Resource Allocation for IT in a Time of
Lean Budgets

Recent news has been rife with stories of information technology budgets slashed, and of chief information officers needing to make quick decisions around cuts and resource reallocation. Most recently, Campus Technology reported -- in a dramatically titled article, "Campus IT Under the Knife" -- that the University of Illinois, owed $431 million by the state government, has asked its chief information officer to cut $30 million from an IT budget that has already been frozen for the past 5 years.

In a climate of such urgent cost containment, IT expenditures are frequently one place that institutional leaders look to for savings. We asked Shah Ardalan, vice chancellor of technology services and CIO for the Lone Star College System, who has built a reputation for savvy IT budget management, for his advice on how IT leaders can take a strategic look at costs and resource allocation during an ongoing budget crisis.

Interview with Shah Ardalan

AI: How can the CIO best revisit resource allocation and determine the right "blend" of cuts?

Ardalan: These are the best times to recheck priorities against the organization's values and strategies.  Based on the current economic challenges, many strategies changed which should result in project reprioritization.  Protecting true talent will be on top of my list.

AI: Could you say more?

Ardalan: I understand and appreciate the improvements and advances in technology, but we all know that at the end (or start) of the day, we need reliable, talented "thinkers" to make it work and realize the ROI.  Once we get out of the current economic crisis, the public will know which organizations stood by their people and where their priorities were.  Purchasing technology is easy, attracting and retaining talent not so.  Employee satisfaction and loyalty go a long way in increased productivity.

"When facing challenges, most CIOs can think of a way to solve it.  A strategic CIO would find ways to connect the dots that are not even on the same chart -- not to survive but to thrive."
Shah Ardalan, Lone Star College System

We have pursued centralization, standardization, outsourcing, and many other major initiatives to reduce administrative cost, increase services (quality and quantity), and thus have saved millions without doing any layoffs.

AI: In reallocating resources, what are the key questions every IT leader should be asking?

Ardalan: I would ask:

  • How would this affect my key performance indicators (KPIs)?
  • How would I keep or reinforce IT's strategic value to the organization?
  • What is the organization's tolerance or appetite for change?
  • What are the next steps -- after things get better?

"Simply put: Am I cutting fat, muscle, or bone? Hopefully I am not cutting a piece of the brain."
Shah Ardalan, Lone Star College System

AI: Shah, could you speak to some of the key performance indicators that are especially critical since the beginning of the recession, and how you are using them to "move the needle"?

Ardalan: I would pay particular attention to:

  • The IT budget as a percentage of the total institutional budget
  • The percentage of your IT budget devoted to innovation

IT budget as a percentage of the institution's budget -- this percentage is different for every institution, but is an indication of how the institution values technology. 8-10% is very good, under 5% is a challenge, though there are many factors affecting this. So, if you are at 8% and the student enrollment is up by 25% and you are adding 10 new buildings without any investment in IT, you need to be prepared for a lower KPI on customer satisfaction and a higher KPI in time to close tickets and so on.

You need to show the trends in the IT budget. As people think of the reduced cost of hardware, I make sure they understand the increased cost of software, maintenance, consulting, and even the reduced value of the dollar. I need to keep the executive team and the board informed and supportive of the IT budget and costs.

"Show the president that based on the institution's growth, more IT dollars are being spent on the academic and student side than before. For the CFO, I show that even when I ask for more dollars, I am still reducing the administrative cost."
Shah Ardalan, Lone Star College System

For example, I can show reduced administrative cost by outsourcing student email, centralizing enterprise software management, outsourcing the 24x7 help desk, centralized hardware purchases, and many other initiatives that allow us to manage and reduce IT cost in very visible ways.

Another way of using these KPIs to protect the IT budget is to let the campus ask for IT dollars even though all purchases are approved by IT. The process is simple -- they ask for funding the first year and transfer the funds to the IT budget if approved, and during the following years, it will become a part of the base IT budget.

The other simple KPI would be to see the percentage of the IT budget used for innovation.

"Take this opportunity to invest in innovation even if it means you need to cut or reduce other areas.  The current situation has made higher education more open to change."
Shah Ardalan, Lone Star College System

CIOs can introduce standardization and/or centralization to improve ROI without sacrificing service delivery or competitive advantage. Any cost savings and/or avoidance resulting from these initiatives should be invested in innovation. Sometimes, even the obvious and expensive infrastructure upgrades could take second place to innovation. At Lone Star College System, even though we are facing cuts, we just invested over $200,000 in faculty technology innovation grants.

AI: What types of innovations are you looking at? And what is an example of an upgrade to forego and why?

Ardalan: We are looking at Thin Client deployment.  This is maybe not as mature as an enterprise solution (within higher ed applications), but there could be a lot of cost savings in PC replacement cycle and power consumption, and desktop management.  This doesn't mean we will lay off our techs; we will help them grow to provide the next level of support.  Since we have not had the cuts (yet) we are moving forward with our planned upgrades.  If needed, as an example, printer replacement or redundancy for non mission-critical systems can be reprioritized.

AI: How do you tell the story of these decisions effectively to other campus stakeholders, and in so doing, raise the "reputation" of the IT unit?

Ardalan: The CIO needs to share meaningful KPIs to show the value of IT organization to the campus all along and well before a budget crisis hits.

"The CIO should be familiar with the operation of the campus so intimately that he/she is either leading or participating in solving other (non-IT) challenges the campus is facing. Just like a strategic partner."
Shah Ardalan, Lone Star College System

During these times, effective communication becomes even more critical. At Lone Star, we have created an Executive Director of Customer Relations whose primary job is to communicate the value of IT to faculty, staff, and students in a structured way.