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In short, the way to [advancement], if you desire it, is as plain as the way to market. It depends chiefly on two words: industry and frugality.

–Benjamin Franklin
‘The Way to Wealth” (1758)

Technology investment is regarded by many leaders as the single most strategic investment that institutions of higher learning can make to accelerate their mission and achieve their business strategy in a timely and effective manner. Yet, all too often institution senior leadership bemoan the fact that technology investment continues to increase as a share of annual operational expense while returning little return on that investment. This dilemma begs a few questions. First, why is this the case ? What can/should leadership do to extract maximum value from their escalating technology costs?

Ideally, technology should be an accelerator for higher education, yet many institutions suffer chronically from overpriced and under utilized technology assets.  Over time these assets become expenses that do  little more than keep the lights on for an institution, constraining IT leaders from emerging as thought leaders in support of the overall institutional mission and vision.  The effort required to maintain legacy systems often prevents IT from emerging as a strategic asset that is able to meet the wants and needs of faculty, students, and staff.  The unwise investments lead to the law of diminishing returns as these technology investments chip away at the institution’s balance of technology expense versus value.  This is evinced annually through the escalating price of licensing and maintenance fees for hardware, software, and technical services which in reality produces very little improvement to automation, workflow, or true cloud hosting and cloud management.  

Adding to key functional officer and executive stakeholder frustration, these same technologies often accrue increasing indirect expenses in the form of time spent by the resident-based functional office and technical office labor resources, namely people, and the good people  always seem to bear the brunt of the burden.  Shadow IT organizations emerge, that is, functional office staff self-modifying or sometimes by management decree perform more and more duties aligned with that of technical professionals as a result of underutilized technology, slow and poor upgrades and configurations.  Shadow IT also emerges because actual IT spend increases the amount of knowledge, skill, and effort required to maintain information systems as opposed to maturing them. This lack of technical professional unity results in haphazard cybersecurity protocols whenever new tools are supplied by functional offices to authenticate behind the firewall, whereas they ought to be demanded by functional offices and supplied by a centralized IT authority, or at a minimum, a decentralized IT community that is centralized on standard operating procedures, practices, and policies through formal and executive sponsored governance.  I’m fine with shadow IT, so long as it stands in the shadow of my department.  In the worst of these scenarios, and unfortunately all too common, technology is refreshed as an annual budget surprise to the CIO and the CFO because of poor planning in IT management ranks, and the lack of coordination with functional office managers, resulting in sudden death (i.e., premature-obsolescence) of the technology system.  

The opportunity cost couldn’t be more clear; the same functional and technical staff would best serve each other, the faculty, students, and the institutional mission if they could afford sufficient time to evolve and mature their knowledge, skill, and effort so as to keep up with the latest trends, reduce costs through improved efficiency, and add value through increased output, in other words; accelerate.  Some accelerators include, but are not limited to; cabinet leadership enterprise thinking regarding information systems and data governance, reorganizing IT into its various IT reference disciplines (e.g., network, security, cloud, user support, emerging technologies etc.) and empowering its staff to achieve excellence in their specialization.  Lackluster and legacy IT departments, staff, and tools cause presidents, CFOs, Deans, faculty, and more, to assert technology as an expensive cost center, as opposed to a valuable investment, to evoke cliches for technology resources and IT leadership such as “the gift that keeps on giving.”

Begs The Question – Savings, Capital, and Technology
Okay Mr. Smart guy, then what’s the silver bullet?  Well, none exists, but the application of business and social science to assist information technology/information systems management is an option.  Economists in this space have been gathering and synthesizing data into useful information and wisdom for over a century, Nobel prizes have been awarded for theoretical proofs leading to practical benefits and heuristics, and application of these by microeconomic entrepreneurs have evinced their real value.  Classical and neoclassical economists such as Adam Smith, David Ricardo, Ludwig Von Mises asserted institutions would best serve themselves, their constituency, and the overall economy through frugality and savings.  Others, such as John Maynard Keynes and new keynesian economists Stanley Fischer and Gregory Mankiw, assert that while this may work for individuals and firms, there may be antithetical results at higher levels of aggregation in economic policy, hence the paradox of thrift. Still, both major schools of economic thought agree that the best microeconomic policy for individual decision makers and collective wills of the institution (the firm), in public, private, and non-profit sectors is one that incorporates frugality in expenses and a strong focus on savings in both purchasing power as well capital planning and services.

Technical Progress
Economist Robert Solow, Nobel Prize winner, Harvard graduate, and professor of technology and growth economics at MIT, discovered something of significance for the world of enterprise as well as key decision makers of public and non-profit institutions that he refers to as the Solow Growth Model.  First, he concluded that savings and frugality has a positive impact on growth, but that savings, frugality, and capital planning are subject to the law of diminishing returns just like anything.  Second, Solow calculated that about four fifths (ths) of growth in output per worker was attributable to technological progress and entrepreneurship.  Technology seems to be more important to institutional economic growth, when acquired and adopted correctly, than savings, frugality, labor, research and development, and natural resources.  According to Solow, increasing saving and capital investment, even with aid, isn’t enough to stimulate growth; the adoption of technology is essential.

Finally, entrepreneurship and technology subject matter expertise are in short supply and high demand, especially in our volatile time due to the pandemic.  Because of the constant change in technology and business process, exasperated by the recent pandemic, it is of paramount importance that higher education institutions partner for success with the right experts and innovators.  Subject matter experts, leaders, and innovators who possess the knowledge, skill, and ability as well the solutions and services to truly add value and accelerate the mission of higher education.  Expertise and knowledge alone are not enough. Partners who have deliberately defined, designed, and applied this expertise and knowledge for the benefit of institutions by way of a defined ecosystem of solutions and services are necessary for real value to be rendered.  As a non-profit minded organization, given birth by to by a highly esteemed council of university and college presidents, Edge represents the quintessential technology solutions and services organization as it has proven itself to be a maturely formed ecosystem of technology solutions, services, experts, and innovators who have aligned with every aspect of the student lifecycle to render real value to the higher education community.  Our approach is an economic advancement one, it is a results based approach that leverages the collective and collaborative power of a fully mature technological economy that is at the ready and forefront always to serve the mission of higher education.

1 The Works of Benjamin Franklin. Edited by Jared Sparks. Vol. 2. (Boston, 1836), p.103.

2 Handler, R. and Maizlish, B. IT Portfolio Management Step by Step: Unlocking the Business Value of Technology. Wiley & Sons. (2005), p.37. 

3 Markham, Christopher R. Leading Questions: A CIO’s Answer to Leadership. CIO Insight Magazine. January, 2016. 

4 Mankiw, N. Gregory (1985). Small Menu Costs and Large Business Cycles: A Macroeconomic Model of  Monopoloy. The Quarterly Journal of Economics. 100 (2), pg. 529-538. 

5 Skousen, Mark Ph.D, “Economic Logic 5th Edition” (2017). Regnery Capital, pg. 401-402.

About The Author

Christopher R. Markham, Vice President Information Technology and Economic Advancement

When it comes to the strategy behind return-on-investment for technology spend, Chris applies nearly two decades of education and experience to assist our member institutions with the complexities of cloud, enterprise computing, and educational technologies. Having served in technology support and leadership roles since 2001, he most recently served as Vice President for Information Technology and Chief Information Officer at SUNY Empire State College, where he successfully completed a transition of the institution’s enterprise resource planning (ERP) system. Prior to that role, Chris served as Vice President for Information Technology and Chief Information Officer at Florida State College. While in that role, he successfully managed the completion of a $30 million digital transformation effort to enhance operations among the institution’s six campuses and more than 50,000 students. Today, Chris works with Edge member institutions on digital transformation initiatives, information technology leadership, technology service management and the business process re-engineering required to recruit and educate students in today’s digital world. Chris applies his graduate education in economics in concert with his technology background to ensure the value of technology is optimal in its application. Chris currently serves in the United States Army Reserves. Standing ready to assist in the success of our member institutions, more and more Edge members are starting conversations with Chris to leverage Edge’s resources in professional services, learning and teaching technologies, and information technology service management.