ICT Investment in the face of austerity

Patrick Truss finds out how an alternative finance programme can help schools maintain high standards but keep costs down

ICT literacy is recognised as being critical to our long-term economic prospects, but with budgets under strain, many schools are cutting back on technology spending. 

Recent analysis by leading ICT finance provider Syscap has found that the number of secondary schools spending nothing on IT equipment has more than doubled over the last year, while the number spending less than £10 per pupil has also risen by 5%. With ICT budgets under this kind of pressure, some schools are looking towards a flexible finance and leasing option as they try to maintain their investment in IT.

“We’re using flexible finance because we think it offers us a better business case for financing the school rather than paying for everything in year one,” said Chris Robinson, principal of John Ferneley College Academy Trust. Previously the school had always tended to buy assets outright, but with a flexible finance plan in place, they’re now able to lease the kit and spread the costs of IT spending over a longer period. “If we can spread the costs of our purchases over three years it enables us to manage our cashflow better,” continued Robinson.

Flexible finance

The school has acquired a range of IT devices using this form of financing, including desktop PCs, iPads and eReaders, which are used across the entire curriculum. This is a far cry from as recently as 20 years ago, when many schools had relatively outdated IT equipment. 

“Schools certainly had technology, but they were maybe 10-year-old BBC models, or Acorn computers,” said Phillip White, Syscap’s CEO. There has been a significant change in attitude towards IT in education since; motivated in part by recognition that technological literacy is essential to our long-term economic prospects.

“Technology is not going away. Its adoption, its sophistication, is increasing daily. We are living in a technology-driven age,” stressed White. “However, at the moment there is insufficient public sector funding to provide high-quality IT to all schools. Therefore, if there’s insufficient public sector funding, then you need to find an alternative way to fund school IT investment. As technology evolves, the funding mechanisms needed to support technology investment have to evolve as well to reflect the ever-changing nature of demand and the wider financial climate.”

This is very much an ongoing process, as the emergence of new technology can make earlier models quickly seem outdated, making it difficult to predict future IT costs. While no company can insulate anybody from the effects of technological progress, White said that schools can gain some predictability over their IT budgets. “If you take 30 PCs, what we want to be able to do is to say: ‘OK, you’ve got 36 equal payments of X, which breaks down to a cost per month, per device.’ Now, if a school wants to expand, to add another 10 devices, then they know the cost is going to grow proportionately,” he outlined.

Technology has to closely match the school’s educational needs, which can vary according to their status and the particular subjects they specialise in. White says his company takes a collaborative approach when working with a school. “Irrespective of the market we’re operating in, our view is that we have to come up with a financial solution that augments rather than hinders a school’s approach to ICT investment – it’s not a one-off event. We invest time up–front to understand the school’s strategy, its vision, its ICT strategy, and we try to create something that reflects that,” he explained.

In the case of John Ferneley College, the school is committed to maintaining their investment in ICT, yet also aims to make as efficient use of it as possible. “Many schools are looking towards giving every pupil an iPad. We looked at that but we decided not to do it because we don’t believe the evidence is there yet that iPads by themselves really improve the level of education,” said Robinson.

New strategy

The school’s financing deal with Syscap has a level of flexibility which allows them to adapt to changing circumstances. The school can invest in new technology and upgrade their equipment within the framework of the agreement. “We give schools the ability to add on and upgrade technology during the course of the agreement, as well as the ability to swap it out as demands within the school change. We will also assist with the disposal at the end of it, to ensure that schools are compliant,” explained White.

This approach is driven by lifecycle management, so that a school can predict their likely IT costs more accurately, while still maximising their investment in technology through innovative use of their recurring budgets. “The useful life of a laptop is effectively three years. With flexible finance we can pay for it over those three years rather than having to pay for it all in the first year,” added Robinson. “In an ideal world you would replace a third of your IT fleet every year, so you’re always keeping up-to-date as kit ages.”

This may vary according to the type of kit and the frequency of usage, an important consideration in terms of flexible financing. A school may want to invest in tablets and laptops for pupils over a much shorter timeframe than the servers that run the school network for example, while some departments may require particularly sophisticated equipment. “In a design environment you might have a one-year scheme for devices, because they have to be cutting-edge, and state-of-the art,” said White. Technology may be used to run the school or to deliver the curriculum; White believes that Syscap’s experience in these areas is invaluable in helping schools identify priority areas for investment and getting the right deal. “We’re experienced in a lot of the challenges that schools face and we deal with a broad spectrum of schools. That’s really good for those schools, because we can share their experiences, while still respecting their confidentiality,” he explained.

The new curriculum

Recent changes to the IT curriculum further heighten the importance of up-to-date technology in schools.
The government plans to place greater emphasis on the technical side of ICT, such as software development and programming, rather than just the understanding and use of it. Robinson says that in some cases schools will require new systems. “I think some schools will have to invest in upgrading or purchasing new kit,” he outlined.
With public finances still under pressure, this points to a continuing need for third-party investment in school IT.

“I think the adoption of one-to-one schemes is going to grow over the next few years,” said White. “Although the economy is recovering, it’s very slow and we’re not going to see a return to material surplus funds that schools can go and deploy in upgrading all their technology. So I do think that, whichever party is in power after the next election, there is a likelihood they’re going to have to leverage third-party investment for school IT.”  

Schools themselves are also becoming more business-oriented in the way they operate, in the sense that they are looking to work more efficiently and gain more control over their own budgets. Recent reforms have removed Academy schools from local authority control, giving them freedom to control expenditure, and Robinson believes flexible finance is an important tool in the management of their ICT budget. “When you bring business skills into it, you’re looking at how you can make your cash work better for you. I think flexible finance is one of the ways we can do that,” he said.

While White agreed that flexible finance has an important role to play in IT investment, he stresses that it is not a catch-all solution. “This is about prudent adoption, ensuring that IT investment adheres to budgets, that the school is working within the appropriate regulatory regime and that they went through the appropriate authorisation process,” he continued. “This is about strategic alignment and understanding the school’s vision. We identify areas where we can add value and help schools achieve their learning objectives.”