Transcript Making customer-related overheads visible

UFS
Universities Finance Seminars
BRITISH UNIVERSITIES FINANCE DIRECTORS GROUP
Pricing Decisions, Marketing & Contribution Analysis
Brian Plowman
Director
Develin & Partners, Ash House, Fairfield Avenue,
Staines, Middlesex TW18 4AB, UK
Tel: 01784 224207 [email protected]
www.develin.co.uk
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Develin & Partners
Approaches we implement:
 Activity Based Management
 Business Process Management
 Value Based Management
 Performance Measurement
 Change Management
 Information Systems Strategy
 Overhead Effectiveness
 Organisation Strategy
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Typical past clients: (Broad spectrum)
Abbey Life Assurance
ABB Kent Meters
ACCO Europe
AEA Technology (Harwell)
Allied Domecq
Allied Industrial Services
Alstom Gas Turbines
Amoco
Anglia Polytechnic University
Aspen Business Comms
Automobile Association
Avesta Sheffield
Bahrain Telecom
Bank of Ireland Mortgages
Banque Industrie Franaise
BARMAC
BBC Production
BBC World Service
BBC Worldwide
Benfield Motors
BET
Boehringer Mannheim Limited
Boots International Healthcare
Boots the Chemist
Boots Store Planning
BP Chemicals
BP Exploration
BP Oil
BAe Systems and Equipment
British Aviation Insurance
British Rail
British Telecom
BT Conferencing
BT Mobile
BTR Graphics
Building Research Establishment
CCH Editions
Cendant Business Answers
Century Group
Cerberus
Chalmers & Mitchell
Charities Aid Foundation
Charter Consolidated
CI Bakeries
CIC Banque (Paris)
CLS Packaging
Clyde Shipping
Comag
Co-operative Bank
Co-operative Retail Services
Copystatic Systems
Costain
Department of the Environment,
Transport and the Regions
DHL Worldwide
Dominic Group
East Midlands Electricity
Enron
Equifax
Estonian Railways
Factory Mutual International
Fisons Pharmaceuticals
Fleet Air Arm
Forth River Purification Board
Franklin Mint
Glostal
Granada Hospitality Services
Granville
Grattan
Guardian Newspapers
Guardian Royal Exchange
Gunstones Bakery
Hazlewood Foods
H P Bulmer
Hepworth Refractories
Hollow Extrusions
Holt Jackson Book Company
How Engineering Services
Hydrographic Office
Ilford Films
Jersey Milk
Kao Infosystems (UK)
Kleinwort Benson
Kuwait Investment Office
Kyle Stewart Limited
Lab of the Govnt Chemist
Le Riche Group
Leeds Permanent Bldg Society
LIFFE
Livpl Victoria Friendly Society
Lloyds Bowmaker
Lombard North Central
London Electricity
Lucas Aftermarket Operations
Lucas Automotive Electronics
Lyons Tetley
Meggitt
Mercantile Credit
Metal Castings
Ministry of Defence
Muraspec
Murray Lawrence
National Savings
National Starch
NatWest Bank
Nokia Telecomms
NORWEB
Ohmeda Limited
Pearl Assurance
Perot Systems
Pilkington Barnes Hind
Pro-Bel
Prudential Assurance
Prudential Home
Service
Prudential Portfolio
Pyroban
Quadrant
Rhone Poulenc Rorer
Ross Breeders
Rover Group
Royal Automobile Club
Royal Bank of Scotland
RTZ Pillar
Saudi International
Bank
Schroder Unit Trusts
Scottish Courage
Scottish Environment
PA
Severn Trent Systems
SG Hambros
Simpson Lawrence
Sir William Halcrow
SmithKline Beecham
South West Water
ST Microelectronics
Typical clients in the HE/FE sector:
• University of Leeds
• University of Manchester
• University of Surrey
• City University
• Anglia Polytechnic University
• Buckinghamshire Chilterns University College
• Edinburgh Telford College
Staveley Industries
Stryker (Howmedica
International)
Sun Alliance Group
Sun Life Assurance
Syntegra
Tate & Lyle Sugars
Texaco
The Mercers Company
The Post Office
Toad Innovations
UK Paper
United Utilities
University of Leeds
University of Manchester
University of Surrey
Vertex Data Science
WH Smith
Wace Group
Waitrose
Walter Alexander
Wella
Whitbread
Wholesale Fittings
Yellow Pages
Yorkshire Electricity
Zeneca Pharma
Zurich Insurance
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HE is big business
Income UK 2001/02
Endowment & investment income
Other income
Research grants & Contracts
Tuition fees, grants, contracts
Funding Council grants
-
1.0
2.0
3.0
4.0
Amount £bns
5.0
6.0
Key messages and actions that follow
Pricing Guidelines
JCPSG Publications •Pricing Toolkit
•Developing a Pricing Strategy
Treasury letter (February 2004)- see TRAC Volume 111
OST Guidance on the Pricing of Research Projects
(October 2004) - see OST website
http://www.ost.gov.uk/whats_new.htm (17 November
2004)
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1. An example of a pricing policy which an HEI might adopt
is one that aims to set prices that cover actual costs and
make a surplus on any activity, the level of surplus
reflecting what the market can bear.
2. It is recognised that an institution may not be in control
of prices for certain services, since most HEIs operate in
a variety of markets with often very different constraints
in pricing
Prices to be paid by Research Councils - see OST
website http://www.ost.gov.uk/whats_new.htm (6
January 2005)
Time table for the Operation of Pricing based upon
Full Economic Cost Methods (sent to VCs in March
2005) - to be included on
www.jcpsg.ac.uk/resources/letters.htm by 15 April
2005
1. The increased awareness of the costs of different activities and different units that has come about
as a result of the Transparency Review should enable institutions to have a much clearer view of
which areas are financially viable, and which are not.
2. The pricing strategy may need to address using the opportunity to review processes and seek
simplification.
High quality answers are needed
Contribution
Contribution analysis
analysis
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Key points
• Meaningful information. Not buried by data.
•
•
•
•
•
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Strategy is about Positioning and Capability
Capability
• Methods
• Processes
• Organisation
• Technology
• Skills
• Culture
Where
you want
to be
Where
you
are
now
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• Overseas student fees
• Non-publicly funded courses
• Franchised programmes
• Research and consultancy
• Professional courses
• Major teaching contracts
• Short courses
• Workplace nurseries
• Residences, catering, conferences,
• Bars and shops
• Printing and publishing
• Theatre performances
• Room and equipment hire
Positioning
• Products/services
• Customer Needs
• Competitors
• Regulatory framework
• Environment
• Shareholders
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The journey
Where you
want to be
Capability
Culture Change
Business Process
Re-engineering
Reduce process
costs, improve
service
Is everyone
with us?
Performance Measurement
Where are we
on the journey?
Change Management
No pitfalls on
the journey
Where you
are now
Activity Based Management
Product & Customer profitability
Portfolio mix, pricing
Positioning
Key points
• Meaningful information. Not buried by data.
• Need to work on both axes: Positioning & Capability
•
•
•
•
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Activities: The fundamental building blocks
Costs *
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Resources
Ledger
Service levels *
Inputs
Make activities
happen
Outputs
Activities
Result of
activities
Cost driver
volumes *
Methods
Way things are
done
Unit costs *
* All these are measurable
Activities are the engine of change
Revenue
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Activities
Process effectiveness
Using Business Process Re-engineering
Costs Resources
Ledger
TRAC & fEC
using Activity Based Costing
Inputs
Make activities
happen
Outputs
Activities
Result of
activities
Cost driver
volumes
Methods
Way things are
done
Unit
costs
Key points
• Create meaningful information. Don’t get buried by data.
• Need to work on both axes: Positioning & Capability – plot the journey
• ‘Activities’: useful for TRAC, fEC and improving process effectiveness
•
•
•
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Activities vary for different reasons
Reduce costs:
By changing the method
Show excited
customer research
proposal
Core
Travel to
customer
Support
Enables core
activity
to take place
Adds value, meets
business and
customer needs
Reduce (increase)
costs:
Diversionary
Reduce costs:
By making an upstream
process improvement
..and by
Changing customer (&
supplier) behaviours
Adds cost, but no value caused by process failure
Explain to customer
why last project was
late, report had missing
sections and the invoice
was wrong
By changing the
level of service
internally &
externally and
identify risks
(benefits)
Process view more useful than functional view
Inputs
(eg
Student
shows
up for
Registrat
ion)
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Outputs
(eg Student
registered
and fees in
the bank)
Linked activities - with measurable inputs and outputs
Becoming price competitive (and/or fund growth plans)
C
C/S
C/D
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D
Outputs
Inputs
Typical
starting
point
51%
30%
19%
Overall less
and
rebalanced
Becomes
Key points
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• Create meaningful information. Don’t get buried by data.
• Need to work on both axes: Positioning & Capability – plot the journey
• ‘Activities’: useful for FEC and improving process effectiveness
• Reducing ‘diversionary costs’ funds all your improvements (case study later)
•
•
Basics of ABC modelling
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Resources (on the ledger)
Activities (found by analysis)
Outputs (meaningful entities/groups/etc)
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The purpose of ABC is to make this link
We know:
What resources
cost
People
Equipment
Travel
Materials
Buildings
etc
Resources
So we must find
out...
How much
activities cost
Selling
Manufacturing
Filing
Training
Paying suppliers
Planning
etc
Activities/
processes
…and why
So we can
determine:
What drives
activity costs
The cost of
outputs
such as
Products
No. of customers
No. of products
No. of invoices
etc
Services
Channels
Customers
etc
Activity
drivers
... in order to be able to assign costs accurately to products and services
Cost
objects
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Cascading costs through the model
Resource
module
Activity
module
Cost Object
module
Ledger items:
Activity 1
Course 1
Salary
Pension
Stationery
Rent & rates
A
C
Course 2
D
Activity 3
E
Activity 4
Fully costed person
B
Decide the logic & assumptions
A
B
C
D
E
F
G
Activity 2
Student 1
Activity 5
Activity 6
Rsrch proj 3
G
Funder 2
Legal Entity
Sustaining
Short cut to reduce complexity in the model. (e.g consolidate all ‘people’ costs)
Allocate people costs on basis of time spent on activities
Allocate other costs on an appropriate basis (eg space used, No. of people)
Allocate some activities to others (eg HR, Estates, etc)
Allocate activities to ‘products’ and ‘customers’ on an appropriate basis.
Allocate products to customers.
Allocate costs and activities to Legal Entity and Sustaining cost objects
F
Key points
• Create meaningful information. Don’t get buried by data.
• Need to work on both axes: Positioning & Capability – plot the journey
• ‘Activities’: useful for FEC and improving process effectiveness
• Reducing ‘diversionary costs’ funds all your improvements (case study later)
• ABC modelling helps to deliver fEC (and every aspect of profitability in the
university – case study later)
•
•
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Cost categories: Activities and cost drivers
Legalentity
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The cost of being in business - no cost
drivers eg annual audit, senate
Sustaining
Current cost, future value no cost
drivers eg New IT development, spare
capacity, brand advertising
Internal service
Front-line
Products/services,
channels, customers
ABC Contribution line
Current cost, current value - indirect
eg quality control, training, IT network
Current cost, current value - direct
eg teaching, research, selling,
customer service, cash collection
A universal law: The Hook Curve
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Cumulative
customer contribution
Contribution
100%
Positive
contributors
Negative
contributors
Customers
Highest contributing customer
30%
60%
Similar though less pronounced ‘hook’ for product contribution
100%
Key points
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• Create meaningful information. Don’t get buried by data.
• Need to work on both axes: Positioning & Capability – plot the journey
• ‘Activities’: useful for FEC and cost reduction
• Reducing ‘diversionary costs’ funds all your improvements (case study later)
• ABC modelling delivers FEC
• Contribution analysis delivers Product & customer profitability. (case studies later)
•
•
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Poised in the starting blocks
Strategy:
Where you
want to be
Capability
51%
30%
19%
fEC
modelling
Positioning
Knowledge
of activities,
processes,
costs, volumes
Contribution
100%
Positive
contributors
Negative
contributors
Customers
100%
Key points
•
•
•
•
•
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Create meaningful information. Don’t get buried by data.
Need to work on both axes: Positioning & Capability – plot the journey
‘Activities’: useful for FEC and cost reduction
Reducing ‘diversionary costs’ funds all your improvements (case study later)
ABC modelling helps to deliver fEC (and every aspect of the university – case study
later)
• Contribution analysis delivers Product & customer profitability. (case studies later)
• All functions work together concurrently on Positioning & Capability
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Case studies
Positioning
Key points
•
•
•
•
•
•
•
•
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Create meaningful information. Don’t get buried by data.
Need to work on both axes: Positioning & Capability – plot the journey
‘Activities’: useful for FEC and cost reduction
Reducing ‘diversionary costs’ funds all your improvements (case study later)
ABC modelling delivers FEC
Contribution analysis delivers Product & customer profitability. (case studies later)
All functions work together concurrently on Positioning & Capability
ABC analysis produces surprising insights.
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A University
Total costs:
£69.4 million
2,000
Modules
Total No. students
13,000
1,000
Courses
3,500
Degree
combinations
Academic staff
630
Support staff
690
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Schools, Modules and Students
Typical School
Schools have
their ‘own’
students
(Revenue)
Sch 1
Sch 2
Sch 3
Cost of
High
preparing and
delivering modules
Cost of managing
own students
Schools develop
and deliver their
own modules
Students select
a range of modules
from various schools
(create costs)
Low
Costs
Used by
Central
depts
Students
Schools
Modules
Definitions
 Students: full-time, part-time, international,
regional, mature, disabled, …
 Customers: students, companies, HEFCE, loan
companies, regional partners, …
 Products: modules, pathways, sets, fields,
advice, guidance, accommodation, awards,
chaplaincy, sporting facilities, ...
 Resources: academic staff, admin staff,
managers, buildings, facilities, networks,
computers, library, ...
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The Model: Highest level of cost separation
Without
Income
With Income
Modules & Students
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£8.4 million
£21.3 million
£39.6 million
£35.2 million
Modules
£4.4 million
Students
Total Costs Modelled £69.4 million
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ABC model
Activities:
# 500
Resources:
Ledger lines
# 1,500
For Research
Academic Time
Labs &
Technicians
The University’s Outputs
IT Services
%
Academic
Salaries
Bursaries
%
Personal
Computers
Stationery
Photocopying
Modules
Building Space
# hrs
For Modules
Lecturing
Administration
Labs &
Technicians
Teaching Space
Standards &
Quality
Module 1
Module 2
Students
# hrs
Tutoring
Resource
Driver
% of time/
activity
Courses
Activity
Driver
Hours/
module
For Students
Modules
Assessments
Registration
Admissions
Counselling
Costs flow through the model
Research Projects
Curriculum Development
Summer Schools
Student Accommodation
Marketing & Public Relations
Student Union & Sports Facilities
Nursery
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Without Income
Buildings not used.
Previous Reorganisations
£8.4
Million
Student Services
Infrastructure
Sustaining
Internal Research
£0
£500,000
£1,000,000
£1,500,000
All of these categories were further broken down in the model
£2,000,000
£2,500,000
With Income
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Funded Projects
£21.3
Million
Summer Schools
Internal Commercial Services
Conference & Catering
Funded Research
Student Accommodation
Regional & Associate Colleges
External Commercial Services
£0
£2,000,000
All of these categories were further broken down in the model
£4,000,000
£6,000,000
Modules - Total Cost
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Standards & Quality
£35.2 million
Teaching Space
Labs & Technicians
Library
Module Administration
Teaching
£0
£10,000,000
£20,000,000
£30,000,000
Average Module Cost per Student
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LAW
ABS
HCP
Schools
LSS
APPS
AL
EDU
CHSS
UCLT
UCANA
DACS
REGO
£0
£200
£400
£600
£800
One module within the Law School
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Timetabling
105 students
MPD - Classroom Audio Visual Equip
Resources Room
£289 each student
Computer Room
ASA - Academic Standards & Audit
Note: All modules costed
LIBRARY - Media Materials
Cheltenham Campus Teaching Space
LIBRARY - Readers Services
LAW - Student Administration
LAW - Teaching Individuals
LAW - Teaching Lecturing
£0
£20
£40
£60
£80
£100
Element Cost for Each Student
£120
£140
Avge Cost of a Module by Number of Students
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£1,200
£1,000
£800
£600
£400
£200
£0
10
20
30
40
50
60
70
80
90
Raised many questions:
e.g Should modules be run with less than 10 students?
100
120
130
Avge Number of Students/Module/School
80
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73
68
70
60
51
50
40
30
34
34
25
20
23
21
18
18
18
11
10
0
Schools
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Students - Total Cost
Financial Aid and Advice
Counselling
Student Income Collection
£39.6 million
Admissions
Registration
Open Access
Student Assessments Tracking
Modules
£0
£20,000,000
£40,000,000
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Students - Total Cost (Excl. modules)
Residencies Income Collection
Health Promotion
Financial Aid & Advice
Counselling
£4.4 Million
Student Income Collection
Academic Guidance
Careers Centre
Recruitment and Admissions
Registration
Open Access Facility
Student Assessments Tracking
£0
£500,000
£1,000,000
£1,500,000
One Law School Student (Out of total 13,000 students)
C&ITS - Open Access Facility
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Service
ADMISS - Admissions
Service
CPSVE - Registration
Service
FINANCE - Residencies Income Collection
10 modules
Service
£3,383 total cost
LAW Module - LWH2998A
CPSVE - Assessment Tracking
Service
LAW Module - LWH1998A
Service
FINANCE - Student Income Collection
LAW Module - Criminology
LAW Module - IT & The Law
LAW Module - Law of Evidence
LAW Module - Sport & The Law
LAW Module - Advocacy & Negotiation
LSS Module - Beginners French 2
Language module
LSS Module - Beginners French 1
Language module
LAW Module - Legal History 1
£0
£50
£100
£150
£200
£250
£300
Full Time Average Student Costs
£6,000
Typical ‘EDU’ student goes to many other Schools’ modules
eg Costly ‘Science’ modules
£5,000
£4,000
£3,000
£2,000
£1,000
£0
Schools
Can compare with average income for students at each School
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Attributes: To analyse data in the model
Public and non-public teaching: (Similarly for modules and research projects)
Student
Year
Course
Study
Funds
Accom
A.Benson
F.Natel
H.Scott
D.Halston
C.Jones
D.Ford
N.Bryan
T.Sparke
P.Orr
P.Gibbs
1
3
3
1
2
2
3
1
1
3
Mst
UG
UG
HND
Basic
Mst
UG
UG
HND
Basic
PT
FT
FT
Tk Snd
Tn Snd
FT
FT
FT
DR
Tn Snd
LA
OS
Own
Co
Own
LA
LA
OS
LA
Co
HoR
Home
Out own
Out Uni
HoR
HoR
Home
Home
Out own
Out Uni
Income higher than UK student
but costs are in excess of revenue!
18 invoices unpaid, and student
not registered on any courses!
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Key points
•
•
•
•
•
•
•
•
•
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Create meaningful information. Don’t get buried by data.
Need to work on both axes: Positioning & Capability – plot the journey
‘Activities’: useful for FEC and cost reduction
Reducing ‘diversionary costs’ funds all your improvements (case study later)
ABC modelling delivers FEC
Contribution analysis delivers Product & customer profitability. (case studies later)
All functions work together concurrently on Positioning & Capability
ABC analysis produces surprising insights even in simple businesses.
…and as many shocks and surprises in a University
Case study: University
Capability
eg Improve processes to reduce costs & improve service
1.
Recruitment, Admissions and Registration (including marketing activities)
2.
Timetabling
3.
Assessment
4.
Curriculum Development and Management
5.
QA: Validation and Annual Monitoring
6.
Staff Development and Training
….
….
23. Key processes
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Involve the people who work in the processes
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Recruitment, Admissions and Registration

Many students do not enter through the UCAS standard system e.g. entry through NMAS, ‘route B’, direct
application, part-time, post-graduate. Nurses and design students all require interviews.

Admissions process viewed as slow, inefficient and uncertain

Lack of clarity of task split between centre and faculty admissions

Students faced with queues, delays and repetition

Fragmented impression given to student – may lose potential students

Staff know of many more issues at the
Fragmented and detailed
duplicate data
collected
university
level
sothroughout
more can
be improved.

Inconsistency of processes in different parts of organisation
Ensures buy-in
byManagement
the people who will be
Curriculum Development
and
affected
the proposed
changes.
 Persistent schedule
slippage, by
deadlines
felt to be unrealistic

Everyone involved in much diversionary chasing activity

Needs clear strategic direction – no real course planning or portfolio development strategy

Curriculum development tends to be faculty-driven rather than demand-lead

Academic planning process is not adhered to – 2 year lead time required for new courses by administrative
procedures

Short product life cycle but tendency to add and never cut courses (many modules may be running
uneconomically)

General consensus that too much choice is offered to students
Create a process perspective: Walk processes
Prospective
Student
Marketing
Faculty Admin
Provide
information on
courses
Update courses
on Marketing
Database
1
Student
contacts BCUC
with an enquiry
Faculty
Academics
Admissions
Disability
Support
Services
Accommodation
Update
Definitive
course list
2
Simple
enquiry?
No
Yes
8
Answer query /
send prospectus.
9 Record in
Marketing Enquiries D/base.
D/base e-mail to Faculties
weekly
Send out invites
to Open Day and
record those who
11 attend.
Faculty 3 Answer query /
D/base provide further
detail or pass to
academic
4 Answer query /
provide further
detail
5 Answer query
about entry
qualifications
6 Answer query
about
accommodation
7
Answer query
about disabilities
Answer query / send
prospectus. 15
Pass on names if
student has shown
interest in open day
Follow-up if they
wish?
10
Seeing the impact of issues
within and between departments
Arrange suitable
facilities to
enable student to
attend
12
13Attend Open
Day
14 Send follow-up
letter - different
O/D dates to
non-attendees.
16
No further follow
up. Student then
decides to
apply / not.
Example shown is ‘Handling Enquiries’ a Sub process of Recruitment
The Recruitment, Admissions, Enrolment and Induction process is one of the
most complex processes in a university and very prone to process failures
and therefore unnecessary costs
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Analyse activities from a new perspective
Forecast next year’s student
accommodation needs
Keep records of suitable
accommodation
Support
Enables core
activity
to take place
Core
Adds value, meets
business and
customer needs
Diversionary
Adds cost, but no value caused by process failure
Deal with all the mismatches and
unexpected numbers of students.
Done with haste and incurring
extra costs.
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Uncover the scale of opportunities
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Total hours p.a. 970,000
FTEs 565 £11,338,000
Hours
Strategy,
plng
Strategy, res
res planning
Curriculum dev, QA
StudentStudent
recruitment
recruitment
Student induction
Curriculum
mgt
Curriculum
mgt
Student progress
Student support
Income collection
Housing
services
Housing
services
Placements
Purchasing
Purchasing
IS/IT
HumanHuman
Resources
Resources
Financial mgt
Estates
Estatesmgt
mgt
General mgt
Not in scope
0
20,000
Core
40,000
60,000
80,000
Support
100,000
120,000
Diversionary
Reported diversionary = 18% total time worked
Removing 50% of it releases 87,000 hours p.a.
140,000
160,000
Bring people together linked in a process
It is no
wonder it
takes so long!
Dept A
Dept B
Task
Task
Check/
decision
Dept C
Task
Dept D
Task
I'm confused!
No wonder the
student is!
No
Marketing Further
action
D/base
Why do the
Schools and the
Centre both do
it?!
No chance that the
HEFCE returns will
be on time
Outputs
Inputs
A Process Review Meeting
Issues and problems
Ideas for improvements
One per process
Agreement to
make changes
Implementation path
– who, how, when
Very often the people in different functions linked by a process
will not have been together before to solve process problems.
The event is a revelation.
UFS
Example: Process #1. Recruitment, admissions,
enrolment and induction
UFS
Recommendations
1.
Recruitment is and increasingly a key issue for Uni. Develop Uni-wide recruitment
strategy to ensure that Faculties work within a common framework and direction.
Recruitment strategy to define approach to be taken with different target groups:
UCAS
Direct entry
Clearing
Stg
Gp
Late entrants
Do they have different ‘recruit’ / ‘sell’ priorities? What are the messages that staff should
be giving to the different groups?
Clarify the image that the Uni is trying to portray…. ‘suits or jeans’?
2.
Define and implement process to generate and maintain a Definitive Course List
comprising:

List of all courses, both full-time and part-time

Status e.g. validated / to be validated, running / not running, in prospectus

Fee

Timing (for part-time courses)
(a)
Short-term solution (quick-win): paper based
(b)
longer-term solution: database of all information, accessible via the web
PST
Example: Process #1. Recruitment, admissions,
enrolment and induction
3.
Assign clear roles and responsibilities:
(a)
Each Faculty to have a Recruitment and Admissions Tutor (academic) and a
Recruitment and Admissions Officer (administrative staff)
(b)
Create a ‘Recruitment Action Team’:

Develop recruitment ideas, share best practice

Ensure common approach and consistency (e.g. open days, enquiries
handling and follow up)

Many aspects
considered:
Enable communication
between
marketing, enquiries and faculties

Ensure standardisation of Joining Instructions
Stg
Gp
• Processes
• Organisation structures
• Cultural barriers
Admissions
Marketing
Faculty
Recruitment &
Admissions
Tutor
Inputs:
•Market intelligence
•Trends & forecasts
•Uni strategy
•Recruitment plan
UFS
Local School
Liaison
Coordinator
Head of
Strategy
& Planning
Recruitment Action Team
Faculty
Recruitment &
Admissions
Tutor
Faculty
Recruitment &
Admissions
Tutor
Faculty
Recruitment &
Admissions
Tutor
Faculty
Recruitment &
Admissions
Tutor
Faculty
Recruitment &
Admissions
Tutor
•Recruitment &
Admissions Officer
•Field Chairs
•Course Leaders
•HoDs
Extended team (within faculties)
Example: Process #1. Recruitment, admissions,
enrolment and induction
UFS
4.
Create a ‘call centre’ with the longer term aim of re-locating this group into the ‘Student
Recruitment’ department
Stg
Gp
5.
Invest in an integrated enquiries database
Stg
Gp
6.
Standardise part-time and post-graduate applications process.
PST
7.
Set turnaround-time targets for applications (both domestic and overseas) – prevent
wastage of applicants due to delay in offer process.
PIT
8.
Something everywhere
Review and implement
quick fixesneeds
for enrolment
and induction
probably
changing
PIT
9.
Implement systematic late enrolment process
PIT
10.
Standardise Joining Instructions.
PIT
11.
Introduce withdrawal interviews for students who wish to suspend studies or withdraw
from a course.
SG
A mechanism to achieve cost reduction/rebalance
Support
Core
Diversionary
Method
change
Process
change
Current
costs,
methods,
service
levels
New
activity
Reduce
service
Reduce costs
Enhance
service
Improve service
Enables price competitiveness
Puts resources behind growing income
New
costs,
methods,
service
levels
UFS
UFS
Outcome - University internal services review
-8.3%
Current
service
level
and
cost
- 9%
Net savings
-6.5%
+5.8%
Current
service level
at lower cost
Minimum
service level in
some services
Enhanced
service level in
some services
from methods
changes
low risk savings
only
high benefit
increases only
9% savings and better service where it counted
Key points
•
•
•
•
•
•
•
•
•
UFS
Create meaningful information. Don’t get buried by data.
Need to work on both axes: Positioning & Capability – plot the journey
‘Activities’: useful for FEC and cost reduction
Reducing ‘diversionary costs’ funds all your improvements (case study later)
ABC modelling delivers FEC
Contribution analysis delivers Product & customer profitability. (case studies later)
All functions work together concurrently on Positioning & Capability
ABC analysis produces surprising insights even in simple businesses.
…and as many shocks and surprises in a University
• Process analysis uncovers ways to improve methods and reduce/eliminate process
failures. The savings can be used to finance growth and improve service levels.
Implications for 2005 onwards
The bigger picture
UFS
UFS
Sources of income
Funding Council grants
Tuition fees & education grants & contracts
Research
grants &
Contracts
Research Councils
UK charities
UK central gov, LAs, Health
UK industry
EU sources
Other Overseas
Other
5,692,090
3,338,194
805,360
606,885
413,163
250,232
188,864
115,605
53,309
Income UK 2001/02
Endowment & investment income
Other income
2,433,418
Course validation fees
Teaching companies
UK central gov, LAs, Health
UK industry
EU sources
Other Overseas
Other income
Other operating income
Residences & catering ops
Grants from LAs
Income from Health & Hospital
Release of deferred capital
Income from IP rights
Research grants & Contracts
17,791
25,638
208,743
137,866
61,287
30,572
1,025,441
967,802
872
227,303
45,858
19,874
Tuition fees, grants, contracts
Funding Council grants
-
117,180
26,971
113,975
258,126
Total: UK
2.0
3.0
4.0
Amount £Ms
2,769,047
Endowment Specific endowments
& investment General endowments
income
Interest receivable
1.0
14,490,875
5.0
6.0
UFS
Sources of income: Into the detail
England
Wales
Scotland
T&R
T&R
T&R
For you, is it:
L = Large
M = Medium
S = Small
170 HE
Institutions
L/M
S
Variable
tuition fees
S
S
L
PhD bench
fees
Research Councils
(80%)
S/M
M
Courses
& Confs
M
RDAs
Hire of
sports
facilities
M
M
Local and
National Gov
S
Charities
(research)
Industry
S/M
M
NHS
Donations &
endowments
Uni ‘Ltd’
companies
EU
UFS
Where do your sources of income plot?
Source
% of
income
Net margin
+3 to - 3
Variable tuition fees
PhD bench fees
Course & conferences
Hire of sports facilities
Local Gov
National Gov
RDAs
Donations & endowments
100%
Cum Contribution
Research councils
Positive
contributors
NHS
University’s own companies
EU
Other….
Other….
100%
# Customers
Industry
Charities
Negative
contributors
?
?
UFS
The Journey
Capability
Strategy:
Where do you
want to be?
?
?
Do your chosen
things very well
?
• Facilities
?
• Skills/experience
• Processes
Plot the journey
Use suitable vehicles
Take all the team
with you
Positioning
Where you
are now
• Contribution
• Outcomes
• Vfm
For your chosen markets
and sources of income
maximise profitability
and enhance your
reputation
UFS
Where do you have to take action?
Capability
Unique
facilities
Cost
effective &
efficient
processes
Variable
tuition fees
PhD bench
fees
RDAs
Research
Councils
Courses
& Confs
Donations &
endowments
Charities
(research)
Local and
National Gov
Hire of
sports
facilities
Common
facilities
Uni ‘Ltd’
companies
NHS
Failing
processes
Industry
EU
Positioning
No special
reputation.
Low £s
contribution
World
renowned.
High £s
contribution
UFS
The journey
Where you
want to be
Capability
Variable
tuition fees
Culture Change
PhD bench
fees
Business Process
Re-engineering
Reduce process
costs, improve
service
RDAs
Research
Councils
Donations &
endowments
Performance Measurement
Courses
& Confs
Charities
(research)
Local and
National Gov
Industry
Change
Hire Management
of
Where are we
on the journey?
Uni ‘Ltd’
companies
sports
facilities
NHS
Where you
are now
Is everyone
with us?
NoEU
pitfalls on
the journey
Activity Based Management
Product & Customer profitability
Portfolio mix, pricing
Positioning
UFS
Thank you
Brian Plowman
Director
Develin & Partners, Ash House, Fairfield Avenue,
Staines, Middlesex TW18 4AB, UK
Tel: 01784 224207
[email protected]
www.develin.co.uk