeo's offices on Kapiolani Boulevard.
Buzzeo, however, has informed UH that it is getting out of the business of developing full-scale systems for universities, even though the company has only delivered one piece of UH's package.
Attorneys for both sides have a month to negotiate, said Kapiolani Community College provost John Morton, who has been involved in talks with the company. If Buzzeo cannot guarantee that the whole system will be delivered, the company will either have to turn over any computer code developed or refund the university's money. Otherwise, UH will begin legal action.
The university's systems have been outdated for several years, and replacing them is a high priority. "That's why we want to try to resolve this as quickly as possible," Morton said.
Vincent deSostoa, who joined Buzzeo as chief financial officer in June, declined comment and referred calls to the company's attorneys, who could not be reached.
Buzzeo's investors have told the company to either sell or close the division that develops information systems for universities, Morton said. The investors want to focus instead on building pieces of software to enable businesses to connect to the Internet.
The announcement came as a surprise to the university, Morton said.
The company had just delivered the first piece of the student-information system, a tool for managing student financial aid through the Internet. The component is in testing at Windward Community College, and makes up about 15 percent of the entire platform Buzzeo was supposed to provide.
Originally, Buzzeo was contracted to build a complete Web-based platform to manage all information for the university's admissions, registration, accounting, class scheduling and transcripts, and to prepare the systems for the year 2000 computer bug.
Regents had been told that Buzzeo's Web-based technology was way ahead of its time, and something that the university could not replicate on its own, according to Joe Blanco, who was a regent at the time and now serves as technology adviser and executive assistant to Gov. Ben Cayetano.
"It was a calculated risk," Morton said. "In retrospect, we certainly wanted a different result with Buzzeo."
In 1998, faced with difficulties getting venture capital, Buzzeo closed its Hawaii office and shifted operations back to headquarters in Scottsdale, Ariz., a suburb of Phoenix.
As a result, the company did not make its deadline to beat the year 2000 bug. Some of the university's information systems were extremely outdated, and needed the upgrade badly. UH ended up making the adjustments with its own resources.
Once current negotiations with Buzzeo are settled, the university will most likely continue developing the system on its own, piece by piece, during the next several years. As an example, UH is already revamping its financial management programs to allow students to pay their debts more readily through the Internet, rather than walking across campus to write checks by hand.
Morton said he still believes in the benefits of Web-based technology, but noted that buying another system outright from another source isn't likely.
"It would get to be quite expensive," Morton said.
He could not predict the entire cost of building the system, since a deal has not been reached with Buzzeo yet. Any money that the university could get back from the company -- including its equity stake, which has grown -- could go toward paying for developing the system.
Morton noted that the university may need to hire other contractors to help design parts of the system.
The financial aid component, meanwhile, appears to be working well and could be ready by May, Morton said.
University of Hawaii
