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“Trends in Universities – possible implications for RM and IA”. Ernst & Young Presentation AURIMS / ANZUIAG Conference 15 May 2013. Introduction. Context – short term issues versus long term trends “University of the Future” – Ernst & Young study Overview of study Key findings - PowerPoint PPT Presentation
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“Trends in Universities – possible implications for RM and IA”
Ernst & Young Presentation AURIMS / ANZUIAG Conference 15 May 2013
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.2
Introduction Context – short term issues versus long term trends
“University of the Future” – Ernst & Young study
Overview of study
Key findings
Trends across the Australian HE sector
Potential implications
for the University (and TAFE) Sector
For RM and IA
For Policy Makers EY Higher Education Study, 2012
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.3
Context – the (then) short term issues
Impact of the Bradley Review Implementation
Significant increase in competition for domestic students
Significant increase in marketing - “brands on trams”
Fees - “Caps on” versus “Caps off” debate
Drop in international students- $A too high??
EBA negotiations – extracting marginal changes
Cost reduction programs in many universities
Dealing with the new TEQSA
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
Universities of the FutureThe Ernst & Young Whitepaper
► Ernst & Young issued its Whitepaper on the long-term future of universities and the evolution of university business models – November 2012
► Interviews attracted much interest – a topic clearly exercising the mind of university leaders – 15 VCs contributed plus other sector leaders
► A common refrain: traditional university business models must change.
► Driving the Changes - new technologies (MOOCS), global competition, changed student learning styles and expectations, etc
► EY developed three potential ‘future models’ as a basis of discussion:
► Streamlined Status quo
► Niche Dominators
► Transformers
► They are NOT mutually exclusive or exhaustive – but useful to explore potential responses by universities to the fast-changing environment
4
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.5
Drivers of Change Five mega-trends will transform the Higher Education sector
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.6
Potential Implications for traditional University and TAFE Operating
Models…
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.7
Current Model for Higher EducationCurrent model – Established Universities/TAFEs
Current area of focus Increased area of focus in future models Areas de-scoped or reduced in focus in future modelsLegend:
Student administration Career centre … ……
HR IT Finance Legal ……
Open daysAgents Road-shows … ……Digital
Arts Eng. Science Bus. Medical / health Law
IT Design … … … …
Partner-shipsOn campus Digital
Customers
Product offerings
Sales
Delivery
Student services
Back office
Domestic students International students Industry
Higher education ResearchVocational & further education and training
Ed
uca
tion
d
isci
plin
es
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.8
Future Models for Higher Education“Streamlined Status quo”Customers
Product offerings
Sales
Delivery
Student services
Back office
Arts Eng. Science Bus. Medical / health Law
IT Design … … … …
Domestic students International students Industry
Higher education Research
Student administration Career centre … ……
Open daysAgents Road-
shows … …PartnershipsDigital
On campus PartnershipsDigital
In-house out-source
Vocational & further education and training
Ed
uca
tion
d
isci
plin
es
Current area of focus Increased area of focus in future models Areas de-scoped or reduced in focus in future modelsLegend:
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.9
Customers
Product offerings
Sales
Delivery
Student services
Back office
Arts Eng. Science Bus. Medical / health Law
IT Design … … … …
Domesticstudents
International students
Higher education ResearchVocational & further education and training
Other education providersSchool
leaversMature
age High-end Low-end
Same as in ‘streamlined status quo’ model
(illustrative focus)
Industry professionals
B2B Exec. Educ.
Ed
uca
tion
d
isci
plin
es
Current area of focus Increased area of focus in future models Areas de-scoped or reduced in focus in future modelsLegend:
Future Models for Higher Education“Niche dominators”
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.10
Customers
Product offerings
Sales
Delivery
Student services
Back office
Domesticstudents
International students
Other education providersSchool leavers Mature age High-end Low-
end
Parents Content wholesalers Content consumers Service providers
Content aggregation Entertainment Financial services …
Vocational & further education and training Higher education Research Mass distribution
Student administration, career services, other - outsourced
… … …Digital
PartnershipsDigital … …
Customer relationship management (cloud)
Outsourced
Industry professionals
B2B Exec. Educ.
Current area of focus Increased area of focus in future models Areas de-scoped or reduced in focus in future modelsLegend:
Future Models for Higher Education“Transformers”
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.11
Trends across the Australian university
sector…
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.12
Some observations of what the market is doing now Brand investment – heavy investments in branding and profile raising, incl.
“international index management”
Market competition - pressure downwards on ATARs, partly in pursuit of market share/student numbers, partly in pursuit of social objectives
Going more regional/national – more campuses outside original “ regional focus” – CQU, ACU, CSU, etc
MOOCS and on-line learning – watching, monitoring, “foot in the water” initiatives e.g. Uni of Melbourne/UWA and Coursea
Seeking more flexibility on resourcing – teacher-only positions, trimesters, etc
Alumni- as a source of revenue and “recommendation”
Administration areas – focus of productivity improvements, outsourcing, etc – professionalising”
Research/Teaching – reviews to get tighter focus and accountabilities
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.13
Potential Implications for the University Sector…
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.14
Some implications for Universities (and TAFEs) Greater domestic and international competition will place significant
pressure on operating margins of universities
There will be winners and losers… a number of universities trail significantly on the drivers of student choice…
Universities at risk will need a clearly differentiated market position and a strong alignment of the student experience and brand promise
Need for a genuine focus on improving the “students’ experience” – using market segmentation and differentiated service models e.g. school leaver vs. mature age student vs. international student, etc
Getting the right balance between incorporating new technologies into the pedagogical experience – yet retaining/building student learning intimacy – as perceived by the student
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.15
Some Implications for Universities (cont.) On-line channels bring additional, NOT reduced, costs in the immediate
term
More pressure on IT capabilities and costs
Need to being sharing course development costs across preferred partners
Bringing employers along the journey – will they accept students taught through the new learning paradigms?
Observe and learn from other sectors impacted by like technology – media, music, banking, retail, etc
Overall Implication
Current operating models MUST change – more segmented student experience, sharing/outsourcing, more partnerships, more flexibility, more technology
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.16
Potential Implications for RM and IA…
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.17
Changes in the market, changes in operating models Market risks – more important than ever – reliance on overseas students,
competitor risks
RM/IA Impact: Operating margins more vulnerable/less predictable than ever
Partnering/Third party risks – across the whole value chain – research, teaching, special product offerings, product development, delivery, sales, student support, admin support
RM/IA Impact: quality controls in partner organisations, their financial viability, etc
Technology risks – “external third party platforms, including “Cloud” solutions, security
RM/IA Impact: quality controls in partner organisations, their financial viability, etc
Offshore risks – for delivery of university courses, accessing offshore courses for Australian-based students
RM/IA Impact: quality and risk control over offshore third parties, possibly operating under different regulatory models
Foreign Exchange risk – costs to overseas students, foreign debt
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
Ernst & Young Global Risk & Opportunities Report
18
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.19
Potential Implications for Policy Makers
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.20
Implications for Policy MakersRecognition of the role of Higher Education in the nation’s future
Not just about export revenue
Not just about “efficiency/value-for-money”
BUT Higher Education is a key input to a nation’s long term productivity and competitiveness
Flexibility in Regulation
Fee-capping?, Allowing new entrants?
Links/overlaps with TAFE/Vocational Education Reform?
Clarity on all Government roles - regulator, price setter, buyer/funder (of research activities), owner (state governments), etc
Clarity may assist reduce regulatory burden
Funding of Research
Squeeze on teaching margins reduces scope to cross-subsidise research
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.21
Comments & Questions?
© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.22
About the presenter…
Peter Rohan is a Partner in Ernst & Young’s Advisory team and has more than 25 years experience as an advisor to Government and industry. Peter's university work has included re-alignment of marketing strategies, student driver market research, operating model transformations, financial modelling and cost reduction,
shared services, and advice on strategic direction.
Peter RohanPartner, AdvisoryTel: +61 3 9655 2668Mobile: +61 433 983 969peter.rohan@au.ey.com
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