The University of Washington's technology staff demonstrated in 1989 what smart thinking and creativity can accomplish when it developed the Pine e-mail system, which quickly became widely adopted outside the university.

But the Seattle-based university recently announced a plan to reduce its IT staff by 66 employees, 15 percent of its total, and part of the reason is due to a shift in how its users are now getting services, such as e-mail.

Most of the university's staff reduction is because of a budget shortfall of some US$10 million in its $50 million annual budget. But UW Technology is also restructuring and preparing for a future where demand for university-supplied IT services will decline as its users shift to services offered by Google, Microsoft, Amazon.com and other providers.

"The marketplace has changed in a fundamental way," said Ron Johnson, the university's CIO, and its users are turning ad hoc to commercially provided services such as e-mail and collaboration tools delivered via the cloud.

Speaking at Microsoft's Tech Ed conference this week in Orlando, company Chairman Bill Gates said services were "just really emerging."

And one of the outcomes of this shift to services will be to build "data centers at a scale that never existed before," Gates said. "Literally today we have, in our data center, many hundreds of thousands of servers, and in the future we'll have many millions of those servers."

This shift to "more powerful and more capable" external providers is not something that Johnson laments, and he said users will be able to innovate on these platforms. But the move has implications for the services the university IT department provides.

Today, the university spends money to provide IMAP (Internet Message Access Protocol) e-mail services, Johnson said. "Do we continue to work on providing an equivalent service that costs us money when Google provides essentially the same or better service for free?"

Drexel University in Philadelphia wrestled with that question and announced in January that it reached an agreement with Google and Microsoft for e-mail services, collaboration tools, calendars and other services.

Google and Microsoft aren't replacing the need for Drexel to have its own Exchange servers for administrative e-mail, for now at least, said John Bielec, the university's CIO and vice president of IT. Drexel's need to meet fiduciary, regulatory and legal precludes a total shift to service providers, he said.

But Bielec isn't ruling out anything for the future when it comes to services from third parties, noting that such services are getting more sophisticated, specialized and useful. For instance, Drexel is using an external service from HRsmart Inc. for student applicant tracking and recruiting, he said.

One major IT benefit of integrating the free services aimed at universities provided via Google and Microsoft programs is avoiding spending on hardware to expand storage. Each e-mail account comes with 20GB of storage.

Universities are either embracing or moving to cloud type services because of the independent nature of many of their customers -- students and faculty. Both Johnson and Bielec, in separate interviews, see the role of their department's changing as result. They will need to ensure they have the skill sets in their technology departments to facilitate adoption of these external services, integrate them and do what they can to manage this consumer-driven shift.

Bielec said his role will, in effect, change from chief information officer to chief information strategist, with less of a focus on operational strategy, and more to an information strategy that looks at how to use these services.