Budgets | Features
Succeeding in the New Normal
If CIOs are going to succeed in this era of belt-tightening, they need to change campus expectations about what IT can realistically achieve and, just as important, alter the conversation about IT as a cost center.
- By Dian Schaffhauser
Being a college CIO these days must feel a bit like juggling chainsaws with one hand while holding a donation cup in the other. It's unlikely to end well, yet it represents the new normal in IT. While campus clients--from administrators to faculty and students--expect the usual raft of tech services, the IT budget simply can't deliver.
The analogy is something that Tim Chester can probably relate to. A month after he joined the University of Georgia as CIO, the university suffered a major data breach. Mop-up efforts involved communicating with nearly 19,000 affected people, forensic testing to evaluate the extent of the problem, and mitigation to reduce the likelihood of a future breach, all of which cost money that was not part of the 2011 budget.
To pay for these unexpected costs, Chester was forced to juggle. For starters, he imposed a soft hiring freeze. "We've slowed down the pace at which we're replacing people who depart," he explains. "If somebody leaves and the salary is $3,000 a month, instead of hiring somebody next month, we'll hire in four or six months. That translates into $18,000 in one-time money that we can spend on something else."
Chester also pulled the lion's share of his application-development staff into a special project to eradicate the legacy use of Social Security numbers in reports and elsewhere. That came at the expense of performing updates to the university's custom-developed ERP applications. And that particular juggle, notes Chester, has "caused some grumblings."
So goes IT management in today's harsh economic climate. But Chester made one other key decision: He's going to put some of the chainsaws down. "The most important decisions that IT leaders make in this day and age are what you choose not to do," he says. "We lose control when we say, 'We're responsible for A-Z and now we have to figure out how to do that 10 percent cheaper.' That's debilitating."
A better approach, he recommends, is to use governance, consensus, relationships, and influence to come up with a set of activities that IT can deliver. "If you take that approach--and that's a hard approach--you actually find that you have a lot more control in this environment than you thought."
As IT administrators struggle to come to terms with the new normal, one truth is becoming clear: CIOs need to change the conversation about IT on campus. First, instead of driving their beleaguered IT staffs ever harder while service levels drop, they need to reset campus expectations about what IT can realistically achieve. Second, CIOs must rebrand their own organization. They need to start taking credit for how IT saves their institutions money. In the eyes of the university, IT has to go from cost center to efficiency expert.
In deciding what not to do, IT groups face three choices: Outsource, curtail some services, or end some services outright. But the ultimate decision comes down to just one key tenet: Which course of action will make the organization more efficient on a per-dollar basis?
A budget crisis is actually a great environment in which to introduce operational efficiencies. At no other time are people more likely to change their work processes or be willing to get by with less.
The key is to root decisions in cold, hard data. Such an approach will win support from top-level administrators, and steal the wind from those who favor the status quo. Loyola University Maryland, for example, looked at usage data patterns to determine which applications could be retired. The Listserv server is the most recent system that the university has removed from service.
According to CIO Louise Finn, retiring such applications saves money in software-licensing costs and in engineering time. "My server engineers are my most constrained resource," explains Finn, "so freeing them up to do other things was really key."
Even if you have all your ducks in a row, such changes are never going to be easy. Finn recalls that there were vocal diehards who didn't want to move to newer systems or change the way they operated. But she had the laid the groundwork and had the deans' support, so IT was able to work through those obstacles.
Another data-driven cutback at Loyola involved the help desk. The school had been using regular IT staff to run its help desk from 9 a.m. to 5 p.m. on weekends. But an examination of hourly statistics showed this to be wasteful overkill. Now the help desk relies on student workers and shorter weekend hours--it's open only Sunday from noon to 4. This cutback alone has saved $35,000 annually.
Pushing for Efficiency
By taking the time to figure out what IT won't do, CIOs can stay within their new-normal budgets and often improve service levels. But there's one other advantage: By freeing up capacity, IT can take on projects that will result in more efficient workflow and cost savings for other departments. In this period of intense fiscal pressure, there is tremendous value in being the efficiency expert on campus.
A great example of this is Loyola's Paperless University, an IT project intended to streamline document management and workflow across campus. As with any initiative that would require significant changes in how university staff do their work, the first step was to develop a watertight business case. In putting it together, Finn's group realized that the human resources and admissions offices would benefit most from the new system.
According to their analysis, the project would reduce usage of energy, paper, and ink, but the real benefits would accrue in staff time savings--something that couldn't happen soon enough. The undergraduate admission office was six to eight weeks behind in opening envelopes and matching documents to applications. "We would have applicants calling and saying to us, 'I mailed my paperwork in three weeks ago and I haven't heard anything. What else do you need?'" recalls Finn. "And it would still be sitting in a mail bin."
Finn found the funds to pay for the project by juggling, naturally. Nortel, the university's network vendor, had gone into Chapter 11, so Finn repurposed some of the capital funds that she had been saving for a network refresh, directing them to the Paperless University and other strategic initiatives.
The school contracted with DataBank to handle the scanning of paper documents that would be stored in Perceptive Software's ImageNow document-management software. ImageNow is integrated with Loyola's implementations of Datatel Recruiter and Colleague to eliminate duplicate data entry and reduce information-retrieval times.
The undergraduate admissions office signed up for Enrollment Manager, a web-based admissions-management service from Admissions Lab that makes the entire application process electronic, creating student records that can then be transferred to downstream offices.
A process that used to take six to eight weeks is now handled in 48 hours. Rather than "chasing paper around from one desk to the other," Finn says, staff can work on functions that are more "customer facing--able to take the phone calls, the walk-in traffic, and just provide better customer service."
The paperless initiative permeates human resources, which is now--proudly--paperless. The staff even tout the department's new status on a web page that explains the process for requesting sabbatical leave: "Please note, as part of the Paperless University initiative, no paper copies are due."
Quantify the Savings
To ensure that IT is recognized as the source of such cost-saving efficiencies, though, it's vital that CIOs also find a way to quantify their successes.
It's an approach that is working for Bill Carter, vice chancellor of IT at Houston Community College (TX), a 75,000-student school spread across six colleges and 23 campuses. More accurately, it started to work when the economy fell apart. A few years ago, when Carter would share with his college board how much it could save through tech-based efficiencies, the members would respond, "Big deal." Now, their response is more likely to be, "What's the efficiency of investment?" a phrase he taught them himself.
Efficiency of investment refers to how much money can be saved over current spending levels by investing in a more efficient work process. In the case of HCC, the costs savings since 2007-2008 are $25 million and counting.
It wasn't always like this. Carter is painfully aware of how IT was originally viewed on campus. "The cost of instructional departments is justified by the revenues they generate from student tuition and state reimbursements," he notes. "Me, I'm a cost center. They dump money into IT. In the past, they've seen very little coming out of it."
No more. During this school year, Carter expects to cover 77 percent of his total IT budget in efficiencies of investment. He has set a personal goal that, within two years, all of his IT costs will be covered, making the organization cost-neutral. Savings totaled $9 million last year, $8 million the year before, $4 million the year before that, and $2.9 million in 2007-2008.
And Carter is using these numbers to help reposition IT as an efficiency expert. As a result, the tune of board meetings has changed from, "'There he goes again,'" says Carter, to "'OK, he's doing this for a reason. We need to understand the reason.'"
For every IT project, Carter finds ways to quantify how it will impact the institution--and the bottom line. Consider IT's automation of the HCC time sheet system in 2009. Prior to that, each employee would submit a written time sheet to a department secretary, who would validate it, get a supervisor signature, and manually enter the data. Each of those manual touches costs money, however: In a college system with about 4,900 employees, the costs rapidly add up. With two pay periods a month, that's 117,600 time sheets to process in a year.
In seeking a way to calculate the true cost of the system, Carter drew on a widely disseminated statistic from Coopers & Lybrand (which became PricewaterhouseCoopers in 1998) that estimates companies spend $20 in labor to file a document, $120 to find a misfiled document, and $220 to reproduce a lost document. Erring on the conservative side, Carter estimates HCC's manual handling costs at $15 per sheet of paper.
As a result, when IT replaced all those manual steps with a workflow in PeopleSoft's ERP application, Carter was in a position to calculate the impact to the institution. The result? A cool $2.3 million in savings during the first two years.
The savings have been even more dramatic in the area of student payments and refunds. The original system was completely manual and onerous, particularly on the refund side. Staff would print checks, stuff them into envelopes, hand them out to students, file the checks after they were cashed, deal with incorrectly addressed checks, store all the paperwork, and later destroy it.
In fall 2008, HCC implemented CashNet, a service from Higher One for handling student payments online. Then, in fall 2009, the college contracted with Higher One for its student refunds and financial aid disbursement service, OneDisburse.
By handing those operations over to a service provider, the college eliminated staff and handling costs; reduced the cost of supplies, such as paper, ink, toner cartridges, and printer drums; and reduced power usage. Carter estimates that HCC has saved about $500,000 for each year that the CashNet system has been in place. The OneDisburse program saved $1.3 million in its first year and $1.4 million in its second year.
But Carter is nothing if not relentless in calculating what he considers the true savings. For example, the college has experienced tremendous growth in recent years, with student enrollment rising from 53,097 in 2005 to 75,600 in 2011. How many additional employees, Carter asked the head of financial aid, would have been needed to keep up with this surge? The response: another 10 people on top of the 15 or 20 he already had in his department. "Right there, that's $500,000," declares Carter.
Publicize Your Success
Success breeds success. "When you do this over long periods of time, all of a sudden people start paying attention," Carter explains. "They start going, 'Wow. I want to get on that bandwagon. I want to think about how IT can help me.'"
At Loyola, Finn realized that the Paperless University was a hit when a famously reluctant faculty group expressed interest in the project. "If I had gone to them two years ago and said, 'We're going to take this process paperless,' they would have run for the hills," notes Finn. "Now, they want to get on the bandwagon."
For that to happen, though, CIOs have to get the word out about their successes. They have to toot IT's horn. To ensure that all of IT's cost-saving initiatives receive publicity, for example, Carter maintains a spreadsheet of all the projects on HCC's sustainability website.
"Technology people are inherently working to make things more efficient," Carter points out. "But they do a lousy job of publicizing their results. They do a lousy job of measuring them. As we get more and more into things like performance funding, accreditation, and accountability, what you're going to find is that IT leaders are going to have figure out a way to justify their existence, or they're going to end up out of a job."