Higher education institutions encountered unprecedented challenges during the pandemic, relying on technology more than ever before to deliver meaningful educational outcomes while students and faculty were unable to gather in person. The public health crisis negatively impacted budgets at colleges and universities and, as a result, higher education IT budgets also contracted.
Here's a look at what higher education institutions discovered as they experienced these financial constraints as well as the challenges facing IT departments going forward.
Higher education institutions that were hit the hardest
According to recent research from EDUCAUSE, IT budgets have decreased at almost two-thirds (63%) of the colleges and universities surveyed. Only about one quarter (26%) of respondents indicated that their budgets remained the same, while 11% reported increases. Overall, higher education IT budgets have decreased by five percent this year.
Some higher education institutions were hit harder than others. Large institutions (with 8,000-14,999 full-time employees) were more likely to see IT budget cuts (79% compared to 63% of all institutions), while only 30% of two-year colleges reported decreases in their IT budgets. Interestingly, very small higher education institutions — those with fewer than 2,000 full-time employees — registered the highest percentage of IT budget increases (33%).
Colleges and universities expect IT budgets to shrink even further. Fifty-three percent of respondents indicated that they anticipate additional changes in the IT budget before the end of the fiscal year. Within that figure, 43% expect to see more budget decreases while 10% believe they will receive increases. As one might assume, higher education IT budgets that have already taken a hit are more likely to see further cuts. Higher education institutions that have already allotted an IT budget increase, however, are more likely to boost it once more.
The state of higher education IT budgets
As IT budgets at many colleges and universities tighten, IT leaders are looking for smart ways to reduce expenditures without negatively impacting their staffing levels or the essential services they provide. The most popular cost-cutting measures include travel bans (86%), hiring freezes (77%), compensation level freezes (68%), professional development reductions (65%), and delays in planned work (50%).
Some IT departments are also renegotiating contracts or licensing agreements with vendors or investing in technologies that enable digital transformation. Twenty-four percent of respondents said they are considering digital transformation initiatives, perhaps because they identified opportunities for cost savings or have placed a higher priority on business continuity in light of their experiences during the pandemic.
So far, most IT leaders are avoiding drastic cost-cutting measures that they perceive as disruptive. These include pay cuts, benefit reductions, layoffs, retirement and other voluntary layoff incentives, furloughs, and consolidation of IT functions. Nearly half of them (47%) say they will not outsource IT services, indicating a strong preference to keep IT service delivery in house.
How IT budget cuts have affected IT services
Because IT departments have found creative ways to reduce expenditures without cutting too close to the bone, IT budget cuts have not yet had a broad impact on IT services at higher education institutions. Between 30% and 40% of the organizations surveyed say that they are not currently looking at eliminating services or programs or scaling back services or service levels.
This is understandable because, whatever their budget, all higher education institutions are confronting many of the same challenges that their counterparts in other sectors are grappling with, from ransomware attacks to figuring out how to choose a password manager that will protect student and faculty accounts both on and off campus. While institutions can take prudent financial steps, they cannot afford to cut beyond a certain point. That being said, 30% to 40% of colleges and universities also said that they are considering taking additional measures.
So far, in the cases where they are cutting costs, IT teams are most likely to target maintenance and renewal (35%), software licensing (30%), infrastructure elements like their data centers or network systems, and auxiliary systems (27%). By contrast, only two percent of them are considering reducing funding for their online learning systems and just five percent of them are re-evaluating their cloud costs. By and large, colleges and universities are still investing in the remote teaching and learning technologies that helped them continue their educational programming throughout the public health crisis.
Challenges facing higher education IT departments
The IT budget decisions that colleges and universities make now will have long-lasting effects. Many higher education IT departments expect a slowdown or reduction in staff, partly due to delays in compensation increases. This could lead to attrition over time, as IT professionals that were already paid well below what they could earn in other industries head elsewhere for more promising opportunities.
Over the long term, higher education institutions might even witness an IT brain drain that could adversely affect their ability to attract high quality IT talent at a moment when digital transformation is critical to their success. IT staff retention challenges could also accelerate the digital divide between higher education institutions themselves, as colleges and universities that have continued to invest in IT snap up talent from their counterparts with smaller IT budgets.
IT leaders also warn that while they can make cuts now without causing too much disruption, technical debt will gradually accrue. If it is not addressed in time, that tech debt will ultimately compromise IT quality and, like the IT brain drain, hamper higher education institutions' ability to innovate and remain competitive.
Higher education IT faces an inflection point
Colleges and universities have a consequential decision to make. Will they reduce their investment in IT, knowing that it was critical to their business continuity during the pandemic and will be essential to their future competitive prospects, or will they find creative ways to cut costs while still innovating the educational experience?
Some institutions are pushing forward with online learning improvements, expanding their investments in technologies that enable remote learning. Others are leveraging data analytics to achieve their desired goals, while some higher education institutions are looking at creative financial tactics to address the budget crunch. One thing is clear: the IT investments that higher education institutions make now will determine their course for years to come.
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