Rationalizing IT Rationing: 10 Ways to Cut the IT Budget (and What Not to Cut)
- Budget pressures on higher education affect IT departments, but cuts in IT should not be across the board — they should align with institutional and departmental strategic plans.
- Campus technology governance groups can provide helpful advice on how best to cut the technology budget for your institution.
- In addition to hiring freezes and deferring salary increases, IT departments can evaluate maintenance plans, contracts, and virtual computing options for savings.
- All those small savings add up and can help IT departments meet mandated budget cuts without affecting the curriculum.
Is your information technology organization facing pressure to cut costs? Whether because of falling stock values affecting institutional endowments, cutbacks in state spending, or declines in private giving, higher education has reduced spending, and IT organizations have participated in the budget cuts. This is the tale of one institution’s quest to cut technology costs while maintaining a high level of service.
Furman University in Greenville, South Carolina, is a private, liberal arts institution with 2,650 students and an NCAA division I athletics program. Computing and Information Services (CIS) includes the campus network, multimedia services, administrative systems, telecommunications, and other typical technology services identified in the EDUCAUSE Core Data Service survey.
Few of the technology cost-cutting ideas suggested here are new, and many have been discussed on such online forums as the EDUCAUSE CIO constituent group. While one size does not fit all, my campus found these ideas and processes helpful in determining which initiatives to cut while still supporting the institution’s academic mission.
Budget Cuts at Furman
By mid-April of 2009, Furman’s endowment value had dropped 29 percent since June 30, 2008, and annual giving to the university had slowed. Since endowment spending is a significant part of Furman’s $133 million annual operating budget (net institutional financial aid), Furman’s board approved a number of steps to address anticipated budget shortfalls for the current year and the next year (2009–2010). These steps included:
- Instituting a hiring freeze (but no plans for layoffs)
- Reducing a 7.5 percent planned tuition increase to a 5.98 percent increase for 2009–2010
- Increasing the financial aid budget by $3.8 million using the tuition increase and budget cuts
- Deferring more maintenance
- Deferring salary increases for faculty and staff pending fall enrollment
- Reducing departmental discretionary budgets1 by 6 percent for 2008–2009
- Reducing departmental discretionary budgets by 12 percent for 2009–2010 (another 6 percent in addition to the 2008–2009 cuts)
All members of Furman’s President’s Council, which includes the CIO, were asked to come up with plans to meet an even larger budget shortfall anticipated for 2010–2011.
Furman University has a strategic plan in place, but the plan was created in 2007 and assumed increased growth in the university’s endowment and giving. The IT strategic plan is based on the university’s strategic plan. While these plans provide guidance and a direction for information service planning, the campus community needed to have a conversation about which strategic goals were most important in the face of resource challenges.
Coinciding with the need to review strategic goals was the university’s first TechQual survey. Conducted in the fall of 2008, the survey assessed the perceived quality of information services on campus. While information service improvements were already part of the university’s strategic plan, the TechQual survey showed where our campus community saw areas in need of immediate improvement, specifically a high demand for more Internet bandwidth for the campus, dissatisfaction with the campus network’s reliability, and a strong desire from students for more wireless access on campus (particularly in residence halls.) With a 44 percent response from full-time faculty and staff and 25 percent response from students, this survey provided data that were extremely helpful in determining what service improvements were most needed.
So given new financial challenges, existing plans, and new survey data, how should Furman’s IT organization best reduce costs while still meeting the strategic technology needs of the institution’s mission? Working with the campus community, and the university’s campus IT governance system, CIS came up with a number of solutions that should save the university nearly $450,000 over the next two years and, at the same time, reposition technology funding to better address strategic goals once the financial climate improves. No wages, salaries, or benefits were cut in the process. Furman was even able to reposition some funds to ensure that our most important strategic initiatives received continued funding even within our new climate of IT rationing.
Furman University’s Computing and Information Services Staff
Are these cost-saving proposals reproducible at your institution? You might have already tried or considered some of these ideas; others may inspire further investigation. Still, you may find some benefit to examining how Furman chose to make cuts.
10 Ways to Cut
I have organized Furman’s cost-cutting tips into 10 categories. Short tables at the end of each proposal summarize the savings, with a large table at the end of this article showing the complete savings Furman expects to obtain by following this plan.
1. Say Goodbye to Frills
Can you see any low-hanging fruit waiting to be cut from your budget? Perhaps not, but be careful not to overlook the obvious. Furman departments had to cut 6 percent of discretionary budgets in 2008–2009 and target 12 percent for 2010–2011. While this might sound like a deep cut, less than half our total IT budget is in such discretionary accounts. (At Furman, such accounts do not include wages, salaries, benefits, and fixed contracts.)
Nonetheless, staff and faculty had to think carefully to identify cuts that would not significantly reduce service or IT’s contribution to the institution’s mission. All of the cuts mentioned here were made after consulting with Furman’s various technology advisory groups.
One example of what could be considered low-hanging fruit was an annual technology desk calendar distributed to faculty and staff. While this custom calendar with a “technology tip for the day” was well received, it cost nearly $6,000 to print each year. That expense is now out of the technology budget. A campus “technology tip of the day” is a good idea, but something we may consider for a blog site rather than printing. Other departments are now looking at their printing costs as well.
Perhaps you no longer offer unlimited free computer printing for students. While many institutions have had print management systems in place for some time, Furman is a little late to that party. Furman is now looking at print quotas, with a pilot program planned for printers in campus libraries. If reports of savings of 20 to 25 percent are true, Furman could see savings in excess of $20,000 per year in the libraries alone.
Student Printing in Library
An additional benefit is that this solution ties into another important goal in the university strategic plan — improving the sustainability of campus operations. Such a print management solution will save paper and contribute to campus discussions of sustainability on campus. While the administration expects some resistance to the new print management system from students, this project is viewed as another tool in our ongoing teaching and learning about sustainability.
Such discussions about what’s important to Furman’s academic mission have come into greater focus since the campus community has been tasked with finding ways to cut costs. When others on campus are cutting their budgets, they’re happy to help point out items in the technology budget they see as “frills.” All such suggestions are welcome.
|Savings from Cutting “Frills”||2009–10||2010–11|
|Stop printing campus IT calendar||$6,000||$6,000|
|Print management software||20,000|
|Reduced CIO contingency budget||15,500|
2. Renegotiate, Renegotiate, Renegotiate
As part of our budget reviews, Furman’s technology staff are taking a long, hard look at each existing information service contract that comes up for renewal. Furman has made a number of significant changes recently. Last summer our local cable TV provider announced they wanted to increase what they charged our university by over $68,000. Rather than pay the increase, we switched to a satellite TV provider with only a $7,000 increase to the budget. This switch prompted some student complaints, but when we explain the cost issues, most understand.
We also looked into switching our campus Internet service provider. We did change service providers, but, given the TechQual survey feedback, we chose to improve service rather than save money. While we did see some small budget savings (about $4,000), in this case the Furman community decided that more Internet bandwidth and improved reliability were more important to our mission than maximizing cost savings.
With its new contract and new Internet service provider, Furman doubled the campus Internet bandwidth by adding a second Internet circuit. Since the second circuit came in over a different path, we reduced the possibility that damage to one of our two circuits would take the campus off the Internet (“backhoe fade”). The additional bandwidth will help the academic program and serve as a catalyst for other savings (for example, through cloud computing).
Furman is also looking for opportunities to collaborate with other institutions to help with negotiations. The CIOs in the Associated Colleges of the South have begun a conversation on possible collaboration/consortium opportunities. In South Carolina, an organization for independent colleges and universities (SCICU) has expressed interest in developing such partnerships for obtaining better pricing on things like software licensing. Such consortia may provide future cost savings.
|Savings from Renegotiations||2009–10||2010–11|
|Switch to satellite cable TV provider||($7,000)||($7,000)|
|Changing Internet service provider||$4,000||$4,000|
3. Look at Changing Use Patterns
With students using cell phones almost exclusively, do we need so many lines for the campus telephone switch? We had a trunk analysis done and found we could save 40 percent by reducing the number of local lines to our campus switch. Of course, now we’re starting to consider a number of other questions related to telephone use including:
- Do we need to rethink the telephone switch?
- Should we consider a VoIP solution sooner rather than later?
- What will an emergency like a flu epidemic do to demand for local lines?
We acknowledge such questions, and will continue to consider them, but the $24,000 annual savings from this change was enough for Furman to decide to tolerate a few busy signals (and we did promise to monitor call volume to ensure that it really was only a few busy signals).
CIS Staff Member Van Bennett with Furman’s Campus Telephone Switch
The modem pool is an interesting, and delicate, case. The technology staff would love to simply eliminate the modem pool, but a previous attempt to cut the modem pool was met with resistance from some who saw it as a benefit reduction. I’ve asked my staff to pursue an alternative solution — rather than eliminate the modem pool entirely, run it at slower connection speeds using some circuits currently assigned to the telephone switch. This would let us cut the circuits currently used by the modem pool and still provide some limited modem pool service, with the hope being that people simply stop using it.
|Savings from Changing Use Adjustments||2009–10||2010–11|
|Reduce local phone circuits||$24,000||$24,000|
|Eliminate modem pool||$12,000|
4. Maintenance Contract? What Maintenance Contract?
Furman is looking closely at maintenance contracts. Is it better to keep a spare, or two, on hand? What key components need to be on a maintenance contract? We’ve made some adjustments by changing vendors, and we’ve seen some savings related to changing terms of the contracts.
One example of a way to save costs on maintenance is deciding when to have a maintenance contract and what to put on a time and materials basis. Our telecommunications staff can now handle much of our telephone switch maintenance in-house, although we do pay for software maintenance. While this tactic adds some risk, our hardware maintenance is less than half what we’d expect to pay with a full-service annual hardware maintenance contract. Some might have questioned this tactic when our voicemail system went down for several days after a lightning strike, but that was part of the risk we assumed with this cost-saving tactic.
We also expect to examine our telephone switch’s future now that our switch manufacturer, Nortel, has declared bankruptcy. Sourcing is a risk with any technology decision, of course, but changing sourcing is also an opportunity.
|Savings on Maintenance Contracts and Licensing||2009–2010||2010–11|
|Anti-virus contract savings||$9,000||$9,000|
|Help desk software maintenance reduction||$6,000||$6,000|
|Log management and other maintenance charges||$10,500||$10,700|
5. You Need a University Cell Phone? How About We Just Pay You?
Furman is about to change the policy for university-provided cell phones. Instead of the university buying cell phones and paying monthly service charges, Furman will provide a monthly subsidy to employees who routinely use their own cell phones for university business. While this change will simplify record-keeping requirements for tax purposes,2 models developed by CIS staff show the university will also see savings of $20,000, or more, per year.
Furman’s Athletics department was especially interested in the cell-phone subsidy discussion. They had previously had an arrangement with a local cell-phone provider that provided equipment and services in exchange for athletic sponsorships. Our coaches had come to rely on cell phones and used text messages as a recruiting tool. When the Athletics department learned that their provider was changing the terms of their agreement, they became very interested in the cell-phone subsidy plan as a possible cost-saving measure for their budget.
|Change from University-Owned Cell Phones to Subsidy||2009–10||2010–11|
|Savings from Furman owning cell phones to subsidy model||$20,000||$20,000|
6. Find Savings from Reaching Across Silos
Does your institution have budget “silos” that could be made more efficient with some centralization? Furman University consolidated computer hardware purchasing several years ago, but kept a good amount of software purchasing decentralized. We believe we could be more efficient with our software purchases if we had more centralized software ordering.
We’re also looking for silos in certain administrative systems. Can the university be more efficient with a single event-scheduling system rather than several? Are the processes each office uses the most efficient and effective ways of running our administrative systems? We’ve made a number of system changes to provide increased efficiencies such as electronic purchasing. We’ve also centralized oversight for, and outsourced, the university’s credit-card transactions to make sure we comply with Payment Card Industry Data Security Standards (PCI-DSS.)
While Furman expects savings from changes to department administrative processes, we have no hard savings numbers to report at this time. These discussions are continuing with various administrative offices on campus, and Furman’s Administrative Systems Advisory Committee has cost savings on their agenda.
|Savings from Silos||2009–2010||2010–2011|
|Centralizing software purchasing etc.||TBD||TBD|
7. You Want a New Computer? Maybe Next Year
One cost-saving idea came from Furman’s budget office, which proposed increasing the replacement cycle on our university-owned desktop and laptop computers. Furman had been on a three-year cycle, but a significant portion of the funding came from budget savings in other areas. Since this funding was now in doubt, the budget office asked us to consider a four-year cycle. They noted that if we changed from a three-year to a four-year replacement cycle, it would save the university about $100,000 per year.
We discussed the idea of a longer replacement cycle with our faculty-led Academic Computing Committee. Faculty expressed concern that while individual faculty machines could go to a four-year replacement cycle, such a cycle was too long for computers used in classrooms and the public computer labs. The labs would look bad, and we could have some faculty with fairly new computers going to work in a classroom that had significantly older equipment. How could they go into a classroom with confidence if they weren’t sure that the software that ran on their desktop system would work in the classroom? Based on this feedback we asked the budget office to move to a combined replacement cycle. By keeping classrooms and public computer labs on a three-year cycle and other PCs on a four-year cycle starting this year (2009–2010), we will only save $50,000 per year, but our faculty and students will have access to newer equipment in our most important facilities. We used the $50,000 savings to fund the life cycle costs not previously budgeted.
Furman’s Multimedia Commons
|Savings from Computer Life-Cycle Change||2009–2010||2010–2011|
|Savings from a 3–4 year replacement cycle||$50,000||$50,000|
|Funding the unfunded portion of the cycle||($50,000)||($50,000)|
8. Can Open Source and Cloud Computing Save Money?
Furman systems and technology staff run and support a variety of open-source solutions. Staff have been pursuing this strategy for some time and are quite comfortable with applications using Linux, Apache, MySQL, and php. While some Furman faculty still long for Blackboard, the majority are comfortable using Moodle as the university’s primary learning management system.
Staff and faculty continue to investigate other open-source solutions (blogs, wikis, videoconferencing, and e-portfolios), but no other enterprise-class open-source solution has yet to present the same high cost savings the university saw by moving to Moodle. Certainly Furman’s association with NITLE has helped staff and faculty become more comfortable with our transition to open-source solutions. The collaboration opportunities presented by such associations, either real or virtual, are well worth the investment in association membership.
Furman is considering some cloud computing solutions as well. Staff and students have tested both Microsoft’s and Google’s offerings for e-mail and calendaring, and are leaning toward the Google Apps for Education solution. However, the transition from our current proprietary e-mail, calendar, and groupware solution (FirstClass) is a concern. Neither Microsoft nor Google provide a groupware solution comparable to Furman’s current FirstClass electronic discussion “conferences”; however, it is becoming increasingly difficult to compete with the amount of storage offered in either the Microsoft or Google solutions when the FirstClass licenses cost Furman $26,000 annually, not including storage costs.
Furman is also looking at a number of special-purpose cloud solutions. Ustream.tv’s video-streaming capabilities are particularly intriguing for a number of communication initiatives. Technology staff are working with the Marketing and Public Relations department to determine how best to use this free service for important academic events.
While open source and cloud computing are worth investigating, they aren’t always the best solution. Furman’s early plans for the next budget year had technology staff budgeting to outsource the university web servers. The rationale for this move was that such a solution would address some of the university’s problems with network speed and make web server uptime more reliable. However, after the university increased its Internet bandwidth and ensured a more reliable Internet connection, the outsourcing option began to look less attractive. After evaluating a number of different outsourced hosting providers, Furman chose not to use an outsourcing strategy for the university’s website. Instead, technology staff will make some additional network architecture changes to create a “web farm” network segment that will further improve accessibility and reliability for campus web servers. This in-sourced solution will save $10,000 per year over the earlier outsourced server projections.
Cloud computing and open source are very big terms for very broad concepts. Finding the proper balance between costs and service is something your campus will need to determine for itself.
|Open Source and Cloud Computing||2009–2010||2010–2011|
|Create a web farm instead of outsourcing web services||$10,000||$10,000|
9. Virtual Servers R Us
Furman’s campus sustainability efforts started us working with virtual servers. We are converting nearly all stand-alone servers to virtual servers. Within the next year, this move will help reduce cooling and power requirements in the Furman University data center by up to 80 percent. The move to virtual servers will also enable more efficient use of the server replacement budget and save over $50,000 per year in hardware costs. When finished with the virtual server conversion, Furman’s technology staff will have collapsed the number of 19-inch equipment racks in the data center from 15 down to 6. The move to virtual servers will save Furman over $60,000 per year in power costs.
CIS Staff Member Cathy Frazier with Server Blades That Will Host Up To 500 Virtual Servers
Early success with server virtualization has made Furman technology staff advocates of this strategy. Virtualization fits with our campus commitment to sustainability and is one of the pillars of how we expect to reduce costs while improving information services in the future. After we have our servers virtualized, we’ll be taking a hard look at where on campus we can use virtual desktops and further save money while making the campus more sustainable.
|Savings from Virtual Servers||2009–2010||2010–2011|
|Moving to virtual servers||$50,000|
|Projected electricity savings||$60,000|
10. Delay as Necessary — and Possible
An ECAR study from 2005 noted higher education’s tendency to “satisfice” rather than optimize.3 With rising financial pressures, we’ve had to make some hard decisions. We have delayed a number of initiatives until further notice, simply because we don’t have funds budgeted. These include a data warehouse, an administrative document imaging system, and a few other projects that we think would improve services. Unfortunately, in times of tight budgets, we need to realize that sometimes less than the best is good enough. That said, we did use some savings to fund an external security review of university department business processes (which leads nicely to the discussion of “what not to cut”).
|Savings from Delayed Initiatives||2009–2010||2010–2011|
|Deferred Internet2 membership||$50,000||$62,000|
|Fund business process security analysis||($50,000)|
|Defer online training initiative||$20,000||$21,000|
|Delay local backup storage initiative||$21,000|
What Not to Cut
Now we’ve looked at various areas to evaluate for possible savings, it’s important to consider those things that should not be cut — if at all possible:
- Training for IT staff
During times of financial uncertainty IT staff need to focus on mission-critical services, especially classroom support. At the same time, it would be nice to improve services where possible. At Furman, technology staff are continuing to focus on ITILprocesses and best practices, especially change-management processes, and service-level agreements. Because Furman has also instituted a hiring freeze and a review process for any position that becomes vacant, the need to retain and retrain existing staff has become urgent. Our fall 2009 enrollment numbers have taken on even more significance, as they will affect our future staffing strategies.
Yes, you need firewalls. No, it’s not a good idea to keep credit-card information on university servers. Yes, it is a pain to have to follow certain regulations, but the alternative of exposing institutional resources to security risk is unacceptable. Information security and risk management are still critical for the success of the university’s mission.
The many recent stories in the popular press about information security have helped our campus community understand the importance of strong security measures. It also helps to have an IT staff that continues to evangelize the importance of information security. While we do scan our servers for vulnerabilities, one element of our strategic plan that had been unfunded was an in-depth review of the security of our administrative offices’ business processes (Is protected information kept on an individual’s computer? When are laptops encrypted? How is information shared?). As Furman’s Information Technology Advisory Council reviewed the various information service strategies in our strategic plan, I was pleased to see them recognize the importance of such a review. We were able to take some of the savings from deferring other initiatives to fund this important security strategy for the coming academic year.
Internet bandwidth is a big enabler for many of our cost-cutting efforts. Also, Furman students, faculty, and staff clearly understand the importance of Internet bandwidth and network reliability to the success of the institution’s mission. We expect that the increased bandwidth and improved network reliability provided will help our survey numbers when we re-run the TechQual survey in the fall 2009 semester.
Training for IT Staff
Furman annually budgets $2,000 per IT staff member for training and travel and asks staff to stretch that budget as far as possible. IT staff consider training part of their compensation, and the nature of this business means that if people aren’t learning, they’re falling behind. We are considering using more video conferencing as an alternative to travel, to stretch funds further. We’re also encouraging staff to attend EDUCAUSE conferences; the regional conferences are an especially good value.
Way back in 2002, Joan Gettman and Nikki Reynolds wrote an interesting article for EDUCAUSE Quarterly about getting the most from attending a conference.4 Their strategies are effective not only for focusing your efforts while at a conference but also for sharing what you learned with your colleagues when you return. While we now have options for attending conferences virtually as well as in person, you’ll still get the most value from your conference and training dollars with preparation, reflection, and sharing.
Governance Is Good
Determining which cost-saving measures to investigate and implement is a shared endeavor at Furman University. Our campus community is engaged in the process and engaged with the governance of its information resources as well. A number of governance groups help decide how best to meet the university’s mission and strategic goals with IT:
- The Association of Furman Students (technology being but one item on their broad agenda)
- The Academic Computing Committee, a faculty-led group looking at strategies affecting teaching, learning, and research
- The Administrative Systems Advisory Committee, for staff information services
- The Information Technology Advisory Committee, which accepts advice and recommendations from the other advisory committees and makes recommendations to the provost and the president’s council
While these governance groups primarily focus on strategic technology issues, their help in setting priorities and discussing possible cost-saving measures has been invaluable. If you face similarly hard budget choices, the wisdom from such broad campus discussions can help bring a broader perspective on which technology path to choose.
For more information on the different areas in which the Academic Computing Committee has participated in discussions with CIS on making cuts or changes without affecting the curriculum or pedagogy, listen to my interview with ACC chair Pat Pecoy
There are many ways to be creative about stretching budgets during tight times. While the tips suggested here are things we’re trying at Furman, we didn’t come up with all of the ideas ourselves. We’ve heard many of them from others in higher education, and especially from comments on forums such as the EDUCAUSE CIO constituent group. We think these ideas will work for us, and we’re always looking for things we have yet to consider. The IT savings scorecard summarizes our progress to date.
Furman University’s IT Cost-Saving Scorecard
|Source of Savings||2009–2010||2010–2011|
|Campus IT calendar||$6,000||$6,000|
|Reduced CIO contingency budget||$15,000|
|Switch to satellite cable TV provider||($7,000)||($7,000)|
|Reduce local phone circuits||$24,000||$24,000|
|Eliminate model pool||$12,000|
|New anti-virus contract||$9,000||$9,000|
|Reduce help desk software maintenance||$6,000||$6,000|
|Log management and other maintenance changes||$10,500||$10,700|
|University owned to subsidized cell phones||$20,000||$20,000|
|Centralize software purchasing||TBD||TBD|
|Move from 3-year to 3–4 year PC replacement cycle||$50,000||$50,000|
|Funding unfunded portion of PC replacement cycle||($50,000)||($50,000)|
|Move to in-house web farm||$10,000||$10,000|
|Reduce server renewal with move to virtual||$50,000|
|Projected electricity savings with virtual servers||$60,000|
|Deferred Internet2 membership||$50,000||$62,000|
|Fund business process security analysis||($50,000)|
|Defer online self-training initiative||$20,000||$21,000|
|Delay local backup storage initiative||$21,000|
|Total savings each year||$102,500||$344,200|
People sometimes ask what’s the one thing that surprised me when I took my job at Furman University. The truth is, while I knew there would be strategic challenges, I did not expect to spend a good amount of my time looking for places to cut the budget. If there’s a silver lining to the situation, it’s that the budget challenge has caused our community to take a closer look at how we should best ration our IT dollars. Everyone understands these are tough choices because technology spending on campus ultimately affects the teaching, learning, and research of our community.
We know we learn from the experiences of others, and hope some of these ideas work for you. We’re always looking for best practices. If you have other ideas that you’ve found work to stretch your IT dollars, please share those success stories, too.
- Furman describes a budget account as “discretionary” if it is not an account used to pay wages, salaries, or benefits, or if the account is not used to pay expenses covered by a fixed contract. Examples of discretionary budgets include travel, training, and supplies.
- See “Employee Cell Phones,” Internal Revenue Service, United States Department of the Treasury, Dec, 3, 2008, for an explanation.
- Robert B. Kvavik and Philip J. Goldstein, with John Voloudakis, Good Enough! IT Investment and Business Process Performance in Higher Education, research study, vol. 4 (Boulder, CO: EDUCAUSE Center for Analysis and Research, 2005).
- Joan Getman and Nikki Reynolds, “Ideas to Action: Ten Hints for Getting the Most from a Conference,” EDUCAUSE Quarterly, vol. 25, no. 3 (2002), pp. 58–60.
© Fredrick Miller. The text of this article is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 license, http://creativecommons.org/licenses/by-nc-nd/.