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Budgeting for ICT in Schools
The ICT Iceberg
When budgeting for ICT you must consider more than just the cost of buying the computers. The TCO (Total Cost of Ownership) involved in using ICT has been likened to an iceberg. This can be illustrated as in the diagram below.
The obvious cost:
- Equipment PurchaseThe hidden costs:
The hidden costs:
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It can be seen from this that there are a lot of 'hidden' costs in using ICT. In reality there is no such thing as hidden costs - people are either not aware of them or simply try to ignore them! It is extremely important that you take note of these costs and budget for them.
Costs can be separated into 2 areas:
Capital Costs (including):
- Servers
- PCs
- Laptops
- Network equipment – cabling, switches, cabinets, etc.
- Peripherals – printers, scanners, etc
- Software – operating system, system management and applications
Operating Costs (which can be further broken down into):
- Maintenance and Support
- Maintenance and support contracts
- Maintenance contingency – spare or replacement parts, ad-hoc call-out charges, etc. (unless in maintenance contract)
- Professional Services – consultancy, etc.
- Training
- Staff
- Senior Management Team time
- ICT Coordinator (curriculum)
- ICT/Network Manager
- Technicians
- Classroom support
- Other recurrent costs
- Consumables
- Internet charges – line rental/lease and ISP charges
- Subscription services – on Internet, CDs, etc
Sample TCO Figures
A number of reports have been produced and give the following rough breakdown of costs for ICT:
Staff 40%
Capital 40%
Support and Maintenance 10%
Recurrent 10%
The major point to note is that capital costs were only 40% of TCO and PCs were typically around only 20% of TCO – In other words, if you buy a PC, you should expect to pay as much again in associated capital costs (software, network equipment, peripherals, etc) and 5 times the cost of the PC in total over the lifetime of the PC.
As most schools already have a network/computers in place, the capital costs you should be looking at are replacement and development costs. Replacement costs are those costs that will be incurred to replace current equipment to continue with the same level of provision, e.g. replace current computers, but keep overall number the same. Development costs are those extra capital costs that will be incurred to improve your provision, e.g. buying extra computers on top of those already in place.
Effect of Capital costs on TCO
Paying an extra 10% for quality PCs increases TCO by about 2%, but will reduce support and maintenance costs as service level is improved. Put another way, saving 10% on costs of PC, by getting low spec/obsolete PCs, reduces TCO only by about 2%, but increased support and maintenance costs is likely to far outweigh these savings, therefore don't go for short term savings on capital outlay (this is false economy).
Effect of Lifetime of Elements of the IT Infrastructure
The lifespan of equipment can have significant impact on the TCO. Analysis reinforces the view that investment in technology should have a primary objective of being 'future proof ' – for example buying higher spec computers. The difference between a write-down period of three or six years for network servers, or five or ten years for the cabling infrastructure, can be significant.
For example, extending the useful life, and therefore write-down period, of all assets by just 25%, will reduce the annualised capital cost, and this in turn reduces the TCO by up to 10%. Compare this to the savings of around 2-4% gained by procurement of the cheapest possible PCs.
Using Management Tools
ICT management tools allow support staff to do routine operational tasks efficiently and easily, sometimes even remotely (that is when not actually on-site – via the internet for example). Having such tools reduces the amount of support time required and when you consider support costs can be from £10 (in-house technician) to over £30 per hour (call-out charge) it does not take long to save considerable amounts and recuperate the initial outlay on the management software. Effective management tools combined with good quality staff would result in reduced numbers of staff with the corresponding reduction in staffing costs. However, having said that, there is always the need to balance this with having an adequate number of staff for the size and type of infrastructure in the establishment. Too few staff, however good, will result in poor support as they become too stretched, resulting in a poor service and corresponding poor achievement (students) or productivity (admin staff).
Achieving True Low Cost of Ownership
One report concludes:
'Unfortunately, the data about TCO does not identify an instant panacea - there is no single item that can be removed to dramatically reduce the TCO. '
Which isn't very helpful!
Recommendations:
- Check your ICT provision and requirements regularly and budget appropriately
- When calculating ICT budgets work on 3-5 year plans
- Look at the impact on TCO when purchasing new equipment, not just the capital costs – don't forget operating cost increases in years following new purchases.
- Ensure you have adequate numbers of technical staff – typical business ratios (technical staff:computers) are between 1:50 and 1:70. A figure to aim for in schools is less than 1:100 initially with a long-term aim to get to business ratios.
- Alternatively (or in addition) ensure you have appropriate support and maintenance contracts
- Use appropriately skilled staff – neither over- nor under-qualified.
- Provide management tools for routine operational tasks to reduce support costs.
- Invest in appropriate ICT training for ALL staff
- Take 'expert' advice if you are unsure about any ICT requirements
How To Work Out Your ICT Budget Requirement
There are two spreadsheets available to help you with budgeting for ICT, a primary school version and a secondary school version. Click on the link on the left to download a copy.
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