Technology Costing Methodology in Higher Education

Introduction: Budget Complexity in Modern Universities

The modern university operates within an extremely complex paradigm, requiring a careful balance among student enrollment, staffing, procedures, stakeholder expectations, and budgets. Educational professionals today must recognize that fiscal responsibility is tightly bound to costs and expenditures, which have tended toward exponential increases over the last decade. This reality has created a condition of continual, multiple horizontal priorities in which even a simple schedule change or the replacement of broken equipment can have serious consequences for an organization's overall budget.

Moreover, modern education is a labor-intensive industry. Fiscal dollars spent on human resource management constitute a large portion of any institution's budget, and staff salaries and related expenses represent a significant share of that spending. Each employee hour that is improperly managed can cost upwards of $80–$150 when the full scope of time, training, taxes, and delays is considered. Consider an organization with only 25 departments in which each department makes this type of error just once per week: the cumulative figure would quickly exceed $150,000 per year — the result of only a minimal mistake, with no positive effect on individual clients (McCarthy, J., et al., 2008).

Technology Costing Methodology Explained

An interview was conducted in early October 2013 with the Assistant Controller of a university, a professional who has held that position for four years and holds a BA in Accounting and an MBA in fiscal management. She noted that her background in managerial accounting has, in many ways, proven inadequate for the challenges faced by modern institutions in the twenty-first century. Managerial accounting has evolved within the modern business paradigm, with several methods now in use depending on the type of organization and the challenges it faces. The core purpose of managerial accounting is to use information to make informed business decisions that will positively and proactively impact the organization. Methods include Activity-Based Accounting, Lean Accounting, Resource Consumption Accounting, and Throughput Accounting.

While she was somewhat familiar with Technology Costing Methodology (TCM), the university had not yet adopted it as part of standard operating procedures or best-practice frameworks at the time of the interview (Jones R., 2013).

Traditional accounting methods are over five decades old and have changed little during that time. Because modern organizations and the resources they use are substantially different from those of the past, new methods that examine how resources are managed have become necessary. Technology Costing Methodology, for instance, focuses on how an organization uses technology and on ways to deploy that technology more efficiently. This method models technology use at a fundamental level and then identifies opportunities for greater efficiency — for example, in the cost of instruction, in resource use per student, or in comparisons between a single professor and a group of teaching assistants leading large classes (Howard, R., et al., 2008).

TCM Compared to Traditional Accounting Methods

TCM is a simulation method that compares the costs of two or more approaches to institutional expansion and efficiency — for example, more face-to-face classes versus more distance education classes (Moore, M., et al., eds., 2008). In this sense, TCM is not simply a set of accounting protocols used for cost/benefit analysis; it is more accurately described as a decision-making tool that creates models examining different instructional delivery approaches and the long-term benefits those approaches may yield for academic institutions (Jones D., 2004).

The university under consideration offers both undergraduate and graduate programs. For several years, off-campus students have been provided access to field-based and online programs through the Department of Continuing Education in conjunction with faculty participation across various programs. One program under review was the Library Media Endorsement Program, along with concurrent faculty involvement, prompted by the question of whether online or in-person delivery was more efficient, better served students' educational needs, and had a more favorable impact on faculty workload. Specifically, the question addressed whether online delivery was more cost-effective over the long run and how it affected faculty activities such as driving to remote locations for course delivery and advising, compared with using the internet to deliver the entire academic experience.

Conclusion: Strategic Value of TCM

In general, technology-mediated delivery is more expensive than face-to-face instruction, largely due to resource allocation, faculty time and focus, and scale. The smaller the course enrollment, the more cost-effective it may be to develop an online version — particularly for courses with fewer than 25 students. Once the infrastructure for appropriate electronic delivery is established, however, many courses could be substantially transitioned to electronic delivery based on a TCM model. TCM's greatest value, therefore, lies not in its function as a traditional accounting tool but in its role as a strategic decision-making framework that helps institutions align instructional delivery choices with both financial sustainability and institutional mission.