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Technology Dissonance: The Digital Transformation in the Face of Budget Cuts

As postsecondary institutions are still reeling from the pandemic’s disruptions—and its significant economic impacts—they would do well to study the business approach to integrating rapidly shifting technologies.

The global pandemic has upended every sector of our global economy, including higher education. In ways that were not even contemplated a few months ago, institutions and organizations of all types are fundamentally re-evaluating their business models and financial structures to ensure their viability.

Though for all that COVID-19 has created, there was already a global movement underway creating massive disruption to the companies and organizations underpinning our society. Digital transformation arrived long before 2020, and organizations of all types have been leveraging cutting-edge technologies to improve everything that they do: customer experience, operations, manufacturing, employee relations, and–yes–education and training.

Colleges and universities have not been immune to digital transformation efforts–online learning has been around for over 20 years–but the imperative to change the approach to teaching, learning and operating a university have no doubt taken on new urgency over the last several months as universities must themselves learn how to market, recruit, and teach without the benefit of traditional (read face-to-face) processes. 

While everyone acknowledges that there’s no going back to “normal,” there appear to be some very significant cracks forming between how higher education is responding to the digital transformation imperative as compared to other industry sectors.

Despite the economic downturn and budget challenges, 70% of business leaders surveyed plan to sustain or increase investment in digital transformation at their companies. In fact, 26% of company IT budgets grew “dramatically” as companies seek to accelerate their transformation.

Contrast that with the latest news from higher ed IT departments almost two-thirds of IT leaders surveyed reported an IT budget decrease for this academic year. The median budget cut has been 10%, and only 11% of leaders say their budget has actually increased. Further, 43% of respondents expect further decreases this year. Can you say cognitive dissonance?  At a time when demands for technology are growing exponentially, and when the entire world is acknowledging its increased importance and making appropriate investments, higher ed is going in the entirely opposite direction.  

While one can certainly sympathize with the incredible budget constraints that universities are operating under, the impact of these short-sighted decisions are far-reaching and will affect university leaders’ ability to further transform their organizations for long-term sustainability. To offer just a few tangible examples of the impact:

The new (test optional) world order

Over 1,630 universities are already test optional for 2021, with more announcing new admissions criteria every day. Of course, this will change the way students apply to schools, but schools themselves face even more disruption because the way they recruit students is changing rapidly. For decades, universities have purchased lists of student names from the major test providers and flooded their preferred markets, schools and students with mostly snail mail–letters, brochures and the like. With tests becoming less important to students and families, universities must rethink their entire marketing plans for recruitment, relying on robust, web-based experiences, internet search, digital and social media. All of these commonplace digital technologies are exponentially increasing in importance. It is hard to see how schools fill their future classes without more–not less–investment in digital technologies and services.

Optimizing course and degree programs for future success

Every week, you hear of more universities doing what was once unthinkable: eliminating whole degree programs and cutting faculty positions. Much in the way airlines have responded to COVID by eliminating flights, routes and laying off employees while still satisfying a majority of flyers, universities must figure out how to optimize their degree programs, courses, classrooms and instructors to serve the most students in the most effective way possible. One of the largest digital transformation expenditures in the private sector is for data analysis and analytics: technology and people to analyze every piece of the business and determine how to best operate for maximum customer satisfaction at minimum expense. Again, it is hard to see how schools effectively traverse through these very difficult decisions that are central to their mission as an educational institution without significantly more investment in analytics.

Formulating the new student experience

In the past ten years–in a race to attract more students–universities have spent gobs of money on new facilities and concierge services:  gyms, water parks, fancy hotel-like dorms, and meal services that rival great restaurants. Literally overnight, the pandemic has decimated the value of many of these facilities to students, leaving universities reeling with further loss of revenue, empty buildings and long food lines for those still living on campus. The entire student experience is undergoing a huge shift, and new technologies are going to be crucial to ensure that universities make the right decisions with the limited resources that they have. Further, students will demand more–and more elegant–technology solutions that universities have largely not considered to this point:  food delivery, lower-density common spaces, customized experiences based on their own risk tolerance. Virtually all of these challenges will require loads of computing power, new technology applications and bandwidth. Hard to see how this jibes to a smaller technology budget.

No doubt, our world is undergoing a tremendous transformation driven by technology. Each of us–as citizens and consumers–have dramatically increased our expectations for how we engage with institutions–and one another–enabled by the latest technological innovations.  Universities are not immune to this transformation, or the expectations that today’s–and tomorrow’s–students have for their educational experiences. While higher education institutions are indeed facing extraordinarily difficult financial conditions today and an uncertain future for the next several years, schools should take a page from their corporate brethren on how to cope with these enormous challenges.

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