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Business Officer Magazine
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Imaginative IT

Think it’s fancy new technology that will future-proof your institution? A leap of faith, a measure of will, and the linking of available IT to people and processes may be all you need.

By Richard Katz

*Don't envy the business officers. As higher education's chief resource stewards, business officers must balance meeting today's unrealistic needs with a declining base of resources and uncertain, but ever-mounting, risks. They must do this while future-proofing the institution—anticipating emerging developments to minimize negative outcomes and seize new opportunities. This, according to Peter Drucker, is like trying to drive down a country road at night with no lights while looking out the back window.

This dark drive is made doubly hard in higher education, where the business officer is accountable for an institution's financial stability, while the core production functions of teaching and research are carried on by faculty at the institution's innovative edge. Fostering both stability and a climate of experimentation is one of the business officer's fundamental challenges. And, all this must be accomplished in a fashion that is transparent and unobtrusive in environments once described as “amiable, anarchic, self-correcting collectives of scholars with a small contingent of dignified caretakers at the unavoidable business edge” by George Keller in Academic Strategy: The Management Revolution in Higher Education (Johns Hopkins University Press, 1983).

The day of dignified caretaking has passed. The day of bold and proactive leadership is here, and technologies already exist to help bring about systemic change in higher education.

Between Two Worlds

In the critical role of balancing stability and innovation, the business officer has a customary circle of fellow travelers: campus attorney, risk manager, auditor, human resources officer, and chief information officer (CIO). Like angels and demons, these friends perch on the business officer's shoulders, each seeking attention regarding what today's needs are, what bad things could happen tomorrow, and which opportunities could be realized if only the institution would invest. Like cables in a suspension bridge, these friends provide sufficient tension in the institution's business operations and plans to assure stability. When too tight, this tension can result in an institution's brittleness and inflexibility.

Like the business officer, the CIO has become a risk manager, a service enabler, and a merchant of opportunities. The CIO speaks not only about reducing risk of security breaches, data spills, and so forth—or of delivering a reliable infrastructure and auditable transaction systems—but also of the future direction of IT and its impact on teaching, research, service, and administration. In many cases it is the CIO who brings to the business office information, tidings, and possibilities from the institution's innovative edge—the laboratories, the classroom, and the world of commercial research and development.

Similarly, like the business officer, the CIO must operate in two worlds. The world of IT progresses rapidly and in a stepwise fashion. The world of colleges and universities progresses slowly, incrementally, and only with great deliberation. The late University of California–Berkeley Professor Martin Trow described how these worlds collide. IT, Trow claimed, “is embedded in and used by institutions that have a history. The historically shaped characteristics of universities are highly relevant to the ways IT will be used by—and over time transform—the existing structures of higher education. It is also likely that IT will cut its own channels leading to the creation of institutions that differ from those of today, institutions where the weight of history does not condition and constrain IT's use” (Martin Trow, “The Development of Information Technology in U.S. Higher Education,” Daedalus, Fall 1997).

To think about IT in the future of the business office, we therefore must take stock of our institutions' propensity to place limits on the possible. Our tendency to condition and constrain technology's bounties often leads us to speculate about what tomorrow will bring. Too often we imagine that some new and as-yet-unimagined technology will release the creativity, accountability, efficiency, and other virtues locked away in our towers. The truth is that IT today is already good enough to facilitate systemic change in our institutions and throughout higher education. The takeaway message for business officers sincerely motivated to reshape institutional performance is a simple one: Don't wait for the future. The future is now.

It is safe to predict that future technologies will get better, faster, and cheaper, and that an abundance of impressive, imaginative, and sexy new technologies will emerge. Yet, today's technologies—applied with consistent, determined, and visionary effort—have the potential to lower costs, raise revenues, and improve service performance. Without depending on an oracular leap of faith, I submit that most IT-enabled systemic change can fit into the following categories:

  • Resource optimization.
  • Talent management.
  • Media swaps.
  • Hardware and software virtualization.
  • Shared services.

Resource Optimization

In research, no Nobel Prize has ever been awarded for the most cost-effective particle discovery. In instruction, quality is a function of how much labor we invest in it, and efforts to remove academic labor from the classroom are resisted strenuously. In environments where labor is sacrosanct, investments in capital (IT, smart classrooms, and so on) rarely follow the classic labor-capital substitution curves we studied in economics.

Notwithstanding higher education's idiosyncrasies, business officers are universally preoccupied with ensuring the effective use of their institution's resources. Most accomplish this through stewardship. They hold the line. They watch carefully to make sure that resources do not “leak.” They monitor and pay wages consistent with local conditions. They hire and train conscientious people who track resources closely. Some use information to perform cost studies of institutional activities, develop key indicators of process performance and cost, and benchmark against other institutions they think do a good job. When the data suggest that too much is being spent, they conduct studies and find ways to take costs out of operations and processes. And, periodically, they cut budgets across the board to bring honeypots out of their hidey-holes.

The takeaway message for business officers sincerely motivated to reshape institutional performance is a simple one: Don't wait for the future. The future is now.

Optimizing the use of institutional resources in higher education today is an art and a craft. It depends on experienced people, persistent observation, disciplined budgeting, and occasional course corrections. Optimizing the use of resources in the future could depend instead on developing a “sensing environment” that includes purposeful and persistent data flows, tools for analysis (data mining, analysis, modeling, and simulation), and event management and notification protocols and systems.

Today's business officer need not wait to optimize resource environments. The tools mentioned are in abundant supply. In fact, they likely already exist on most campuses. What is needed are a leap of imagination, a measure of institutional will, and the talent and wherewithal to bundle the available technologies and link them to people and processes that are organized and empowered to act on information.

The logic and elements of smart resource optimization are pretty consistent across domains of application. An easily accessible example makes the point. Optimizing energy use is a concern of every institution. On a smart campus, the institution's major energy generation, distribution, and consumption components would be instrumented (“sensing environment”) and key information about consumption would flow regularly to systems designed to evaluate it.

In simple environments, studies of seasonal weather patterns could be translated into timers on thermostats. In advanced environments, models might be queried to evaluate whether energy consumption is optimal (an institutional standard), and corrective actions could be taken where consumption was found to be outside of allowable limits. This general idea and these general technologies and techniques can be used across a wide spectrum of resource classes.

  • Enrollment management. As enrollments begin to decline in many regions, admissions departments will have to get even smarter about using data flows of prospect and applicant information to deliver incoming classes that meet the institution's target specifications.
  • Student success. Closely related to enrollment management, few institutions have yet developed models that predict attrition. Small gains in student retention are not only morally and politically satisfying, but they also pack a big and positive financial wallop. Linking data from student and learning management systems to predictive analytic models and to an invigorated advisement infrastructure could have a huge return on investment by improving retention, course persistence, and grade performance.
  • Facilities use. Again, models of use based on class schedules, employee mobility, work schedules, and other variables are already being used at some institutions to optimize the yield of the institution's physical plant.
  • Grants management. It is possible to imagine an infrastructure that would combine knowledge of grant opportunities and priorities with the research interests and capabilities of an institution's faculty. A system of early and directed notification of opportunities linked with campus or departmental grant-writing capabilities and use of stored application boilerplate information could enhance the efficiency and effectiveness of the grant activity—again, with considerable political and financial returns.

This list is by no means exhaustive. Many other areas of resource optimization can be made smarter in this general fashion.

Talent Management

While talent management could be thought of as another resource optimization challenge, it is of overarching importance. In many aspects, colleges and universities are talent aggregators. The famous educator and former Harvard University President James Bryant Conant once described the secret of great research as simply a matter of attracting the most talented researchers, giving them the resources they need, and then getting out of the way.

While I suspect there is more to the magic in the administrator's bag of tricks, it is hard to understate the importance of talent to a college or university. This is particularly true in light of contemporary demographic assessments that anticipate the biggest workforce transformation in the United States since the GIs left for and returned from World War II. Within a decade, more than half of our campus faculty and administrative staff are expected to leave our institutions. While this shift represents an unprecedented opportunity to reshape the institution's academic priorities—and hence, its costs—it also signals the need for a process of talent replacement that should be done with care.

The information technologies needed to recraft the management of institutional talent exist today. It has long amazed me that we unquestioningly accept the fact that our own coaches scout talented prospects long before their senior year of high school. Implicitly, or technologically, they have a model of what they need (“In 2012, we will need two linebackers and one running back”). They also model what successful talent looks like (“In our system, we want running backs with a low center of gravity, big thighs, and the ability to make sharp cuts”). Head coaches have sensing devices (scouts) and get regular data on the health, height, weight, academic performance, and athletic performance of their prospects.

I know of few institutions that extend the logic of this system of scouting and talent assessment to the academic or administrative realms. The systems already exist to monitor and track science fair winners, spelling bee champions, and honor society members. I believe that managing this kind of information for students, faculty, and staff will provide a critical competitive advantage in the coming era of talent scarcity. As baby boomers exit the workforce, heightened competition to replace them will come not only from other colleges and universities, but also from industry, and this competition will be increasingly global.

Media Swaps

Many institutions continue to regard e-learning as an educational Johnny-come-lately. While most institutions within the United States have invested in enterprise learning technologies such as course management systems, smart classrooms, and so forth, few are actually managing e-learning as a strategic resource strategy. Although many have grudgingly come to accept that there is no significant difference in learning outcomes between face-to-face and e-learning experiences, few have internalized the likelihood that sometime soon we will discover large pockets or even generations of learners who prefer the convenience, control, and multimedia richness of e-learning environments to learning experiences that occur within our classrooms. While this debate is for the academic side of the institution to resolve,  contained within it are some enormous business questions:

  • Can one blend the balance of face-to-face instruction with synchronous and asynchronous technologies and techniques in a way that is both educationally and financially optimal?
  • Can one use the online learning infrastructure as a tool for managing campus enrollment capacity in a different way?

The substitution of the classroom medium for the online medium is only one of many possible media swaps now possible. Librarians are wrestling with how to rethink resources in the context of Google search and the digitization of documentary content.  Museums are rethinking how to curate artifacts in the face of our growing capacity to display objects digitally and to enlarge the museum's footprint via the Internet. Questions about how, whether, and when to blend the face-to-face with the virtual must become a matter of institutional and strategic concern. The nature of the institution's image and brand and its underlying economics are likely to eventually hang in the balance.

Hardware and Software Virtualization

Virtualization refers to a newfound capacity to abstract software and data from the underlying hardware and thereby make it possible to run computer “jobs” on any authorized and virtualized device on the network. This is powerful stuff. It means that your CIO can configure a secure and climate-controlled server to deliver services that fully preserve the look and feel that faculty and students are accustomed to in their laboratories. It means we are no longer constrained by the capacity of this machine or that budget, and we can begin thinking about unwinding the accidental architecture that has emerged on all research university campuses.

Right or wrong, IT investment decisions in higher education have long followed the money. They have been highly localized and only mildly constrained by efforts of IT directors to review purchase requisitions before they were finalized to assure some basic levels of interoperability between devices on campus. In institutions where much money flows directly to research, a patchwork quilt of IT exists throughout the campuses. In extreme cases, researchers manage multimillion-dollar clinical or high-performance information systems with small armies of graduate students—all outside the watchful eye of CIOs and business officers who may be liable for FERPA, HIPAA, and other compliance concerns.

Questions about how, whether, and when to blend the face-to-face with the virtual must become a matter of institutional and strategic concern.

More often, research data reside under desks, on laptop computers, on thumb drives, or somewhere in the network cloud and are completely outside of even basic institutional protections for security, privacy, transparency, energy management, and the like. As funding agencies like the National Institutes of Health and the National Science Foundation begin requiring demonstrated long-term plans to preserve research data and make it accessible to other researchers, and as resources become further constrained in the current financial climate, these ad hoc and accidental arrangements for IT must change. Virtualization is one technology that will unlock this long-standing and vexing door.

The accidental architecture of campus IT is, in part, an architecture of distrust. Historically, researchers insisted on local control for the simple reason that they wanted things done their way and on their terms. Virtualization makes it possible for people to manage their research and administrative environments in a distributed fashion. A trust bridge has been built allowing the institution to protect critical data resources, hardware, and software in proper environments while allowing researchers to either use or administer those systems. Over time, as users realize real cost savings and as institutional service providers earn their stripes as providers of reliable and knowledgeable services, the trust issues will become artifacts of another age.

Shared Services

In many ways, the exciting past of IT—the building of ubiquitous and ultra-fast networks, the miniaturization and imbedding of intelligence in everything, and the convergence of voice, video, and data on devices like the iPhone or BlackBerry—is prologue to what is on the horizon. What is looming is the prospect of fundamentally recrafting who delivers which technology for whom and at what price. Now that computing platforms have become standardized and virtualized and can find each other among the tens of millions of devices on the Internet, a new software architecture and a new business architecture are emerging.

The new software architecture—“software as a service”—reconceives software from a packaged good that one buys or licenses and installs to a service that one finds, consumes, and pays for as needed over the network at the point of consumption. In theory, anything that could be rendered in software can now be deployed as a service. This establishes the preconditions for an entirely new way of organizing, delivering, costing, pricing, and managing institutional services. 

As the technical standards evolve and mature, companies are rethinking how all their services are organized and delivered. Services that have long been integrated as part of ERP (enterprise resource planning) systems may now be found as separate components. Tiny computer applications become available on our cell phones for 99 cents, while at another extreme, new companies offer to service the institution's total financial aid portfolio. Business officers in the future must become business architects, determining which skills are critical to keep on campus and where “in the network cloud” it may become more cost-effective or simply better to outsource solutions. How one plays and wins or loses the talent game will factor into this thinking about business architecture. Of course, business officers and CIOs alike must also become extremely good at sourcing services and managing contractual relationships.

Importantly, shared services will not likely be a simple redressing or rebranding of familiar actors and products. Today, anyone with a computer and a network connection can become a higher education service provider or consumer. And many will.  In the evolving world of shared services, colleges and universities are banding together to develop software as a community. Already available or planned under the Kuali Foundation banner is community-developed, shareable, and open software to operate campus financial transactions, learning management, grants management, and student services.

In another example, at North Carolina State University, student computer lab services have been virtualized and can be made available remotely as a service on a student's own personal computer. This kind of effort allows the institution to rethink its fundamental approach to delivering student computing services, with potential for enormous savings in space, hardware, software, and personnel. Institutions that are leading providers of a service can and will make those resources available for others to share.

Such reshuffling of IT production and consumption is likely to change our business landscapes in fundamental ways. Our IT infrastructures today are largely funded centrally as capital assets for the common good. Tomorrow, these may be funded as pay-as-you-go resources by the actual consumer of the infrastructure at the point of consumption. This practice will reduce the longstanding need to operate servers and networks with excess capacity to handle spikes in volume. Consider Flowers.com. Three years ago, that firm would have needed IT capacity to manage everyday loads and capacity to handle peak traffic on Easter, Mother's Day, Valentine's Day, and other floral holidays. Today, firms like this can reduce the capacity of their systems and networks and expand that capacity on demand, on a temporary basis, from commercial or other third parties.

Forces of Change

While it is more fun to write about semantic Web sites, medical simulations, 3-D avatars, green lasers, nanotechnology, sensors, and other technologies that will surely influence colleges and universities, more important is the question of what forces will drive change in higher education and which technologies can help us respond to these pressures as an industry and as a professional community. 

Within the next 10 years, higher education is likely to be shaped by several fundamental forces:

  • Standardization of technology.
  • Consumerization of technology.
  • Diminished financial capacity.
  • Pressures to open and liberate data.

Standardization and consumerization of technology. Standardization refers to the steady and accelerating acceptance of technical standards that will make it easier for business activity and technology infrastructure to move to places based on scale economics, safety, mission, and so forth. Consumerization refers to the tendency of modern software to be open, accessible to the individual, easy to use, and either loosely coupled (to the institution or to other software) or coupled only when needed. These phenomena suggest a possible radical reshaping of the institutional IT environment. IT and business leaders in the future will need not only to make complex decisions about what technologies they operate and which they source elsewhere, but they will also have to keep an eye on the consumer market.

Students and faculty are arriving on campus today with sophisticated open source tools that allow them to bypass key institutional systems like the course management system. How long will it be before the consumer options include gross-to-net calculators, trial balance software, endowment analysis tools, and others that operate outside the managerial reach of the institution? If in the past we witnessed the emergence of an accidental architecture of central and local systems throughout the campus, we now face the distinct possibility of architecture in which core institutional data and transactions are conducted on handheld mobile devices using consumer software.

Diminished financial capacity. The financial crisis of 2008 has many business officers and presidents predicting that structural economic change has arrived. When the recession ends, many expect that U.S. higher education—and indeed worldwide higher education—will operate in a “new normal” of diminished financial means. Further, the fear and anger over runaway costs of health care has fueled heated debate and awakened the sleeping federal giant. Higher education inflation has in fact exceeded that of health care, and it is likely that our industry will continue to come under pressure to stabilize or reduce prices. These and other forces suggest that the days of IT as a cost addition to collegiate programs are over. Even radio commercials on the public airwaves talk about how University A was able to serve more students by eliminating servers. When the dialogue pits IT investments against service to students, the climate must change.

Pressures to open and liberate data. Opening and liberating data from systems and from institutions is another game-changing social force pressing on colleges and universities. The American system of intellectual property protection and rights management is severely challenged, and the cost of scholarly resources, textbooks, and other fundamental bits of academic mortar are rising at the same time that our financial resources are becoming significantly constrained.

Business officers and IT leaders must also worry about vendor lock-in—the shrinking of the vendor market serving higher education and the consequent decline of options available to us for operating critical elements of campus life. The high cost of switching vendors and the limited choice of vendors is locking us in to vendors that may provide poor support and that may engage in near-monopoly pricing practices.

Finally, it seems inevitable that states, and ultimately the federal government, will require that colleges and universities make it possible to easily and regularly export a variety of data about students in forms that facilitate tracking student academic progress and assessing institution performance of our core teaching mission. These requirements will necessitate substantial rethinking of existing transaction systems, installation of new data extraction capabilities, and enormous attention to data quality and privacy issues across the entire higher education landscape. 

Focus on the Here and Now

The days and years ahead will be challenging ones for higher education. The good news is that the technology environment is maturing in ways that will make it increasingly possible to explore and deliver IT at a different scale of expense and to change the allocation of that expense. And, existing technologies applied with vision, commitment, and an eye on the future can go far in meeting the external challenges that face us all.

Furthermore, the conditions and constraints on our capacity to transform challenge to opportunity are chiefly social, not technical. Business officers must decide how much change their institutions can assimilate and how much persistence and commitment the institution's leadership team will be able to muster. While we must continue to invest in our networks and to constantly experiment with new Web 2.0 technologies to ascertain their place in our academic and business activities, we mainly need to focus on the basics: governance of IT decision making, stewardship of institutional data quality, and business architecture. This work can begin right now.

RICHARD KATZ is vice president of EDUCAUSE, Boulder, Colorado.