HEIRAlliance Executive Strategies Report #4

WHAT PRESIDENTS NEED TO KNOW
...about the Payoff on the Information Technology Investment

from the Higher Education Information Resources Alliance of ARL, CAUSE, and Educom

Documents related to this report are available and described at the end of this report.

Computers have become such an integral part of the higher education workplace that it is increasingly hard to remember the daily routine of even ten years ago when typewriters still clung to their position as a primary medium of communication. Technology investment--in network infrastructures, wide access to centralized campus information, and desktop communication tools for research, learning, and administration--can send a clear message these days about where a college is headed and where it fits in competitive rankings. For most colleges and universities, each entering class arrives with greater experience and skill in computing and network communications, which translates into greater expectations for access to such tools.

Historically labor-intensive, higher education has seen costs rise regardless of how resourcefully it has responded to changing needs of society. Technology competes for ever- scarcer financial resources, along with such essentials as salaries, financial aid, physical plants, and library holdings. How do we assess the value of our investment in a resource which is so complex, widely distributed, thoroughly integrated, and rapidly changing?

In some respects, the contributions of information technologies are realized to the extent that they replace paper processes, eliminate duplication of effort, reduce travel time and expense, and generally relieve faculty and staff of repetitive operations, freeing them to spend time on higher-level tasks. Ideally, technology can help colleges and universities do what society is demanding that they do--serve a greater number and diversity of students with at least the same level of quality--in such a way that their costs can be measured directly against the cost of producing the same effect by traditional methods.

On another level, perhaps the most important payoff from the investment in technology will be found, not on the balance sheet, but among more qualitative measures of an institution's health. How have technologies furthered the institutional mission? ... helped meet community needs for relevant courses and services? ... increased the ability to share resources? A purely economic approach will not support the risky but vital investment in an infrastructure that will permit a quantum leap to a currently undefinable future model of operation.

Innovations generally involve measuring something for the first time, or in ways that differ from the past. In many ways, the benefits of using information technology can be appraised by realizing what couldn't be accomplished without it. Examples come from all over campus:

• In the library--Networks now support far more ports for users outside the library to access the library system than PCs within the library walls. Periodical indexing services from publishers are provided at shorter intervals than the same index in print versions. Automated catalogs provide access to materials the moment they are cataloged --sometimes even the moment materials are ordered--instead of after cards have been filed in the card catalog. Faculty and students have fast access to full text of many federal government reports. They might explore a 30- million-item networked database, or retrieve articles from remote databases within hours via FAX.

• In the classroom--Mathematics and science students can work with real, "messy" problems, not just artificial ones with tidy, analytic solutions. Simulation, analysis of alternative scenarios, sophisticated information searches, and document revision support more extensive research and more self-directed learning. Networks allow students the luxury of round-the-clock conferencing with faculty. Distance education technologies bring course materials (text, graphics, sound, video) to isolated areas, and let specialists share their expertise with worldwide audiences.

• In research--Faculty can develop extensive bibliographies in distant libraries and archives prior to beginning research. Faculty and students can track developments in their fields through specialized databases, online catalogs, and discussion groups, and get almost immediate response to queries that used to take weeks. Smaller colleges can provide sophisticated resources through cooperative ventures and the Internet, which one Kenyon executive has termed "an almost inexpressibly grand tool for learning and instruction."

• In administration--Many of the more obvious benefits involve paving administrative cowpaths: A room assignment package completes a complex process in a few minutes instead of three weeks, and encourages experimentation with alternative options. Bookstore ordering software saves eight person-weeks of work in ordering and processing textbooks, and quick delivery allows the store to maintain lower inventories. Fund-raising applications support pinpoint targeting of major campaigns in addition to generating pledge reminders, tax receipts, and thank- you letters.

Campus-wide information systems can give students immediate, round-the-clock access to their financial and academic records, college calendars and course information, housing and employment opportunities, with great time savings for both department personnel and the student. Quick access to timely, accurate information supports executive decision-making and testing of alternate scenarios.

Taking full advantage of networked, institution-wide resources means large investments in the network infrastructure and in hardware, software, staffing, and training. It can mean revising operational systems to create centralized data management and sharing of departmental resources. It definitely requires shaking up traditional departmentalized approaches to data ownership, IT acquisition planning, and prioritizing the needs of the institution.

The strategic value of these new high-tech capabilities varies with each institution. Is outreach a primary goal, or is the student body largely residential? Is research or remediation the greater teaching challenge? Will another student computer lab suffice, or do the academic aspirations of the institution require full electronic access to international resources?

BENCHMARKING AGAINST THE INSTITUTION MISSION

IT investment, like any other investment, must be benchmarked against current institutional needs, competitive forces, and the desired growth for the future. Payoff in this kind of investment can be approached from different angles:

• Economic approaches look at financial return on investment, break-even or payback rates, internal rate of return, net present value.

• Cost reduction approaches consider work value analysis, cost of quality, and cost-displacement or avoidance.

• Strategic approaches weigh business objectives, technical improvements, and value of alternative options. Some of the benefits will be found largely in intangibles like morale, increased collegiality, innovation in course design, more flexibility in meeting needs of diverse learning styles, and administrative policies which are defined less by bureaucratic convenience or protocol and more by user need. Even though it may be hard to measure these kinds of benefits immediately, the investment returns should be reflected in future performance indicators such as:

     OUTPUTS              INPUTS
     enrollments          faculty pay/FTE
     retention            class size
     degrees              staff/FTE
     job placement        state/local revenue

Other key indicators could include cost structures or reductions, service quality, increased access or beneficiaries. Measurements should be compared over time within the institution, and against peer institutions.

Part of the payoff assessment, of course, is recognizing what traditional costs are being displaced by IT investments-- personnel tradeoffs, hardware, software, maintenance, training and support--and ensuring that time saved is diverted to valued activities. Measurements of cost, efficiency, and ramifications should be built into every IT expenditure for continuous monitoring of the value of the investment.

NOT WHETHER, BUT HOW MUCH

In the past ten to fifteen years, the convergence of three technologies--high-speed, low-cost computing; high-capacity, low-cost mass storage; and high-capacity, low-cost telecommunications--has transformed information flow and personal communications throughout the world. Colleges and universities cannot refuse to invest in information technologies; they can only set the pace of their investment.

The costs of not equipping our campuses to compete in a future where students can learn and communicate in a virtual classroom linked to international networks of digitized information will be substantial. Faculty and staff will lack the tools and expertise to develop new learning modalities and be unable to help students learn to select, synthesize, and give meaning to the vast array of informational choices which confront them. Many institutions will be lost in the growing competition from for-profit learning corporations which are already beginning to challenge higher education's monopoly on the provision and credentials of learning.

Information technologies, like any good tools, can enhance the craft of education and boost productivity. How skillfully and efficiently we use them depends on how comfortable they become in our hands. This will take time, as faculty, staff, and students become adept at managing networks and networked information, as we learn to control the unique benefits and distractions of electronic mail, as paper processing gives way to digital networking, and as we all adjust to the intricacies of the electronic workplace.

To the extent that these technologies become second nature to our operational and educational purposes and more precisely fit those functions, they can assure our relevancy in a rapidly changing world and allow us to shape new roles for education in our society.

SAMPLE BENEFITS AND COST ASSESSMENTS

TECHNOLOGY TIES

The Education Network of Maine offers ...

• 70 credit courses leading to five full associate and two master's degrees at more than 100 Maine locations

• numerous teleconferences and training sessions

relying on ...

• 11 off-campus student support centers and 97 high-school sites

• a comprehensive statewide telecommunications system comprising 43 transmitters and 700 miles of fiber-optic cable

• a nine-campus online library system with electronic requestor function

• an interactive television system (ITV) using a four- channel audio, video, and data fiber-optic spine, with cordless telephone audio talkback system allowing off- site students to participate in class discussions

• a toll-free Teleservice Center for registration, referrals, and information

resulting in ...

• an historically high headcount at UMA in the early 1990s, when most of the Maine university system faced flattened or shrinking enrollments

• the ability to serve 5,000 individuals per day for a total cost to date of $15 million (less than a 500- student high school in a small Maine city)

MOVING BEYOND THE BASICS WITHOUT BREAKING THE BANK

The college has essentially completed the basic work of building a network infrastructure, providing full desktop access, and nurturing a campus culture which embraces electronic communication as an essential tool. It is now in a period of integration and transformation, using IT resources to develop new paradigms for teaching, learning, and working.

Is Kenyon's IT budget swelling proportionately?

• In the past five years, enrollment has dropped 5 percent, student aid has climbed 110 percent, the faculty salary pool has risen 40 percent, and the E&G budget has risen 38 percent. IT expenditures have also risen 38 percent, remaining at about 4.1 percent of E&G.

• For five years, through 1991-92, major IT developments averaging $600,000/year were funded primarily from off-budget sources--campaign gifts, reserves, operating budget surpluses.

• Growth areas in the operating budget (desktop computing hardware, academic computing incentive awards, equipment maintenance, networking) have been largely offset by decreasing hardware maintenance contracts, paralleling the rapid drop in VAX equipment costs.

• Staffing for IT services has increased 60 percent in eight years, primarily through transfers from other departments; the number of users has increased 1,900 percent. Staff:user ratio has increased from 1:11 to 1:87.

KIOSKS vs. COUNSELORS

comparable services, offered by
   six-kiosk system =                 $3,600/mo
   staff (academic counselors,
       clerical, student employees) =  $9,252/mo

cost per student
Kiosks/student/year =                  $2.16
kiosks/student/quarter =                 .54
printed catalog =                      $1.58
academic counseling (1/2 hr) =        $11.75

THE BIGGEST PAYOFF: COMMUNICATION

This report was drawn from papers prepared by five teams of higher education executives; copies of these papers are available from the CAUSE office at $10 for the complete set. Additional copies of this report are available from CAUSE at $5.00 each. Inquire at 303-939-0310, fax 303-440-0461, e-mail orders@cause.colorado.edu.

Contributing Editors for this report:

BRIGHAM YOUNG UNIVERSITY

Brigham Young's paper for this project focuses on the human component of the IT investment, with special attention to library issues such as access, sharing of resources, and electronic formats.

DALHOUSIE UNIVERSITY

Dalhousie's paper for this project itemizes the many ways in which Dalhousie has become dependent on IT, and summarizes benefits which the University has identified for its various constituencies.

KENYON COLLEGE

Kenyon's paper for this project summarizes the changes in its IT environment from 1986 to the present, along with relevant budget information, and outlines the impact technology has had across campus. Includes statements by fifteen College administrators from all functional areas.

SINCLAIR COMMUNITY COLLEGE

The Sinclair paper identifies key assumptions and elements in the IT investment--the leader's role, payoff and measurement issues, institutional vision--based on facilitated meetings of the contributors. Background material includes the cost analysis of Sinclair's Intouch kiosk system.

UNIVERSITY OF MAINE AT AUGUSTA

UMA's paper for this project describes the background and development of the Education Network of Maine, with the impact on faculty and staff, academic and student services, and its importance in positioning UMA for the future.

The Executive Strategies reports are published by the Higher Education Information Resources Alliance (HEIRAlliance), a vehicle for cooperative projects between the Association of Research Libraries, CAUSE, and Educom. Reports in this series inform campus leaders about critical and timely issues related to information technologies. Focus issues are identified by the executive officers of the three sponsoring associations: Duane Webster, Executive Director, Association of Research Libraries; Jane N. Ryland, President, CAUSE; Robert C. Heterick, Jr., President, Educom.

Copyright 1994 by HEIRA. Material from this report may be reproduced for noncommercial purposes with appropriate credit to the HEIRAlliance. Executive Editor Karen McBride at EDUCAUSE 4840 Pearl East Circle, Suite 302E, Boulder, CO 80301; phone 303-449-4430, e-mail kmcbride.educause.edu.

ARL, the Association of Research Libraries, is an organization of 120 major research libraries in the U.S. and Canada whose mission is to identify and influence forces affecting the future of research libraries in the process of scholarly communication. 202-296-2296

CAUSE, the association for managing and using information resources in higher education, is a nonprofit association whose mission is to enhance the administration and delivery of higher education through the effective management and use of information technology. 303-449-4430

Educom is a non-profit consortium of colleges and universities headquartered in Washington, D.C., which is concerned with computing and communications issues. Its programs focus primarily on networking and integrating computing into the curriculum. 202-872-4200

• Complete set of background papers

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