You can cut a lot of fat from University administrative budgets. Just as an example outsource email. There are plenty of reasons this does not happen, but mostly it's a question of politics not cost savings.
A lot of universities already do outsource email. Some University of California campuses use Google, for example. The big growth in administrative expense isn't really the IT department, though, but more on the high end, the vast array of Deans and Associate Deans and Office of the Provost, with their staff and consultants and travel and such.
