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Information Resources and Institutional Effectiveness: The Need for a Holistic A pproach to Planning and Budgeting Copyright 1995

CAUSE. From _CAUSE/EFFECT_ magazine, Volume 18, Number 1, Spring 1995. Permission to copy or disseminate all or part of this material is granted provided that the copies are not made or distributed for commercial advantage, the CAUSE copyright and its date appear, and notice is given that copying is by permission of CAUSE, the association for managing and using information technology in higher education. To disseminate otherwise, or to republish, requires written permission. For further information, contact Julia Rudy at CAUSE, 4840 Pearl East Circle, Suite 302E, Boulder, CO 80301 USA; 303-939-0308; e-mail: jrudy@CAUSE.colorado.edu INFORMATION RESOURCES AND INSTITUTIONAL EFFECTIVENESS: THE NEED FOR A HOLISTIC APPROACH TO PLANNING AND BUDGETING by David J. Ernst and Peter Segall ABSTRACT: Limited financial resources make it more important than ever to develop a coordinated institution-wide process to link academic priorities and expenditures with the technological infrastructure necessary to support the objectives. Trade-offs must be made across the institution, rather than simply within the traditional information resources areas, in order to ensure both a healthy academic program and the requisite information resources.

Peter Drucker once said, "Elephants have a hard time adapting. Cockroaches outlive everything." One might wonder how well higher education in this country is adapting to its current challenges. Colleges and universities are undergoing an era of unprecedented change brought about by a stinging combination of economic, social, and political forces. Most Americans are asking themselves how they can afford a college education. Since 1980, the average college tuition increased three times faster than inflation. Some estimates have pegged the anticipated tuition at an institution like Harvard at $350,000 for today's kindergartner, unadjusted for inflation! According to the Association of Governing Boards (AGB), the number- one issue facing higher education in 1994 was the "budget squeeze."[1] The operating budgets of over one-third of private schools remained the same or increased a small 1 to 4 percent. Forty percent of public institutions and 30 percent of private institutions experienced mid-year budget cuts in 1992-93. Our colleges and universities are in an economic pincer. The increasing inability of families to cope with college costs, caps in federal appropriations, increasing competition for state funds, and the leveling off of sponsored research funding are all shrinking the revenue streams upon which schools are dependent. Dramatic increases in benefit costs, energy prices, and the need to fund deferred investments in physical plants, among other areas of

increasing costs, are soaking up discretionary resources for all institutions. The result is a vice grip of economic constraints that will seriously threaten marginal institutions and hobble many middle-tier ones, and, some would argue, may result in an environment of mediocrity at even some of our most highly endowed schools. On top of this economic squeeze comes the advent of the new student demographics. The face of America's student population is changing. There has been a decline in the numbers of traditional college-aged students in the population and an increase in the relatively older, nonwhite, frequently part-time students, who in many cases are more costly to educate because they frequently require remedial studies, special language courses, and financial assistance. Forty-three percent of today's students are over twenty-five and 300,000 are over fifty. Forty percent of the new students at CUNY in New York are African-American or Hispanic. In addition, the public's expectations for colleges and universities are higher than ever before. The AGB cited "public opinion" as its number-one external trend affecting higher education. Last year William Honan wrote in the New York Times, "The question is no longer whether to retract ... and adapt in order to bear down on the basic mission of higher education ... but whether these reforms can be accomplished from within or must be imposed from without."[2] Scandals in college athletics, abuses in research, and an overall uncertainty about the value for the money have contributed to an increasing sense of disenfranchisement towards higher education. How are colleges and universities adapting? Many are surviving through a combination of academic consolidations, selective investments in new delivery mechanisms, and restructuring of administrative functions. The president of Columbia University has cited the "great deal of overlap" among Columbia's academic programs and has promised to consolidate certain functions. The president of Yale has stated that Yale doesn't "have to deal with every subspecialty in every field ... instead we can create centers of excellence." A few other examples include San Diego State University, which announced a plan to close nine academic departments, and Northeastern University, which eliminated its physical education, recreational management, and health majors while consolidating other academic programs. At the same time, some schools are investing in technologies to enhance their competitive position. As we all know, the power of telecommunications is providing new ways of conveying information and responding to questions that arise in the learning process. E-mail makes possible a system of quick and frequent communications between students and instructors. To cite one example, Northeastern recently invested $2 million in automation, including fiber-optic wiring for the entire campus. Many campus brochures now commonly boast of the "electronic links" in residence halls that connect students to on-site faculty, researchers in other institutions, and a whole world of databases through

the Internet. Additionally, many colleges and universities are undertaking a fundamental restructuring of their administrative activities and finding that the most effective long-term approach to reducing administrative costs is to redesign work processes from the bottom up. Hence, such methodologies as Total Quality Management and Business Process Reengineering have rapidly made their way from the corporate world to the campus. William Massy wrote a seminal article in 1990 that characterizes administrative activities as an intricate "lattice ... that has grown, much like a crystalline structure, to incorporate ever more elaborate and intricate linkages within itself."[3] On many campuses there are major initiatives to control and reduce this lattice. Oregon State University and the University of California at Santa Cruz, for example, have had campuswide quality improvement and process redesign programs. Stanford, Penn, Harvard, and Yale all have comprehensive administrative restructuring programs in place. The goal of these programs, and the many more like them at other schools, is first and foremost to reduce costs, while improving the institutions' ability to manage themselves administratively and financially. What most of these institutions are learning, however, is that administrative work cannot be restructured in fundamental ways without making investments in technologies that will enable new ways of doing business. The old, batchbased, central control systems (that never really controlled very much anyway) must give way to information-rich, customer-oriented service systems that provide administrators with the tools they need to manage administrative processes without armies of clerks, checkers, and paper-pushers. Hence, many of our institutions have implemented or are in the process of implementing such technologies as student access systems (for example, online registration and inquiry), direct vendor ordering and paying systems, and relational technologies and data warehouses to allow for more effective reporting and analysis. The problem is that for many institutions, the investments made in new systems are not always integrated with institution-wide strategic directions and needs. Put another way, institutions tend to make all of their strategic tradeoffs within the academic program, between academic and administrative activities, and among operating, capital, and investment programs and then determine how much they can spend on information resources. It is as if this latter category were "something we think about once we are done doing our 'real' jobs." Even worse is the situation where heavy information technology investments are made and the institution tries to figure out how it can use these new tools to further its goals and objectives. Too often, information resources managers see themselves in competition with (and usually in a subordinate position to) key initiatives across the rest of the campus. This outlook must change, among both the providers and the users of information resources. Now, more than ever, the times call for strategic and well-

coordinated planning across the institution. There is great need to weave together the interdependent components of academic program, administrative support, and information infrastructure in a way that responds both to shrinking resources and the requirement for increased effectiveness. Managers of campus information resources--whether labeled administrative, academic, or library--should take the lead to push for this integrated planning and for the more important integrated actions that will flow from it. As Patricia Battin has pointed out: Since it is unlikely that the majority of institutions will be able to afford and maintain cutting-edge technology (any more than they could buy every scholarly book published in the past), it will be important to develop a coordinated process to link academic priorities and expenditures with the technological infrastructure necessary to support the objectives. Trade-offs must be made across the university, rather than within the traditional information technology, academic computing, and library compartments, in order to insure both a healthy academic program and the requisite information resources and services.[4] As we implement business process reengineering and redesign at more and more institutions across the country, we demonstrate that information resources--information, technology, and services--are important "partners" up front in the change process, not something to be added on after redesign has occurred. It is the iteration between evaluating how the institution does its academic and administrative business and where and how information technology can enable, facilitate, and fundamentally change that business for the better, that makes IT an essential ingredient in stretching resources instead of being a drain upon them. Unfortunately, in higher education, we have not had much experience in having to make institution-wide trade-offs for resources, let alone doing so in an environment where information technology is viewed as part of the solution rather than part of the problem. In order to move from past practices of across-the-board cuts and local optimization, strategic and integrated planning will be necessary, but not sufficient. Equally important will be a coordinated budgeting capability, driven by the plan, and able to accommodate multiple funding sources supporting a handful of strategic institutional initiatives. In other words, we must be able to implement the concept of "all dollars are 'green.'" We specifically need to break out of the traditional (and limiting) funding mechanisms for information technologies and "graduate" from the rate-based, service-center mentality. According to Battin: This new and constantly evolving environment of information services and resources requires the development of a coordinated and capitalized budgeting capacity to replace the ad hoc and reallocation practices of the past. These mechanisms served higher education well during the early stages of technology integration, but the combination of growing reliance on technology for critical functions through the institution and the short life cycles of hardware and software characteristic of digital technologies make a more

coordinated budgeting process essential to insure a reasonably secure and predictable financial and technological environment.[5] Armed with a commitment to a "holistic" approach for strategic planning and integrated budgeting for institutional academic, administrative, and information resources, just how does one begin to implement these concepts? The answer, as always, lies first in understanding and appreciating the particular culture of the institution involved. Given that as the context, an approach which relies on three key elements of successful strategic planning should serve well. First, an assessment of the current state of integration among campus priorities in the academic, administrative, and technology areas is in order. This "environmental scan" will provide a baseline against which to compare the ultimate goal of the "holistic" approach. Second, a "vision" is developed of how a strategically planned and budgetarily better integrated campus would operate and how that vision would improve the quality of work and life at the institution once implemented. This vision, or set of institutional attributes for the future, serves as the goal state to guide implementation efforts. Finally, and most importantly, the actual tactical plan and set of action steps are laid out, incorporating the integration of academic, administrative, and information resources priorities and their enabling budgets. The tactical plan may incorporate reengineering efforts, academic program changes, administrative support realignments, and new software and hardware applications. Those tactics, grounded in a realistic assessment of the current state, with an equally acute vision of the future goals, become the new strategy and conceptual framework for institutional effectiveness. This approach is obviously more easily said, or written, than done. However, embracing the concept of the holistic partnership of academic program, administrative activity, and information resources is the essential first step (and focal point) for increasing institutional effectiveness amid the external and internal forces operating on higher education today. Strategic planning and integrated budgeting are not new concepts, but they are successful ones that can make the essential difference in utilizing a set of information technologies and resources that will determine our future either because of us or in spite of us. ============================================================= Footnotes: [1] _Ten Public Policy Issues for Higher Education_, Public Policy Series No. 94-1, facilitated by Arthur M. Hauptman (Washington, D.C.: Association of Governing Boards, 1994). [2] William Honan, "New Pressures on the University," _New York Times_, 9 January 1994.

[3] William F. Massy, "Productivity Improvement Strategies for College and University Administration and Support Services," presented at the Forum for College Financing, October-November 1989. [4] From an e-mail communication, April 25, 1994. [5] Ibid. ************************************************************* David J. Ernst is a Managing Associate in the San Francisco office of Coopers & Lybrand's Higher Education Consulting Practice. He joined C&L after twenty years of senior management experience in higher education, including Director of Administrative Systems at Stanford and CIO at the University of California at San Francisco. Peter Segall is a Director of Coopers & Lybrand's Higher Education Consulting Service, based in Boston. Prior to joining Coopers, he served as the Assistant Vice President for Development Operations and Support at Brown University. ************************************************************* Information Resources and Institutional Effectiveness: The Need for a Holistic A pproach to Planning and Budgeting 2NVYOHzN "nWord Work File D 3190TEXTMSTEXTMSWD B-_f B

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