Transcript Slide 1

Universities through the Looking Glass
Measuring success in the new economics of higher education
HESA Benchmarking seminar
1st March 2011
Past conditions for success will not be the same in the future
“FUNDED WORLD”
“MARKET WORLD”
Maintaining and
supplementing public funding
Self-sustaining business portfolio
Break-even or slightly better
for solvency
>5 -10% surpluses for selfsufficiency
Competitive Success
Factors
Peer-rated teaching and
research
Value-adding service propositions
Organisation Models
Discipline- and function- based
Open and flexible resourcing
structures
Budgets as spending limits
(or targets)
Budgets as devolved business plans
Staff and other fixed operating
costs
Optimal inputs for competitive
pricing
Delivery of HEFCE and other
public contracts
Differentiation, value, costeffectiveness
Business Imperatives
Conditions for
Sustainability
Resource Management
Cost Drivers
Performance Measures
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Universities need to develop new, capability-based business models
The current funding-led business model is
geared to sustaining a fixed cost base, and
depends on continually rising revenues – this
is not sustainable
EXPECTED
FUNDING
A capability-based business model would be
self-sustaining and inherently adaptive to
changing market opportunities
DISTINCTIVE
ASSETS
BUDGET
ALLOCATIONS
Market
Insights
Contracted
Activities
Inherited
Cost
Structures
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Shared
Purpose
Investment
& Renewal
Integrated
Delivery
Incremental
Resources
“THIRD STREAM”
REVENUES
COMPETITIVE
PROPOSITIONS
INCOME &
MARGINS
CORE
OPERATIONS
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OPERATING
STRUCTURES
In this world, success will be measured by results, not inputs
STRATEGIC OBJECTIVES
CRITICAL CAPABILITIES
SUCCESS MEASURES
Protect core teaching income
(UG and PGT/R)
 attractive learning/study experiences
 strong employer relationships
 excellent student services
 demand vs. places
 fee revenue/student
 high employability ratings
Extend domestic education
earnings
 employer and professional body links
 agile programme design
 marketing and channel mgt.
 part-time and work-based offers
 CPD and short course numbers
 e-learning and flexible channels
Grow international earnings
( in UK and offshore)
 effective brand management
 productive overseas partnerships
 excellent student service
 positive brand associations
 strong in-country relationships
 reputation for student success
Maintain research and
development profile
 targeted research priorities
 leverage of research strengths
 managed R&D relationships
 top-end research capacity
 research earnings per academic
 private research income
Develop new services and
business opportunities
 business account management
 external relationships (HE & business)
 enterprise mgt. systems/skills
 earnings from knowledge services
 income from new services
 collaborative partnerships
Improve operating efficiency and
margins
 flexible and productive staffing
 innovative delivery models
 year-round operations
 net costs/margins from T and R
 output per academic (T, R and KX)
 value from service operations
© PA Knowledge Limited 2011.
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What does all this mean for benchmarking?
•
Benchmarks that were important in a funding-led world will not necessarily be valuable
in a capability-based world
•
We are currently in an uncertain no-man’s land, equipped only with data from the old
world but without a benchmarking framework for the new world
•
If universities compete on differentiation, who will they compare themselves with?
•
In a world of diversified and differentiated choices, how will stakeholders judge the
relative performance and success of institutions?
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A quick look shows the diversity of the sector
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League tables represent the worst of benchmarking…
•
No single version of success …
•
What about part-time, on-line, and post-experience students, work-based learning,
international students?
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Benchmarking will become more important for….
The student ‘deal’
Pricing
Contact hours
and other inputs
Outcomes
Where price becomes a complex calculation of ‘sticker
price’ minus bursaries, discounts and awards, calculated in
terms of repayment amounts and periods ..
… and value considers contact time, learning modes,
placements, skills-training, extras, timetabling and course
dates …
… plus greatly increased interest in data around outcomes.
What % get employment? When? With which types of
organisation? On what salary? What happens to them over
5 years?
Is there an RoI metric for students which combines prices and outcomes?
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Benchmarking will become more important for….
Market size
Growing
Shrinking
Assessing market opportunities
Bus
Law
Maths
Media
Eng
Geog
Growing Shrinking
Market share
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Benchmarking will become more important for….
Quality
Assessing portfolios
Invest for
profit /
cross
subsidise
Grow /
sustain
Close?
Invest
for quality/
cross subsidy
Profitability
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…and will be used in different ways
• A strategic process and not as an end in its own right
• Increasingly part of business as usual decision-making
• Based on sources from outside the sector as well as inside
• Using more recent data
• Internal benchmarking across departments and faculties
• Benchmarks woven in to KPIs and strategic performance assessment
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