How the Recent Recession Affected Technology Spending in Higher Education Institutions
In a study conducted by EDUCAUSE Center for Applied Research, analysts discovered IT spending after the 2008 recession increased in many higher education institutions. These findings were surprising, given the economic turmoil the country was experiencing at the time. Only 53% of the study’s respondents reported decreases to their IT operating budgets between the fiscal years 2007-2008 and 2009-2010. And of this percentage, only 30% reported budget declines exceeding 5%.
A 5% decrease in an IT budget, or even a flat budget, can certainly lead to negative effects on core technologies. However, most organizations can absorb these cuts without experiencing substantially lower performance or service levels.
Unexpectedly, 31% of respondents reported an increase during this time. Why would some IT budgets actually rise during the most dramatic economic decline since the Great Depression?
According to the study’s researchers, the extent of IT budget cuts were minimized for a variety of reasons. First, it’s possible the hardest hit educational institutions declined to participate in the study, thus skewing the results somewhat. Second, the effects of the recession may have been offset by the federal government’s economic stimulus programs.
But why did some IT budgets grow? The participants in this study cited several reasons:
- Maintaining a basic IT infrastructure
- Continuing with a project funded prior to the recession
- Continuing with a project that was too far along to recoup any savings from terminating it
- Making technology investments that would improve operational performance and potentially save money in the long run
There are many reasons why higher educational institutions kept spending on IT during a recession. As societal and economic dependence on IT continues to increase, schools must not only keep pace, but lead the way. For example, Internet usage is expanding every year. And, “Bring Your Own Device” (BYOD) initiatives have placed burdens on existing network infrastructures. As a result, schools have had to grow their networks in line with the additional demands being placed for network resources.
Faced with cutting budgets and reducing costs, it would seem investments in new technology would be curtailed. However, many higher education institutions have embraced technology to create efficiencies that reduce costs and improve service. Instead of curtailing investments in new technology projects, many IT organizations have turned to other budget-cutting measures, such as hiring freezes or reduced travel expenses.
Regardless of the economic environment, educational institutions must meet the growing demands of their markets. To do this, many schools have leveraged IT as a strategic tool. Forward-thinking educational institutions are turning to tactics like outsourcing data, voice, data center and managed IT services that lead to significant cost savings over time.
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