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A strategic economic model³

Problems with some current funding models

Many institutions have been willing to make huge investments in information technology, not because they saw the value in it, but because they were afraid not to. This has served us well in the past, since we have been able to respond rapidly to increasing demand for more, better, and different services and technologies. Now, however, customers have come to expect that capability and capacity are "free," and consumption is expanding at an increasing rate. Even when the supply shifted from central mainframes and minicomputers to peripheral personal computers, funding often remained central, i.e., the dean or provost rather than the individual departments supplied the dollars for departmental servers and for faculty workstations. This economic model is functional when 30 percent or 40 percent of the campus uses the technology and the total technology expenditures are proportionally small. It results in crisis when 90 percent or 100 percent of the population needs the technology and institutional expenditures become large and visible.

Although much of the capability and capacity has been provided centrally, the support for its use has not. New technology has brought information environments that people can use without having to learn FORTRAN or even DOS commands. It has not, however, delivered an environment in which printers can be fixed, or lost files can be found remotely. Campuses have thus evolved a hidden support economy-the secretary becomes the word-processing expert, the faculty member installs departmental machines, and the undergraduate student creates and maintains the department Web pages.

The true cost of computer support

One of the implications of this hidden economy is that nobody in the institution knows the true cost of computer support. Most support is delivered by people who do not have the word "computer" in their job descriptions. Departments see others making good use of technology. They want the same results, but they are unwilling to invest the same capital and effort. Significant institutional resources are being used inefficiently. The secretary has become an expert through trial and error. The faculty member takes half a day to install a machine that a technician could have running in an hour. The department's elegant and sophisticated Web site has to be discarded three months after the student graduates because nobody can understand its non-standard, idiosyncratic structure. We cannot effectively manage the technology on our campuses if we do not understand its costs.

Achieving a functional economic model

Three important actions are required to achieve a rational, strategic economic system. We must measure and fully understand the true costs and benefits of information technology so that we can make a rational argument for funding. Next we must more directly map the responsibility for costs to the location of the benefits. Finally, funding responsibilities must be assigned appropriately to the central technology organization, departments, and individual faculty.

• Measure costs and benefits to the institution. Benefits must be measured not in technology indicators, but in terms of institutional goals and priorities. The costs must be derived by looking at the whole institution, not just the technology organization. With an understanding of real costs and benefits, we can design a support structure that minimizes the former and maximizes the latter. With measures of costs and benefits, we can make a rational argument for funding. How many of our institutions provide computers for a department but no additional funding for maintenance, upgrades, and replacement? How much time is wasted because a faculty member has to spend a day appealing to the dean before she can get someone to look at her broken computer? How much extra time is spent at the help desk trying to support software that is three versions old because no one budgeted for upgrades? Any of these situations may be tolerable in isolation, but in aggregate, these inefficiencies are enormously expensive. By budgeting for the true operational costs of supporting information technology, we can greatly improve the quality and efficiency of support.

• Map the responsibility for costs to the location of the benefits. Since everyone in the institution is expected to correspond, access the library, or write papers, reports, or grants, the institution should create an information environment that handles these functions effectively and efficiently, with costs covered by general technology support funding. Where needs are more specific to departments, costs of meeting those needs should be born by the appropriate department(s). The Spanish department, for example, will benefit from using a Spanish language keyboard that displays accented characters and from having easy access to an online Spanish dictionary and thesaurus. The department should pay the primary costs of this level of functionality. If a faculty member in that department needs to manipulate Spanish text from 14th-century manuscripts, the costs for that specialized service should be the responsibility of the faculty member.⁴

• Designate appropriate funding responsibilities. Ultimately, every faculty member requires a unique information environment. Of course no institution can afford to support unique environments for each individual. The old model of subsidizing "technology" must be replaced by one that subsidizes institutionally important functions. The department subsidizes the activities important to its success, and the individual does the same for his or her success.

Table 1 suggests some of the characteristics of services that might point us to centralized subsidy vs. fully distributed costs under our model. In general, if the beneficiary of a service is the common good rather than the individual consumer; if the service requires a large, one-time investment; if the service is seen as strategic by the institution and it is desirable to have it used widely; or if there is no capability for individual users to control their level of consumption, then central subsidy may make sense. Likewise, if a resource is abundant relative to demand, or is self-renewing, we may find it easier to subsidize than account for usage and impose charges.

Economics 101 tells us that there will be unlimited demand for "free" resources. Unlimited demand, however, does not imply unlimited supply. Administrators and customers need to be reminded of this and accept responsibility for defining their fundamental technology needs (benefits). We have the responsibility to help everyone, including ourselves, understand the real cost of information technology. Together, we can generate a rational economic system that directs resources most effectively toward the goals that truly make a difference for the institution.

Endnotes:

³John L. Oberlin presents excellent discussions of economic systems in academic information technology in the following articles: "Departmental Budgeting for Information Technology: A Life-cyle Approach," CAUSE/EFFECT, Summer 1994, 22-31; "The Financial Mythology of Information Technology: The New Economics," CAUSE/EFFECT, Spring 1996, 21-29; and "The Financial Mythology of Information Technology: Developing a New Game Plan, CAUSE/EFFECT, Summer 1996, 10-17.

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⁴If use of the Spanish language keyboard is also important, for example, to Religious Studies, Art History, and the Institute for Central American Studies, these departments might collaborate with the central IT organization to target this specific functionality.

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