Paying the digital piper – buying computer systems
Kenneth C. Green
I bought my first electric typewriter when I entered graduate school. At the time, over 20 years ago, it was expensive – about $250. But it was also “state-of-the-art” technology for portable typewriters, with a carbon ribbon cartridge that gave my papers that oh-so-sharp look, as if the document had been produced on one of the expensive IBM Selectrics that were ubiquitous in university offices at the time. Shopping carefully, I confidently believed I had purchased the typewriter that would carry me though graduate school and well beyond.
My new typewriter performed exceptionally well for my master’s thesis and through the first years of my doctoral comes. But then, somewhere between the time the dissertation committee approved my proposal and the completion of the statistical analyses, I experienced word processing. Initially, it was word processing on an IBM mainframe computer that was cumbersome and arcane, but still a quantum leap forward over my typewriter. Not long afterward, it was word processing on microcomputers.
My relationship with my “state-of-the-art” typewriter – indeed with any typewriter – would never be the same. Like a growing number of academics and professionals in the early and mid-1980s, my writing and other work quickly became dependent on a desktop computer. The tool I had hoped would last for a decade was relegated to the closet, to emerge only on occasion for completing special forms.
The research institute where I worked during graduate school bought its first microcomputer, an Apple III, in 1981. I bought my first Macintosh in 1984. The Apple III, with printer, cost about $6,000; my first Mac, also with a printer but sold at campus discount, cost me about $1,800. My old typewriter still works, whereas the Apple III and my first Mac are long gone, replaced several times over by newer technologies that do far more and cost much less.
Adjusted for inflation, the $250 I spent for a typewriter in 1975 would today convert to about $1,000 – enough to purchase a low-end (but still very useful) Windows or Macintosh system. In nominal dollars, the cost of a reasonable multimedia computer system now runs about $2,000. But the money buys far more computer than it did a decade ago, let alone just two or three years ago – more memory, more hard-drive capacity, faster, more powerful processor chips, a fax/modem, plus a CD and bundled software.
The useful life of a $2,000 computer system bought today will be about 24-30 months; the useful life (in terms of market standards) of the software that comes bundled with that new computer is about 9-12 months. Technological obsolescence is a structural component of technology-driven change.
All this documents Moore’s Law, a fundamental axiom of the computer industry: product performance nearly doubles almost every 24 months, while price falls roughly by half. Computer manufacturers rush new products and technologies to market with a speed rivaled only by clothing companies that show new styles with the change of seasons. Trade magazines routinely criticize hot products launched just nine months earlier as “old and tired.” Software companies release “new, improved, greatly enhanced, and far-superior” versions of their products every 9-15 months.
Of course consumers have come to accept what we might call the “half-life/half-price” structure of the computer market. Buy it today as a hot new product and you pay a lot; buy it in six or nine months and it will cost much less.
In some ways buying a computer has become like buying a new book: pay top dollar for the hardcover and have it now or wait for the less-expensive soft-cover version. Thus, time is money – in both publishing and computing.
But buying a computer is also like buying a car: sticker price is not always the “out-the-door” price. Because buying a computer (at $2,000-$3,000) and a car (now averaging almost $20,000) involves real money, many consumers generally try to plan these purchases carefully. Some of us save some money in a cookie jar or special bank account. Then again, some of us also succumb to passion and rush out for that “gotta have” new computer (a multimedia system with a hot new chip and CD player) or new car (Volvo? Mustang? mini-van?) with a powerful (or thrifty) new engine and CD stereo.
In short, as individuals most of us generally pay attention to and anticipate costs. But what we recognize as consumers we have yet to institutionalize in the behavior of academic departments and institutions. Much of the computer purchasing done by colleges and universities is opportunistic: campuses tend to find money rather than reserve funds. Many institutions often resolve their computer purchasing problems on an ad hoc basis, frequently using year-end money.
Indeed, new data I collected for Campus Computing 1994: The USC National Survey of Desktop Computing in Higher Education reveal that only one-fifth of the nation’s colleges and universities have a capitalization or amortization plan for their computer purchases (Los Angeles: University of Southern California, 1994). About half acknowledge that they generally buy on a one-time budget allocation, while another 30 percent report that they are attempting to develop a plan to “acquire and retire” computers.
But even the one-third reporting “movement” toward a budgeting plan is deceiving; the USC data reveal surprisingly little change in that percentage over the past five years, despite the well-known need to replace computers every 2-3 years. Rather, it seems most institutions remain captive to a budget process that prevents seemingly rational financial planning.
Of course, part of the problem is structural: campuses routinely “ramp up” to resolve problems – form a committee, find some money, compromise on a decision, and then move on to the next problem. Alas, were it that simple. Technology is no longer a new phenomenon for colleges and universities: it is now a key component of the infrastructure, central (and increasingly essential) to the instructional activities and scholarly mission of all types of institutions and across all disciplines.
The movement toward the information/knowledge economy of the 21st century highlights the need for colleges and universities to invest in and maintain the technology resources needed by students and faculty, and by scientists and humanists. But we’re not going about it well – or right. Stated simply and directly, colleges, universities, and academic departments cannot build or maintain a technological infrastructure on year-end funds or “budget dust.”
All this points to a pressing need to change quickly at least two key components of institutional and departmental behavior. First and foremost, institutions really do need a technology plan. The “ramp-up” strategy reflected in ad hoc computer committees and short-term buying binges no longer works. And academic units, not just institutions, also need a technology plan: technology requirements are increasingly linked to departmental activities and to the resources departments need for instructional labs, computer classrooms, and curricula. The institutional and departmental plans, like other good plans, should articulate goals, identify priorities, and specify implementation strategies. These plans must include a financing component that addresses faculty needs, curriculum requirements, and replacement strategy. And these plans must be realistic, working plans that do more than occupy shelf space upon completion.
Second, many if not most campuses must change a key element of the standard budget model, which currently provides little or no incentive to save money or reserve funds. Too often “left-over” money reverts back to the central budget during the closing days of the fiscal year. Too often departments create short-term “reserves” by trading favors (e.g., “Buy this for me in April and I will buy that for you in August”). We need to recognize that this kind of fiscal model is broken and must be fixed – soon. A key element of the remedy must recognize the needs for departmental reserves and the replacement requirements imposed by technological innovation.
The changes in financial models outlined above represent imperatives, not options. Technology is the driving force for these changes, but not the only one. Colleges and universities have long needed a financial model that adequately addresses short-term (i.e., 3-5 year) capital costs for science labs, computing and technology, and other important, often expensive resources that have a short half-life, Sooner or later most institutions will have to amend their budget models to incorporate these changes. The wise will do it now.
Kenneth C. Green is professor-in-residence of higher education at the University of Southern California and director of the Technology, Teaching, and Scholarship Project at USC. His e-mail address is firstname.lastname@example.org. His 1986 Change article, “The New Computing in Higher Education,” coauthored with Steven W. Gilbert, was recently republished in The Best of Change – 25th Anniversary Issue, May/June 1994. The author retains the copyright for this article.
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