Special Series: Technology and the CEO >> Part 2: Expense or Investment

• 05/31/05

In this second part of our series, a candid discussion about a president’s need to differentiate between out-of-control technology spending, and wise, long-term technology investing.

By Laurence W. Mazzeno

Nearly a decade ago, when I was serving as chief academic officer of a small Catholic college in Ohio, I was accosted by the chief financial officer who was carrying around the hefty budget request I’d submitted for IT hardware and software. “Okay,” she said, “I can see where we’d benefit if we spend this $200,000 next year, but when will all this spending for computers end?” Hoping not to be too flippant, I responded quickly but firmly, “Never; technology costs are like the poor in the Bible— they’ll always be with you.” So far, my observation has proven to be accurate. Every year, college presidents in institutions large and small are confronted by IT professionals, faculty, and campus leaders with annual budget requests for new equipment, software, interconnectivity systems—and the people to support all these things. Whether you’re president of a major state university system or a small liberal arts college, you can’t escape the question: What will you spend this year on technology? Yet, how you view that spending can make a great difference to your students, faculty, and staff. Will you grit your teeth and authorize expenditures, or will you look for ways you can maximize your investment in IT resources?

No matter what you call it—“investing” or “spending”—money just g'es out the door, right? Wrong. One of the key reasons presidents need to think of “investing” in technology rather than “spending” on technology is that we are conditioned in our society to think differently about expenditures and investments. It may be cliché to say that we spend in the present but invest for the future—but that cliché has merit. When we talk about investments, we naturally think about the value that our investments will bring in the long term. We tend to plan our investments so that, through them, we can achieve goals that we’ve set for ourselves.

Information technology is not simply a “thing” we purchase. Rather, it is a means to achieving strategic ends, and therefore deserves the president’s attention. The need for presidents to develop the “investment” mindset is critical. For the second year in a row, respondents to the annual Educause Current Issues Survey reported in 2004 that “Funding IT remains the number one IT-related issue in terms of its strategic importance to the institution” (www.educause.edu/apps/er/erm04/erm0430.asp). It’s no wonder; as David Ward and Brian Hawkins observe in The Presidency (American Council on Education, Spring 2003), “Information technology is a critical enabler of institutional strategy. ” Information technology is not simply a “thing” we purchase. Rather, it is a means to achieving strategic ends, and therefore deserves the president’s attention. In fact, Ward and Hawkins make the same point that I’m aiming at in this article: “Instead of thinking of information technology as a cost center,” they argue, “presidents would be well advised to focus the discussion on the extent to which the investment in technology furthers both sub-unit and institutional goals.” Why view information technology as an investment? Here are a few practical reasons:

First, today’s students expect to be able to use the latest (or nearly latest) computer-assisted, Internet-based systems to gain and exchange information and to handle the “business” of living. They are comfortable with the rapid changes in technology, and increasingly demand 24/7 services. They want to apply to your institution over the Internet, do their research and submit assignments electronically, register and pay their bills that way, and use the electronic superhighway for entertainment. While you may not think you’re losing students because your technology’s not up-to-date, you may not realize how many people never even apply if they discover you don’t have what they want.

Second, many faculty will have similar expectations—or in some cases, unrealistic expectations about what your institution should or should not be providing. Every campus has its technojet- setters and its Luddites among the faculty. Simply spending to satisfy the first group without a sound plan that takes into account the larger educational goals of an institution is sure to bring about a reaction from those who believe that any change from the chalkboard assisted lecture is a change for the worse. When you make it clear that you view investing in technology as a means to achieve educational goals, you can gain faculty buy-in by demonstrating that those whose teaching and research are aligned with the institution’s strategic objectives will be supported appropriately. Ask yourself: What educational goals do I want to achieve? Can those goals be achieved more efficiently and effectively if I enhance current operations through technological innovations?

Third—and this is a direct follow-on to my second reason—developing a plan for investing systematically in hardware, software, and personnel will help you ride out the natural ups and downs that will occur when “the next hot idea” sweeps across the educational landscape. Not everyone needs to be on the bleeding edge; developing long-term goals for your campus’s use of technology will allow you to say “no” to fads while having the resources available to say “yes” when you and your management team decide it’s time to upgrade, expand, or change systems. In recent years, there have been a number of tools developed to measure the effectiveness of technology: Dennis Jones’s Technology Costing Methodology (TCM), or Frank Jewett’s BRIDGE model, both described briefly in Sally Johnstone and Russell Poulin’s article on the cost of educational technology (“So, How Much Do Educational Technologies Really Cost? ” Change magazine, March/ April 2002) may prove useful tools. But finding the right tool is at best the second step; first, you need to commit to a“long-term” attitude regarding the purchase and replacement of information technology as a means of enhancing your educational enterprise.

In fact, you will do well to think of developing a technology plan in the same way you would a plan for personal investing. Ask yourself: What educational goals do I want to achieve? Can those goals be achieved more efficiently and effectively if I enhance current operations through technological innovations? What will it cost to add or upgrade technology to current operations? How will those operations be transformed? What will the “people costs” be?

On this last point, I can’t stress too much the importance of figuring people into the technology equation. Institutions that spend for the latest gadgetry, but fail to invest in training and appropriate support personnel, usually end up seeing no improvements in either instruction or business functions. Perhaps the greatest investment one has to make is in the people who use technology. On campuses where people have been shown the advantages information systems offer in the classroom or in their offices, not only has productivity increased, but there’s been improvement in job satisfaction—and in student learning, our core business.

Finally, presidents need to appreciate the need for systematic investment in new technologies to meet regulatory requirements. While no one likes to think that the federal or state government should dictate what we do, in fact, we are subject to many regulations, and require many services that now make ongoing technology upgrades a necessity. The US Department of Education’s insistence that federal financial aid matters be handled electronically is but one example. There are issues of student privacy and records security, and there are increasing demands frommany outside agencies that we protect the information we keep—all of which demands continuing investment in upgraded hardware and software to meet the increasingly stringent requirements set by those who, for better or worse, have significant control over the way we do business.

While many of us like to think of ourselves as running institutions to serve the public good and advancing the frontiers of knowledge, it’s an inescapable fact that as college presidents, we run a business. Larry Tabb, CEO of a Massachusetts- based financial management group observed in “Out of Whack: Aligning IT & Business” (Wall Street & Technology, February 2004), “Getting one’s technology priorities aligned in this age is incredibly important—so important it should not be left to either the CFO or CIO.” Rather, he urges, technology leadership “must come from the corner office.” In my view, the only way to determine one’s priorities is to think strategically—and the only way to do that with information technology is to view it as a necessary investment that, when used wisely, will enhance the quality of education we offer students, and improve the opportunities of our faculty and staff to conduct their business effectively. Becoming a savvy investor in technology for our campuses is a role we must embrace.

Laurence W. Mazzeno is president of Alvernia College, Reading, PA. SunGard SCT (www.sungardsct.com) is the publisher of President to President: Views of Technology in Higher Education (2005) from which this article is excerpted, and is also corporate sponsor of the New Presidents program. Marylouise Fennell, co-editor of President to President, is coordinator of the New Presidents program, and senior counsel to the Council of Independent Colleges (www.cic.edu). Scott D. Miller, co-editor of President to President, is president of Wesley College (DE), and chair of the program.