Campus IT Under the Knife
The University of Illinois is being forced to take a hard look at its IT expenditures in the wake of state budget cuts.
- By Bridget McCrea
When the biggest client doesn't pay its bills, most organizations either find new clients or figure out ways to cut back on expenses to offset the budget crunch. The University of Illinois found itself in that unenviable position this year when the state appropriated $743 million to it for the 2009 fiscal year but only delivered on a portion of it.
"As of Jan. 31 we've billed the state for $563 million," said Michael Hites, associate vice president. "We've received $132 million of that money."
Credit state budget cuts for leaving the university holding the bag on $431 million and scrambling to come up with ways to make up for the dearth. Cost cutting will be the most logical solution to the problem, said Hites, "since we don't have the revenue coming in [right now]."
To offset the shortfall, university leadership must find ways to reduce expenses while keeping information technology, administrative, and academic services running at optimal levels. To achieve that balance, Hites said the school is closely examining administrative and operational areas, including IT, strategic procurement and energy conservation.
With about $200 million to 300 million in annual spend, IT was a noticeable choice for cost cutting, said Hites. The Board of Trustees has asked the university to determine whether $30 million can be eliminated from the technology budget annually without creating negative impact. The school has increasing salary expenses and an IT budget that has been "flat for the last five years," according to Hites.
"The dilemma right now within the IT group is that technology touches every aspect of the university," said Hites. "Compared to our "Big Ten" peers, we're not bloated. Still, we have to make the cuts."
To figure out how to best reduce IT expenses without compromising services, the University of Illinois formed an Administration Review and Restructuring Committee (ARRC), which includes an IT subgroup. Right now, Hites said, the group is gathering data related to IT costs and studying it to find out what areas can be cut.
The exercise has been challenging. "Part of the difficulty is defining what an IT cost actually is," explained Hites. Such costs range from servers and equipment to software to the travel associated with IT. "If you can't count IT [costs] accurately," he said, "then it's very difficult to measure whether you've made an impact or not."
In examining its own IT expenses, the University of Illinois came up with an annual expenditure of $200 million to $300 million. Now it wants to cut that number down by 10 percent--a significant reduction that will be outlined in a report to be delivered to the college's board of trustees in May. Hites said the report will comprise an overview of the school's current IT setup and specific items that need to be addressed.
"That's what we're working on in committee right now," he said. Items already under discussion include data centers, virtualization, consolidation, and governance processes. The committee is also looking at human resources expenditures, which Hites called "the single largest expense for IT," when compared to hardware, software, services, supplies, and telecommunications.
"We talk about these and other IT issues in the context of meeting the local need in the most efficient manner possible," said Hites. The committee is also assembling case studies that look at specific areas of savings, such as personal computer energy usage.
"If we were to turn off all machines at night and on weekends, we could probably save $500,000 a year in energy costs," stated Hites, who pointed out that "cost distribution" to other departments or entities is not on the agenda at the University of Illinois. "We're looking at direct cost savings and cost avoidance, not redistribution."
With so many aspects of the university's IT department coming under scrutiny, Hites said, the committee is "trying not to overanalyze the problem or the solution," and has so far avoided bringing on third-party consultants to handle the project. "We've had a lot of consultants come in here in the past," remarked Hites. "We're reviewing their [recommendations] now, rather than bringing more consultants in to start all over again."
As the university's IT leadership pores over its budgets, expenditures, and needs, the ARRC and its constituents are making recommendations in the areas of strategic procurement (including the consolidation of commodity purchases to achieve lower pricing structures) and energy cuts (such as the adoption of conservation measures). Hites said any recommendations must be approved by the Board of Trustees before being put into action.
For now, the university will continue to ferret out areas where costs can be eliminated or reduced. And even though its biggest client isn't paying its bills in full right now, the institution's leadership team is taking an active approach to offsetting that shortfall while keeping services flowing to students, faculty, and administrative staff. The ARRC committees meet every two weeks, on average, to discuss problems and come up with solutions that are then shared with one another.
"The amount of cross-campus collaboration we're seeing right now is wonderful," said Hites, who said he expects that level of teamwork to continue even when the cost-cutting strategies are implemented. "We'll keep working with each other at a more intensive level than we ever have before."