Rightsizing Cloud and HPC When Funding Disappears
“I think the big thing is to know what you’re trying to deliver to the mission,” says Rathje. “And then have the right set of tools — not three sets of tools. That’s part one. Part two is to architect those tools in a way that gives the university the capability to improve its outcomes and perhaps generate revenue through scale. The tools could also be used to maybe reduce cost, friction and waste within the organization.”
University IT leaders are now charged with identifying which high-computing environments will be most impacted by the lack of grant support — while cloud spending continues to outpace university tuition growth — and examining how turning to FinOps might help them merge research metadata with fiscal data to create centralized governance models.
Some universities are already experiencing the impact of rightsizing. Johns Hopkins University has historically been the largest recipient of federal research funding among U.S. universities. The Baltimore institution laid off more than 100 employees in June after its federal research portfolio dropped by more than $500 million last year, as “these downward trends have continued unabated” into 2026, President Ron Daniels said in a message to the university community.
“As our federal research portfolio shrinks, the infrastructure around it must change in parallel,” a university spokesperson shared with press.
EXPLORE: Data-driven spending decisions improve efficiency for higher ed IT teams.
This pattern is playing out at research institutions across the country. In a May video address, Massachusetts Institute of Technology President Sally Kornbluth said the funding picture is still concerning even after Congress partially restored agency budgets.
“Compared to this time last year, MIT has experienced a decline in campus research activity funded by federal awards of more than 20%,” says Kornbluth.
Considering all funding sources, sponsored research activity at MIT is now 10% less than a year ago, and new graduate student enrollments (outside of the institution’s business school and an engineering program) are down by nearly 20% for next year.
Managed Services as a Budget Bridge
“Managed services could become a very foundational part of an organization’s response, allowing them to focus on best values for their labor investments,” says Rathje. “Rather than having a team member for everything that they do, maybe they focus their teams on the real value-add items, and they look to a managed service to cover other things and do some cost predictability around that.”
Modernization is still top of mind with most higher ed IT leaders, with 92% of respondents to a 2025 EDUCAUSE QuickPoll reporting that their institution is either considering modernization or has already modernized some systems.
“However, the path to data modernization in higher education is complex, with only 1% of respondents indicating they feel their institution has fully modernized its data management and strategy,” the report states.
One option when roles tied to grants disappear: Universities can turn to creative solutions with managed services and their vendors to keep research systems running while rebuilding internal capacity.
DISCOVER: Cost-effective risk management approaches for your higher ed IT team.
“Forward-looking CIO and senior IT leaders who are making these purchasing decisions are looking at the purchasing process to implement things like staff augmentation, inclusive of a training component,” says Barajas-Murphy. “From the conversations I’m seeing, CIOs increasingly are looking at procurement and purchasing and considering such questions as, how can we nest-in training?”
Some CIOs are already looking at how to embed these solutions into their procurement processes through staff augmentation.
The dual-budget pressure of the OSTP announcement, along with enrollment declines and the state funding picture, isn’t a storm to wait out. The federal funding model is changing structurally, and the higher ed institutions that get ahead of it will be the ones who include IT leadership at the table as part of the solution to help streamline overall institutional operations and to act as an income and optimization multiplier.
“IT plays a big part, but it’s not just about IT being more efficient costwise,” says Rathje. “IT needs to be in a position to help the rest of the university generate more revenue and be more efficient with costs.”