Gauging Technology Costs and Benefits

To make effective decisions, district leaders can turn to some new tools devised by the Consortium for School Networking by Rich Kaestner

Is your school district leveraging its technology effectively? Do the costs justify the benefits? What does your technology infrastructure cost in terms of money and time?

Unfortunately, few district administrators can answer these questions with any certainty. They don’t understand the real costs of developing and maintaining computer networks or the benefits of planned or proposed technology projects in measurable terms. For the most part, they base their technology decisions on their perception of the value of the technology.

Regardless of the role technology plays in a school district, district personnel should know the costs associated with technology, understand the consequences of technology purchases and be able to measure the benefits of technology so they can make more informed decisions.

However, determining costs and benefits of current technology or proposed projects is difficult because the value of technology for education is viewed differently than for businesses. For example, businesses use processes like Return on Investment and Net Present Value to project costs and benefits of proposed projects with an eye to increasing bottom-line or top-line dollars. In contrast, educators focus on addressing non-monetary goals and mandates such as improved student performance, equity and 21st century skills. And unlike businesses in the corporate world, public school districts must answer to constituent concerns over expenditures.

School district personnel can better understand current technology costs and more easily determine the value of proposed projects using a couple of valuable tools: Total Cost of Ownership and Value of Investment.

Calculating Costs
Total Cost of Ownership for technology is a method for determining all of the costs associated with implementing and maintaining computers and networks. Capturing all of the costs associated with a networked computer infrastructure can be difficult; assessing the most significant costs can be a reasonable endeavor. Once they determine TCO, administrators are in a better position to make decisions concerning overall efficiency and plans for the future.

The TCO methodology examines three major cost categories: annualized technology costs, direct labor and indirect labor:

• Annualized technology costs are the amortized costs of client desktop/laptop computers and devices, network equipment, servers, software, printers, supplies and external service providers.

• Direct labor costs are the district’s burdened costs for all personnel who have responsibility for buying, implementing, maintaining and managing the technology infrastructure. Those with part-time responsibility are counted for the portion of their time assigned. Teachers and other school staff who provide tech support as well as any outsourced services also should be included.

• Indirect labor costs reflect the time users spend in training and dealing with system and application issues that affect productivity. While indirect labor is not a line item in the budget, loss of productivity represents a real cost to the district.

Resulting TCO metrics such as per-client-computer costs, number of computers per support staff and number of students per available computer also can help measure and allocate resources for improved efficiency, improve the budgeting process and make more informed decisions concerning planned technology initiatives. A comparison to other similar districts or case studies can provide further insight.

Assessing Value
Total Cost of Ownership answers the question, “What is my technology infrastructure costing me?” Value of Investment answers the question, “Which way should we go?”

The VOI methodology:
• concisely explains the value of proposed initiatives by stating costs and benefits in measurable terms and relating the benefits to district goals and mandates;

• provides an approach for comparing the costs and benefits of two or more proposed projects that are vying for the same funds by comparing costs and scoring benefits of each project; and

• provides long-term project sustainability by reviewing actual achievement of projected benefits.

The VOI approach for evaluating proposed K-12 projects consists of six steps: projected cost, anticipated savings, projected benefits, risk, value determination and validation.

Projected Cost.Think of projected cost as the project TCO. To determine projected cost, consider all of the initial costs and ongoing costs. Initial costs include technology costs, implementation costs and user time in training costs. These costs should be amortized over the life of the project (usually the useful life of the hardware, not to exceed five years). Ongoing costs include any leasing, direct labor support, ongoing training and indirect labor costs.

Anticipated Savings. Any savings realized by implementing technology can be directed toward the mission of educating children. Even projects that focus on student learning carry the potential for saving money or increasing revenue. For example, districts that have implemented one-to-one student computing projects have realized savings in teacher time and supplies through the use of electronic assignments, turn-in and feedback. The one-to-one initiative also can improve student attendance and pull in students from private schools or home-schooled students for increased revenue.

Lowering overall TCO decreases direct expenditures or provides tools to enhance staff efficiencies. For instance, investing in a systematized refresh cycle for keeping technology current can save support and end user time. Integrating administrative systems to automatically provide required or desired reporting may deter the cost of hiring another administrative employee.

Projected Benefits. Since education goals such as improved student achievement can’t be measured in terms of monetary savings, administrators can use a scoring model to evaluate projects competing for the same funding, i.e., to compare projects to determine best value and to clarify in measurable terms the reasons for undertaking a project.

First, list the district’s mission, goals, mandates and any other requirements. Many schools or districts have a formal statement or list of mission statements such as, “Provide an equal learning opportunity for all students” or “Develop life-long learners.”

Next, state the project benefits in terms of measurable indicators of achievement. Rather than, “We plan to use this technology to enhance student achievement in the elementary school,” say, “We anticipate use of this technology in our 3rd and 4th grade math labs will enable us to increase our state standardized math scores from the state norm of 58 to an above-average 63.” Now you have a specific reason for the expenditure as well as a goal against which to measure the success of the initiative.

Finally, determine the impact of proposed projects on the district’s stated goals or mandates. This is certainly a subjective process, best performed by a committee of people from computer services, end-user beneficiaries and district administrators. But, when the process is complete, you can make informed choices when several projects are competing for the same funds and answer questions about why you made a decision about a particular project.

Risk. Although risk does not affect actual savings or qualitative project benefits, it does need to be assessed before taking on a technology project or when evaluating projects competing for the same funds. A good way to look at risk is to ask, “What is the probability that this project will be successful?” While there are strategies out there for assessing risks, a simple consensus is generally adequate.
Value Determination. If you have multiple projects (technology or not), you can now compare costs and scores side-by-side and make informed decisions concerning relative merit. You also can concisely state the anticipated costs and benefits in measurable terms.

Validation. Once you’ve implemented your technology project and allowed the time necessary for the projected benefits to become evident, it is time to go back and ask, “How did we do?” So often we implement projects and move on, never looking back. However, taking this last important step allows you to validate the success of the project from a cost-and-benefits perspective and to learn from the experience, discovering unanticipated benefits as well as challenges.

Alice Owen, executive director of technology in the Irving, Texas, Independent School District, said her district has financed much of its student laptop program with local school bonds, starting six years ago. “While we feel this program is successful and there continues to be great enthusiasm for the way we are transforming teaching and learning, we need to continue to articulate the benefits to our public in order to sustain community support,” she said.

Owen said the district has achieved its goals of providing access to all students and preparing them with technology literacy skills before they graduate from high school. In addition, a three-year study by an outside evaluator identified some side benefits of the project: (1) improved teacher skills, (2) fewer discipline incidents, and (3) improved student attitude toward school.

Differing Attitudes
Without a disciplined approach to measuring the value of technology, the perceived value becomes more a matter of attitude. The superintendent of one Oregon school district set a technology agenda early in his tenure when he realized the minor role technology played in his schools compared to the status it held at his former district in the technology-rich Silicon Valley.

“I was concerned about the lack of technology use in classrooms,” he said. “The first thing I did was implement a wireless network and start laying out plans to integrate technology into the curriculum.”

The superintendent in a nearby district said he wasn’t sure what the fuss is all about. “The use of technology with student learning is really over-hyped and I see little evidence of enhanced student learning through the use of computers, which are costly to purchase and support.”

Regardless of one’s view of the benefits of technology, understanding the costs and assessing the value of proposed projects is important — and takes work. Even with Total Cost of Ownership and Value of Investment methodologies and tools in place, projects need executive leadership and cross-departmental cooperation. TCO needs a focused data collection effort and cooperation from several departments; VOI requires cross-departmental agreement on benefits and risk.

The rewards of a TCO assessment are a better understanding of technology infrastructure and user costs (where you are), and the rewards of a disciplined approach to VOI are a concise understanding of projected benefits and informed decision making (where you are going).

Rich Kaestner is the director of the Total Cost of Ownership and Value of Investment Projects for the Consortium for School Networking, 1025 Vermont Ave., N.W., Suite 1010, Washington, DC 20005. E-mail: richk@alyrica.ne