Enough to Go Around? Budget and TCO Tool Kit - Tech Learning

Enough to Go Around? Budget and TCO Tool Kit

The Changing Financial Landscape The past four years have seen a precipitous decline in funding for school technology programs. According to Quality Education Data, spending on instructional technology peaked at $8.36 billion in the 1998-99 school year, falling by more than half a billion dollars each year for the
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The Changing Financial Landscape

The past four years have seen a precipitous decline in funding for school technology programs. According to Quality Education Data, spending on instructional technology peaked at $8.36 billion in the 1998-99 school year, falling by more than half a billion dollars each year for the next four years to $5.74 billion. This represents a spending decline of more than 32 percent.

Due to the increasing gap between revenues and costs, a number of states, including Wisconsin and California, were forced to severely reduce or fully cut instructional technology grants to local school districts. In turn, districts canceled systems upgrades, reduced staffing, cut training programs, stretched replacement cycles, and trimmed similar "nonessentials".

The good news is there are signs that the trend in decreased spending on instructional technology is beginning to subside. QED estimates that spending will turn upwards again to $5.8 billion by the end of the 2003-04 school year, a very modest increase of $60 million over 2002-03. The International Data Corporation confirms this projection. IDC analysts believe that while containing technology costs will continue to remain a top priority, there will also be small growth in the overall education technology market for the first time in several years.

Nevertheless, it is clear that districts will not soon be returning to their bountiful days of the late nineties. Coupled with the decline in spending in the last four years is the increased and mounting level of accountability demanded by No Child Left Behind. As a result, districts will need to maintain financial restraint while learning to squeeze the greatest educational impact out of their technology investments.

Enter the TCO Model

When schools are forced to restructure technology initiatives due to unanticipated costs, it is a sure indicator that their planning was not comprehensive. Specifically, the Total Cost of Ownership was not adequately forecast.

The TCO for technology is the life cycle of costs for technology, including both direct and indirect expenses. They include costs around capital (hardware, software, and facilities), administration and operation (planning, upgrade, replacement, and technical support), and end user operation (staff development and user downtime).

Appropriate TCO planning provides the advantages of reducing network downtime, improving integration of technology resources into curriculum and instruction, and allowing teaching staff to focus on instruction rather than technical support. By identifying, planning, and managing TCO for technology, schools and districts can maximize their investments in this area.

Key TCO Challenges for Leaders

Thinking smart about school- and district-level technology TCO means considering a range of factors, including many that, at first, may not seem directly tied to budget considerations. Experienced school technology planners name the following challenges.

  • Offering Compelling Evidence that Technology Works
    Due to technology's incredible complexity and accelerating rate of change, it is unusually difficult to measure its full value, even under ideal circumstances. Yet educational policy makers are demanding that technology investments have clear and direct links to schools' efforts to improve student achievement. Leaders must offer policy makers compelling evidence that their information technology investments are closely planned, managed, and evaluated.
  • Building in a Strong Management System
    All too often, even schools and districts with well-conceived technology plans that include funding for all aspects of TCO still fail to reach optimum success because management is poor.
    Public and commercial pressures for innovation push organizations to continue to add and learn the latest technology. But schools are unique. Their management structures are not designed to keep pace with such rapid changes. For starters, they don't have a direct financial incentive to push a timely and more efficient management of technology and lack the flexibility to facilitate the timely transfer of internal funding for the optimal level of investment.
    In a short, the following remain the most common roadblocks to good school and district management:
    Inadequate training of instructional, administrative, and technical staff Insufficient technical expertise Little asset inventory or management Proliferation of operating systems and desktop images Use of one-time funding sources to invest in new technology.
  • Staying Focused on a Core Vision
    While we strive to do more with less, the management challenges of technology lead us in the direction of less is more. The most effective strategy for responding to the management challenge is to stay focused on the core of your vision. Don't attempt to do everything. But, when you do choose a focus, be certain you implement it extraordinarily well. Say no to requests for new technologies if you do not have capacity to provide the highest quality technical support and training. Anything more is a waste of resources.

Leveraging Resources

Because of the inherent difficulties in anticipating all costs of owning technology, adoption of TCO tools to measure the cost and effectiveness of technology initiatives are becoming more common. In the Five Practical Tools section you will find descriptions of a number of applications designed to help school leaders determine the true cost of investing in technology. Their primary function is to produce analyses that show both direct and indirect costs associated with investments in hardware, software, professional development, and a variety of associated and support resources.

Five Practical Tools

1. Total Cost of Ownership Tool

Consortium for School Networking

As part of their Taking TCO to the Classroom initiative, the Consortium for School Networking partnered with research firm Gartner to develop the Web-based TCO Tool. Registration is required, but the tool is available free to any school in the United States. TCO Tool measures direct and indirect costs of technology investments, such as hardware, software, and direct labor for tech support, and the indirect costs accrued for tech support. The tool also helps schools and districts make better budgetary decisions, organize tech planning, establish a baseline for future analysis, and maximize benefits from investments in technology. In just over a year since its launch, more than 750 school districts have used CoSN's TCO Tool.

Users of the TCO Tool must enter more than 100 data points concerning their existing network and future plans. It then calculates the data and displays metrics and charts that compare the user's district to others around the country. The districts used for comparison were chosen because they are representative of districts of various sizes and locations. Detailed case studies on each of the comparison districts were prepared by Gartner and are available on the CoSN Web site. The TCO Tool is particularly useful as a means to benchmark a district's current costs of managing their technology and how those costs may change in the future. If a user wants to make more complex comparisons, the tool allows for the analysis of multiple scenarios.

The TCO Tool can help technology leaders make the case that their technology spending is reasonable and efficient. Given the tight fiscal and regulatory environment, this kind of analysis is likely to have a positive impact on policymakers. Furthermore, because the TCO Tool is based on the Gartner's unbiased and proven methodology, the metrics produced should gain additional credibility with education policymakers.

2. K12 TCO Calculator

Institute for the Advancement of Emerging Technologies in Education

Another useful TCO planning tool is provided by Institute for the Advancement of Emerging Technologies in Education at AEL. IAETE's mission is to promote the purposeful use of new and emerging technologies to improve teaching, learning, and school management. Their K12 TCO Calculator was developed to enable technology planners to calculate approximate costs for implementing a five-year technology plan and see the long-range impact of their decisions on the total school or district budget. It also allows users to perform theoretical scenarios to investigate the implications of choosing various options in their plan.

Users of the K12 TCO Calculator input current and projected inventories, professional development needs, building characteristics and proposed modifications, and goals defined in the five-year technology plan. After the required data are entered, the calculator creates charts and tables that display the projected costs of major expenses (computers, peripherals, telecommunications, professional development, building modifications, and electrical power consumption) as well as a comprehensive cost summary and projections for all costs based on typical equipment life spans and replacement cycles. Costs are broken down for each year of the plan and include adjustments for E-Rate savings and inflation. Users can adjust their projected investment based upon enrollment figures, desired student-to-computer ratio, and potential replacement costs. Calculator data tables can be downloaded as Excel files for further analysis and scenario building.

IAETE is very careful to outline all of the assumptions it uses to generate its final TCO reports. All subcalculations that require an assumption are marked with an icon that hyperlinks the user to a detailed explanation of the parameters of the assumption.

Please note that both the CoSN and IAETE tools require a significant investment of user time. The quality of the output from the tools is fully dependent on the quality of the data input and therefore on the time and attention to detail committed by the user. Both tools will pay dividends if the user is willing to invest the appropriate amount of time and research.

3. Smart Budgets for a Digital Age

BellSouth Foundation

The BellSouth Foundation was created more than 20 years ago to improve the quality of education in the communities where BellSouth operates. The foundation provides funding to promote active learning and to stimulate fundamental change in educational institutions. In addition, BSF has developed a suite of tools to help technology leaders understand the fiscal impact of their decisions and to provide advice to help districts make better technology-related budgeting decisions.

The BellSouth tool, Smart Budgets for a Digital Age, is a free Web-based application that helps technology leaders determine the human resources required to implement their technology plan and provides a way to estimate the cost of staffing. The site does not provide information on hardware, software, or other nonpersonnel related costs.

Users of the Smart Budgets tool box complete a series of forms about the size and composition of their district, as well as existing and planned technology efforts. The tool can be employed by a single user to create a general estimate of personnel costs. A more detailed report can also be generated, though it requires school administrators, school technology/media specialists, and teachers to complete online surveys.

Smart Budgets for a Digital Age is a simple tool that offers users some useful information about the personnel costs of supporting technology programs. It is easy to use and requires little time to complete the surveys. However, the lack of analysis about hardware, software, training, and other indirect costs means that this is not comprehensive enough to provide a complete TCO picture. It may supply some useful data, but is also likely to generate more questions than answers.

4. ECS Web Site Education

Commission of the States

The Education Commission of the States is an organization devoted to providing information, analysis, and technical support to policymakers who operate at the local, state, or national level. The ECS Web site is packed with resources covering all major issues in education. While the resources are aimed primarily at state-level policymakers, there is significant value for school and district technology leaders. The technology finance section includes annotated reviews of selected readings and research on the challenges of funding educational technology. It also includes a state policy database that lists the status of all state-level bills that impact the funding of educational technology. Finally, ECS offers a comprehensive set of annotated links to external resources on technology budgeting and TCO.

5. "True Cost of Ownership"

Jamie McKenzie, the tell-it-like-it-is guru of educational technology, presents a unique perspective on TCO in his article, "True Cost of Ownership." McKenzie believes that the typical approach to TCO, including CoSN's work, does not address the full cost of implementing a successful program. He states that the usual application of TCO to school technology "does not adequately address other critically important costs that could have major implications for district and school success in broader terms." He then defines a list of TCO elements that, if overlooked, may cause a technology innovation to fail. McKenzie describes this list as a supplement to the good work already done by CoSN.

McKenzie's list includes soft items that are often neglected, including learning resources such as subscription services that are not included with the computer, research and development costs, network management and development costs, and costs for spirit and support building. He argues that counting these costs is essential to developing a full TCO perspective. Including these often- hidden expenses can help a school or district avoid flaws that will prevent the initiative from meeting all of its goals in the most efficient manner.

Todd McIntire is the vice president of achievement for Edison Schools.

CoSN's TCO Rubric
Which kind of district are you? The TCO-Savvy District The Doing the Best We Can District The Worry About It Tomorrow District Professional Development Devotes 15-30 percent of its budget to staff development Provides some staff training, but not at times that are convenient or when staff is ready to put the lessons to work Assumes that teachers and staff will learn on the job Support Provides computer support at a ratio of at least one support person for every 50 to 70 computers or one person for every 500 computers in a closely managed networked environment Relies on a patchwork of teachers, students, and overworked district staff to maintain network and fix problems. Does not track the amount of time the network is down or computers are not in use Relies on informal support Software Recognizes that the greater diversity of software packages and operating systems, the more the support that will be required. Makes provisions for regular upgrading of software packages Utilizes centralized software purchasing, but choice of application and respective support left to individual schools and staff members Expects support personnel to manage whatever software happens to be installed on a district computer Replacement Costs Budgets to replace computers on a regular schedule, usually every five years, whether leased or purchased Plans to replace computers when they no longer can be repaired Assumes that computers purchased with 20-year bonds will last forever Retrofitting Recognizes that many school buildings will require modifications of electrical, heating, and cooling systems, as well as asbestos removal, to accommodate new technology, and budgets accordingly. When possible, makes these improvements when schools are being built or renovated Understands minimum and recommended requirements for electrical and other infrastructure improvements and incorporates them when funding is available Pulls the wires and then blows the fuses Connectivity Plans its network to provide connections that provide enough bandwidth to manage current-and future-needs, especially multimedia applications Has the bandwidth it needs today, but has no plan for scaling it upward as demand grows A phone and a modem, what more do you need?

Additional TCO Resources
There is a wide array of commercial applications and services on the market that can help schools and districts reduce TCO. Following are examples of just some of the products designed to streamline the budgeting and planning process, manage assets, and optimize the use of existing resources. Budgeting Tools
Smart Budget by L&A Partners
L&A Partners' Smart Budget is a Windows application that helps users create complex, meaningful budgets without spreadsheets or calculators. Smart Budget takes expense and revenue budget information and creates understandable and accurate projections while reducing the probability of errors being introduced in the budget. Smart Budget provides a clear audit trail on how the budget is calculated. The final budget can be outputted in Excel, PDF, HTML, or text format.
Other budgeting tools:
FRx Software

PROPHIX Software
SRC SoftwareAsset Management Tools
Truistic Software Inc.
Truistic provides asset management software solutions that identify and track IT assets including computer systems, servers, laptops, PDAs, cellular telephones, PBX systems, fax and copy machines, printers, and network components. TruAssets also tracks applications installed on Windows-based systems, and tracks all changes to hardware and software assets. Asset management software can improve TCO by reducing network downtime, risk of theft and loss, license agreement infractions, and expense to perform audits at remote sites. Truistic empowers technology leaders to reduce waste, weed out obsolete or inappropriate technologies, and plan for the orderly deployment of new technologies.
Other asset management tools:
NetSupport Inc.
SyslistResource Optimization Tools
4GL School Solutions Inc.
4GL School Solutions provides data-driven solutions for managing special populations, including special education, English language learners, and at-risk students. 4GL's solutions help districts increase the effectiveness of their special education programs by reducing the expensive, noninstructional costs of administration and compliance liabilities. 4GL has demonstrated that an analytical approach to managing these populations can have a positive financial impact on a school district, with typically a 100 percent or greater financial return to the district over a three-year period.
Other resource optimization tools:


Rediker Software



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