Looking at IT Through a New Lens: Achieving Cost Savings in a Fiscally Challenging Time

By George F. Claffey, Jr.

• IT departments must cut costs and justify expenditures in the face of shrinking budgets.
• On top of obvious changes, bringing a new viewpoint to budget cutting reveals opportunities for alternate solutions, from virtualization to open source.
• Whether between campus groups or between campuses, collaboration yields many new ideas in responding to the economic downturn.
• Membership in a consortium gives a campus more leverage in commercial negotiations, opportunities for economically “in-sourcing” services, and access to additional resources.

“Please keep in mind that resources for FY 2010 are expected to be limited. It is also requested that you present a budget that is 5% and 10% less than the FY 09 net budget.” — Chief Financial Officer

CIOs across the nation received similar messages from their CFOs this year. Many of us remember the economic crisis of the 1990s. Although some of the strategies used then might help us weather today’s storm, information technology operates and is leveraged in fundamentally different ways now. Reducing IT budgets is difficult because many campuses are locked into contractually increasing software and maintenance fee payments. Coupled with that, many higher education institutions expect significant enrollment increases. In short, IT is once again being asked to do more with less.

While fiscally challenging times often prompt a retreat into “core strategic services,” we should view this crisis as an opportunity to reevaluate the position, strategies, and politics in play on our campuses. Often we find that we’re doing something merely because that’s how it’s always been done. This challenging economic situation gives us an opportunity to reevaluate what we are doing and how we are doing it, seeking greater efficiency and effectiveness in new solutions.

As we stare across the multiple tabs and hundreds of rows that make up the IT budget serving our students, faculty, and staff, we must realize that the answer cannot be found with basic cuts. We must look at how technology is used — or not used — on campus. To promote greater cost savings, we need to look through a new “lens.” Four broad categories can be evaluated to determine if IT resource alignment is appropriate and if savings can be achieved through change:

• Services and infrastructure: retirement and consolidation
• Personnel: capital, training, research and development
• Evaluation of alternate technologies
• Economies of scale

Services and Infrastructure: Retirement and Consolidation

A common first step in evaluating IT use on campus involves auditing our existing “standard operating procedures,” IT posture, and equipment stocks, age, and use. Before we begin looking for efficiencies outside the IT department, we should take an introspective look at ourselves, looking to trim the fat in our own budget lines early.

Printers, Modem Pools, Fax Machines, Oh My…

For years my campus has had a large laser printer next to an even larger copier. Underused analog fax machines abound, and personal “desktop” printers are rampant. Historically it seems that IT provided not just institutionally beneficial technology but “convenience” technology. If a walk down the hall was inconvenient for faculty or staff, IT could supply a personal printer. One convenience printer sets a precedent for everyone to have a printer. Antiquated technologies that persist in today’s campus IT portfolio —and that are good candidates for retirement and cost savings — include:

• Personal printers
• Analog fax machines
• Remote access servers and modem pools
• Multiple computers per user

We can achieve real and sustainable budget savings by reducing or eliminating printers that live next to copiers; reducing or eliminating antiquated fax machines for electronic faxing services that can be centrally managed; and reducing and recycling many if not all desk-side print devices. With reductions in ink/toner, maintenance contracts, supplies, and even help-desk calls, a campus can save money and reduce personnel resources devoted to those tasks. These reductions will also align with our campuses “green” initiatives by reducing our carbon footprint. Specific institutional savings will depend on how many legacy systems are supported on campus, but we can leverage this economic downturn as a catalyst for investigating outdated equipment and processes.

From Mainframes to Thick Clients to Virtualization

Many data centers in higher education were designed as small-to-medium-sized facilities. In the late 1990s they got bigger to support increased demands on the IT department to provide and support a greater number of physical servers. One row of racks led to another row of racks, and with them grew redundant and sometimes tertiary support systems such as UPS devices, HVAC units, generators, redundant switches, and routers. Fiber was designed to consolidate copper, but in reality it generated more fiber and more copper.

Virtualization, the division of one physical server into multiple isolated virtual environments via software, reached mainstream adoption a few years ago. Initially, IT professionals began “virtualizing” their architecture to take advantage of savings on small, independent web servers, but over the past three years many campuses have consolidated entire rows of server cabinets into less than a handful of virtualized servers and storage area network (SAN) equipment.

Virtualization has many benefits, including reduced costs for the provisioning of new (virtualized) servers and the consolidation and reuse of traditional “wasted” resources such as memory and disk space on physical servers. It also provides:

• Lower heating and cooling costs
• Reduced electrical consumption
• Fewer physical servers and maintenance contracts
• Fewer physical switches
• Easier disaster recovery
• Simple deployment

Note that while virtualization achieves hardware efficiencies, it is not a magic bullet. A virtualized environment offers new threats and system vulnerabilities. From a security standpoint, all virtualized machines are just as susceptible to traditional attacks as they were prior to virtualization. Of various new potential risks, the primary threat is “Hyperjacking,” the corruption or penetration of the virtual machine hypervisor (also called a virtual machine monitor, or VMM).

A move to virtualization might also require changes in data center operations, such as:

• Licensing
• Backup
• Intrusion detection and prevention
• Network architecture (subnet creation, segregation, etc.)

Changes in licensing can be both positive and negative depending on an institution’s product suite and the vendor’s licensing (per physical host versus virtual machine. Additionally, virtualized environments are relatively hardware agnostic and can simplify disaster recovery plans and recovery asset requirements. While not all servers are good candidates for virtualization, many campuses are seeing significant savings by leveraging a virtualization strategy.

Personnel: Training, R&D, and Intellectual Capital

Many campuses have reduced staff numbers as part of cutting budgets, leaving fewer people to do the same — or more — work. Other campuses have avoided this step, yet hampered staff effectiveness by failing to make other budget cuts strategically.

Training and R&D Cuts Are Not the Answer

Like it or not, training seems to be the first thing deemed “elective” in the budget. My campus has reduced training and travel across the board, but it would take canceling all training and travel to support a 5–10 percent budget cut. It’s interesting that training continues to be one of the last things added to the budget and one of the earliest things cut. Training is important for knowledge transfer and maturing of staff members’ understanding of different technologies. Within the IT department, 46 percent of aspiring CIO leaders rank training and professional development as the second most important factor in maintaining a competitive workforce in the next five years.¹ Additionally, while we could cut training and conference attendance, it is important to understand that reducing training and professional development contribute to our staff attrition rates.

In that same vein, research and development (R&D) activities are usually first or second to be cut, with the assumption that an organization can focus on its core activities during a budget crunch. An IT department must have time and resources to explore emerging technologies, even R&D efforts are scaled back. Resources like the Horizon Report can help identify and narrow the focus to new and emerging technologies that an institution should investigate.

Leverage Knowledge Capital

Higher education contains some of the best and brightest IT folks anywhere. Rather than chase the corporate dollar, they find rewards in helping students earn degrees, enjoy academic collaboration, and feel energized by daily thought-provoking, peer-based interactions. We must realize that a CIO can’t handle everything alone. We must share with peer networks and subordinates the challenges we face and provide open and nonjudgmental pathways to suggest changes and improvements. Our employees are brilliant, creative, and available to help us identify, evaluate, and implement changes that reduce costs across campus.

Evaluation of Alternate Technologies

Implementing technology effectively to help higher education institutions achieve their mission is the primary goal of campus IT departments. That does not mean automatically adopting the newest technology that comes along. In the face of tight budgets, we wouldn’t receive approval for any project that didn’t have strong supporting evidence for its probable efficiency and long- or short-term cost savings. Again, looking through a new lens benefits IT.

Do We Need “Always On” Availability?

For years vendors have touted the latest “best in brand, best in breed” solutions as the answer to campus problems. We’ve purchased these solutions knowing that we’re buying “industry-proven” architecture that will serve our higher education environment well. To support these solutions, we’ve configured clusters of servers, synchronous databases, and arrays of disks to support campus requirements for technology uptime.

Somewhere in the past 20 years, the expectation arose that IT was “always on and always available.” Fully redundant network diagrams that provide 99.9 percent uptime look great, but do we really need them? Are we willing to pay six-figure premiums to achieve an extra .05 or .01 percent availability? It is time to question that assumption and challenge our willingness to spend so much money for an incremental increase in uptime and performance.

Do we really need the latest, greatest technology to serve our campus constituencies? Does the performance of best-in-breed industry solutions justify the cost? Or should we look through another lens and consider alternate solutions?

Open Source Solutions

One of my biggest surprises in moving to the higher education environment was the depth, reach, and support of the peer community. If someone on campus had a problem and someone on another campus had the answer, they would share the solution, offer advice, or invite a visit to see how they had solved the problem. Even among “academic competitors,” the IT staffs generally were supportive of IT professionals from other institutions.

In a community that is so sharing and open, why do we hesitate to evaluate open-source technology developed collaboratively? Perhaps “no one was ever fired for buying IBM” in the 1980s, but that philosophy does not apply today. Today, CIOs are judged on their ability to control costs. In March 2009, Kim Nash wrote that one in four CIOs lost their jobs because of poor performance.² While higher education might not be as cutthroat as the business community, certainly parallels exist.

Recent mergers and acquisitions seem to have fueled some in higher education to hasten their evaluation and adoption of open-source products. The 2008 survey by the Campus Computing Project found that about 25 percent of the 531 two-year and four-year schools will probably migrate to an open-source learning management system (LMS) by 2013.³ Open-source is all the buzz right now, and the rewards of implementing it are in line with the risks.

To be fair, open-source collaborator/developers face different costs and commitments than do consumer/users. An institution that is only a “user” risks a shift in direction by the developer community that could lose alignment of the open-source product with campus needs. Those institutions that become collaborators won’t have a free ride either. An institution should expect to shift some of its payments from large maintenance and premium support contracts into new, local, full-time staff to support open-source development.

There is help within the higher education community — groups of institutions collaborating on single integrations or plug-ins for open-source tools can advise others interested in the same solutions. As an example, Smith College in Massachusetts sponsored a “Moodle Hack/Doc Fest” in early June to bring together Moodle developers to collaborate toward the development of a specific Moodle interface designed for liberal arts colleges.

In many institutions, faculty serve as a catalyst for change, advocating for open-source software to replace some of the best-in-brand, best-in-breed systems. Faculty engagement is critical to a successful LMS change and implementation. While acknowledging their desire to evaluate open-source initiatives, we should partner with faculty to focus their skills and enthusiasm on evaluating new products, the pedagogical issues and impacts associated with the different systems, and what a conversion will mean to the campus community. Prior to starting an open-source project, it is imperative to set expectations because everything included in a commercial system will not be in the open-source system. Open-source and third-party tools can address some of the gaps, but before going down this road, it’s important to map and determine how to address the institution’s functional requirements.

Open-source initiatives are gaining in popularity, with higher education encompassing growing communities of both developers and users. The benefit of higher education’s open and sharing community is the ability to leverage our intellectual capital and work together toward a common goal. The results can provide significant cost savings. (See “There’s No Such Thing as a Free Lunch.”)

Economies of Scale

Even small schools can take advantage of economies of scale, especially in negotiating contracts with vendors. The most obvious solution is to join or form a consortium with the same interests and needs.

Strength in Numbers

Joining a consortium can help reduce costs. Groups like EDUCAUSE and NERCOMP (NorthEast Regional Computing Program) excel in aggregating information, their members’ needs, and buying power. Small- and mid-sized schools often lack the buying power of flagship universities, but through state-wide, regional, and peer-based consortia, smaller colleges can leverage the buying power of much larger institutions with greater discount power. Many consortia use the vendors’ lowest published prices for licenses or independently negotiate favorable terms. While most vendors provide some academic discounts in the 20–30 percent range, consortia discounts range from 35 to 60 percent of list price, with the ability to use that pricing as a launch pad to negotiate a deeper deal based on the end-of-quarter or quantity purchases. Examples of consortia contracts can be found at:

• Connecticut Colleges Purchasing Group (see the Contracts link)
• NERCOMP Licensing Agreements:

In addition to pricing discounts, peer-based collaboration in a consortium provides invaluable information and strategic resources. Quarterly and annual meetings, workshops, presentations, and papers address many of the issues that member institutions grapple with each year.

Shifting Responsibility Through Outsourcing

Perhaps more important than pricing discounts possible through economies of scale, some consortia offer hosting opportunities for ERP, LMS, and other systems. These can be evaluated as “services discounts,” often reducing local FTE costs. Certainly arguments will continue about the cost effectiveness of outsourcing. Many of these arguments assume that the outsourced solutions provider is the typical for-profit organization —insert instead a higher education consortium whose mission is to aid in the proliferation of technology to support teaching and learning, not increase shareholder profits. Generally, higher education consortiums provide comparable services at 65–80 percent of the cost of a commercial application service provider (ASP). In theory, we have “in-sourced” the work to ourselves, a consortia of higher educational professionals whose mission is to support students, faculty, and staff. With the in-sourced application, the institution benefits from a deeper and specialized staffing set without worrying about staff recruitment, retention, training, overhead, and fringe benefit costs. As Phil Goldstein wrote about the December 2008 ECAR Symposium:

The movement to use alternative sources to provide IT services was already underway before the economic downturn began. Open-source collaborations and the outsourcing of student e-mail are two prime examples. Many expressed belief that budget cuts would hasten their need to engage in collaborations with other institutions or source services to the cloud. They also saw the crisis as giving them more license to experiment and perhaps take some risks by adopting services or service delivery methods that are less proven. Attendees reported that their agendas for collaboration were already expanding. Several institutions were entering into regional purchasing collaboratives. Others reported that they were considering arrangements to manage an application for another institution in their area.⁴

For an example of another type of consortium that serves ASP needs for higher education, see “Connecticut Distance Learning Consortium.”

From “Mission Critical” to Utility Service

The utility service concept holds true for services like e-mail, with free or low-cost products like those offered by Microsoft or Google. How much additional value do we provide with campus-based service compared to a free e-mail service? As we buy the next tray of disks for our SANs, combat increasing spam problems, and debate the appropriate size for faculty mailboxes, commercial services offer virtually limitless storage, utility-grade uptime, and browser-based access anywhere, anytime. Students are already logging into outside services as their preferred e-mail platforms, so why do we pay the premium to provide our own e-mail service, compensate staff to support the service on an emergency/on-call basis, and back up, archive, and store terabytes of e-mail to satisfy legal requirements? Looking through a new lens, we can reduce internal costs, provide greater uptime, and in the end deliver a service to students that they prefer and that meets the administration’s requirements.

iTunes U and YouTube EDU are other no-cost/low-cost examples where you can collaborate and leverage free services to generate savings. (See “CT iTunes U” for an example.) Signing up is the easy part — while we call this technology free, it really is not. The framework of a service like iTunes U is free, but it requires the ingenuity and effort of faculty, administrators, and students to truly find the value in this tool. Be sure to read the fine print to understand the true costs (see “Be Wary of the Fine Print”).

Going Back to the Beginning

In addition to the strategies identified above, all of us can benefit by revisiting basic concepts. It’s vital to consider issues of governance, alignment with the campus mission, understanding where we are now to decide where we want to be in the future, and taking advantage of other organizations on campus to help us achieve IT goals.

Alignment and Governance Are Critical

Many of the strategies identified here can be implemented successfully at campuses across the nation. An individual school’s experience and cost savings will depend on its current IT posture as well as campus constituencies’ expectations for technology. Some of these strategies can be implemented quickly, while others require long-term investigation of different technologies and pilots before making the decision to move forward. Strong campus governance that includes and engages the IT department is critical to adopting these initiatives, as is alignment of the IT department’s strategic goals with those of the campus. Without those two elements, any initiatives for technology — no matter how important to the campus — will not receive the support needed for successful implementation and adoption.

Understand Where You Are Today

One of the concepts that the Information Technology Infrastructure Library (ITIL) identifies as fundamental in supporting change is the importance of determining a “baseline” before beginning to measure the impact of something. In looking at IT through a new lens, we must understand the level of service we provide today and the dollars expended to provide it. Only when we fully understand our direct and indirect costs (salaries, fringe, overhead, administrative, software, hardware, training, maintenance, and support) can we truly develop a baseline to measure change. Leveraging this information, we can build our key performance indicators (KPIs) and track our changes and their impacts on the IT infrastructure.

Get By With A Little Help From Friends

Many of these strategies cannot be accomplished unilaterally by the IT department. The good news is that organizations already on campus can help.

• Facilities managers have been working with “green” and energy conservation initiatives for years. Consider partnering with them to look for economical or alternative solutions to HVAC and energy consumption needs.
• Many campuses have environmental awareness, sustainability, or green committees. Often these groups survey the campus population looking for suggestions to “reduce, reuse, or recycle.” Partner with these committees and identify and develop a response to the large number of consumables created by IT.
• We can also leverage the vendor community as a strategic resource. Most major vendors have green products and specialists who can assist as we continue to provision equipment to support campus needs. These same companies can help us evaluate the ROI on newer green solutions in comparison to those currently deployed.

Such collaborations are not a one-way street. We must commit to work with these departments and assign personnel from IT to serve on the committees aligning campus environmental awareness with a reduction in IT waste.

Where Do We Go From Here?

Are there other strategies for cost savings? At the regional NERCOMP conference in 2009, I gave a presentation outlining eight core strategies that discuss looking at IT and campus needs through a new lens. A copy of those slides is available, as is a podcast I did with Gerry Bayne of EDUCAUSE that includes information from the presentation along with questions and answers on related topics.

The potential for cost savings does exist in higher education’s IT departments. It should exist in all departments. Not only must we cut our own budgets but also help other departments leverage technology to reduce their costs. In 2002 the National Center for Public Policy and Higher Education published an article by Patrick Callan about coping with recession in which he wrote:

The current recession coincides with the third great wave of college enrollments. This generation of students will be the most ethnically heterogeneous — and the poorest — ever to seek higher education. It will require extraordinary effort for states and colleges and universities to meet the needs of these students, even if the economy avoids a prolonged downturn.⁵

So not only have we been through this before, we are not alone. This economic crisis, in combination with the growth of students at our campuses, represents a perfect storm where we can challenge assumptions and precedents and evaluate cost-effective and economical solutions to the technological needs of higher education. The reduction of printers, outdated equipment, and physical servers will reduce our carbon footprint, but adopting these and some of the other practices suggested here will also help put some “green” back in the IT budget.

In the spirit of collaboration, I encourage higher education IT leaders to share effective cost-saving practices at regional and national conferences. In addition, the “Economic Downturn” page on the EDUCAUSE website collects multiple resources addressing the same issues. Finally, I hope this article prompts others in the IT community to work individually and collaboratively on improving and adding to the community’s repertoire of cost-saving ideas. Only through open conversation about our struggles and successes can we move forward in these challenging times.

1. Philip J. Goldstein, and Judith A. Pirani, “Leading the IT Workforce in Higher Education — Key Findings,” (Boulder, CO: EDUCAUSE Center for Analysis and Research, 2008).
2. Kim S. Nash, “One in Four CIOs Fired for Performance,” CIO.com, March 11, 2009.
3. “2008 Survey of Information Technology in U.S. Higher Education,” The Campus Computing Project, October 2008.
4. Philip J. Goldstein, “Managing the Funding Gap: How Today’s Economic Downturn Is Impacting IT Leaders and Their Organizations,” An EDUCAUSE White Paper from the December 2008 ECAR Symposium (Boulder, CO: EDUCAUSE, January 2009).
5. Patrick M. Callan, “Coping with Recession: Public Policy, Economic Downturns, and Higher Education,” The National Center for Public Policy and Higher Education, February 2002.

© 2009 George F. Claffey Jr. The text of this article is licensed under the Creative Commons Attribution-Noncommercial 3.0 license.