TCO Checklist:
Software Costs and How to Control Them

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In business settings, the cost of software can sometimes equal the cost of hardware, and generally runs about one-fourth to one-fifth of total hardware costs. In the school environment, however, it is proportionately much less, usually representing 10 percent or less of the total budget. In a RAND Corp. study of eight pioneering high-tech schools, software costs ranged from 4 to 10 percent of their technology budgets, and averaged about 8 percent across the schools. None had purchased site licenses for more than five or six "tool-based" programs (and the average was closer to three). In addition, the authors reported, schools had saved money through economies of scale by building large libraries of CD-ROM and videodisc products.

A projection of school technology costs developed by McKinsey & Company, Inc. calculated that "content" in the form of software and online subscription fees would represent 14 percent of the total cost of its "classroom" model and 20 percent of the cost of its less expensive "computer lab" model. Over time, it said, the share of the pie taken up by content would grow to about 21 percent of the classroom model's annual budget, and 26 percent of the computer lab model.

Many calculations of the costs of networking schools provide only for basic application software, not the costs of software that could be considered more purely instructional or part of the budget for curriculum materials. Note, too, that some cost models were developed before schools began developing their own direct connections to the Internet, saving online subscription fees, if not telecommunications costs, and before they began making substantial use of the resources of the World Wide Web, many of which are available for free.

In the 1999-2000 school year, the educational marketing company Quality Education Data projected that the average school would spend $11.47 per student on instructional software and $7.37 on Internet services, but those figure, of course, is an average of both technologically advanced schools and those that have not yet made a substantial technological investment.

Limiting the diversity of software titles that a district uses is one way to help control costs, by limiting the number of staff that will be needed to support the applications and the amount of training staff members will need. However, this may entail tradeoffs in terms of meeting users' needs for particular kinds of applications or instructional offerings.

Many businesses also find that the Total Cost of Ownership can be controlled if software packages are upgraded at the same time across the company, and if employees are encouraged to use the same version of the software if they work at home. Money can be saved, too, when the installation and upgrading of software can be controlled centrally over the network.

The CEO Forum on Digital Content

Having in earlier studies established the need for hardware and connectivity as well as staff development, the CEO Forum in its third year addressed the issue of digital content--and discovered that focus on content alone would not advance learning nor technological skills in the nation's schools. So the forum expanded its focus to "digital learning," which it defined as "the educational approach that integrates technology, connectivity and human resources" and ultimately leads to the creation of optimal learning environments. In that environment, students learn problem solving and technology from projects which encourage research, communication, and collaboration.

Those projects are created by teachers who utilize the full range of digital content resources: textbooks, film, worksheets, video, e-mail, CD-ROMs, computer simulations, databases, audio and streamed discussions--materials available in both traditional and computer-based curricula. Citing several "best practices," the report illustrated the potential of such digital-based approaches to satisfy the system-wide demands for accountability as well as individual learner needs for tailored instruction. Furthermore, some of the cited practices underscore the promise of digital learning to equalize educational opportunity, as in the lowering of the drop-out rate among migrant farmworker families in Texas.

The shift to digital learning, however, requires schools to be committed to a true integration. Results of a recent Quality Education Data survey indicate that by the year 2000, hardware and connectivity have been well established in a majority of schools: 95 percent of public schools and 72 percent of classrooms have Internet access; the ratio of students to computers has been halved in just five years, from 10:1 in 1995-96 to 5:1 in 1998-99. But studies by the National Center for Education Statistics indicate that although 53 percent of teachers felt "somewhat prepared" and 23 percent felt "well prepared" to use computers or the Internet at school, only 39 percent used those resources to create instructional materials and 66 percent use the Internet for classroom instruction; most (86 percent) teachers said they used the Internet for e-mail and locating curricular materials. Most schools, concludes the CEO Forum, are in the third phase of technology integration, Readjustment, and are thus poised to move to the fourth and final phase, in which technologically-savvy schools create new learning models and improve academic performance.

Requisite for that move is an inventory of digital content which is then clearly linked to specific performance standards. Increased investment in digital content will mean close examination of budgets, pressure on the content industry to modify and improve products, and locating resources (especially governmental) and models for the integrated curriculum.