Flexibility and Productivity

Presentation to APC

7th March 2008

Contents

• What have we achieved in the last few years?

• What do we plan to do?

• Is it enough?

Financial History

Income growth by five-year period (adjusted for inflation)

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Av

era

ge

11

-15

16

-20

21

-25

26

-30

31

-35

35

-40

Years

% s

urp

lus

Financial Accounts Surplus 1964-2004

-15 .0%

-10 .0%

-5 .0%

0 .0%

5 .0%

10 .0%

% s

urp

lus

Estates Investment

Financial Summary of Investment£m’s

Residences 200

Capital Programme (last 5 years) 90

Capital Programme (next 5 years) 110

Growth investment 100

500

(Plus Science Park)

Masterplan

Projects in Progress

ISS Building Sports Centre Waterside Biology C Floor County South University House LICA/Imagination Learning Zone Infrastructure

Finance Strategy

Finance Strategy (Draft)

• Need for £40m - £100m investment

• On and off balance sheet

• Phase V

• Surplus 4 to 5%

• Revenue has to grow 1.5% faster than costs (excluding interest and depreciation)

Finance Strategy Challenges

• Investing in the right areas

• Managing our cost base

• Balancing short and long term pressures

• Communicating the strategy

• Management information

• Change management

IT Investment

Information Systems Projects 2004-8

• Estates Management System• HR & Payroll• CRM – Alumni, Corporate, Events, Student Support• Decision Support (Admissions)• Residences and Conferences• Teaching Timetable• Flexible Benefits• Agresso 5.5

Information Systems Projects – possible work

• Web Infrastructure Programme

• Further CRM applications including support for Postgraduate Recruitment Processes

• Decision Support (other)

• Virtual Research Environment

• Award Management

ICT Strategy Impact

• Web Infrastructure Programme– Web experience will be tailored through a portal and

expanded to include access to key institutional data

– Web Content will be managed• Family resemblance across all institutional web pages

• Greater coherence in quality and identity

• Modern governance processes• ISS as curator• Support for teaching, learning and research

Process Review

Process Reviews • Rolling programme to review all University processes:-

– Do they do what they are supposed to?– Are they efficient?– Do they support our strategic direction?

• Started with Finance– Diagnostic work complete in 2007– Implementation in progress (Agresso 5.5)

• Currently reviewing Postgraduate Recruitment– Report due in April

• Future areas under review, possible candidates are:– HR processes– Management of the student record– Student support processes

Cost of Finance Processes

The total staff cost of finance in commercial organisations as a percentage of turnover is :

Top quartile 0.5%

Median 0.9%

Bottom quartile 1.8%

LU cost is around 3.1% which places us below the

bottom quartile (£3.9m out of £127m).

Realistic targets What is an appropriate target for us?

LU is not-for-profit (higher costs as a % of turnover)

LU may be subject to greater regulation than commercial businesses e.g. procurement regulations and funding body requirements

The companies involved in benchmarking are likely to be the more efficiency-focussed companies

BUT – even if we were only to achieve the bottom quartile figure of 1.8%, this would represent a saving of £1.5m per annum

Benefits expected from Finance process changes

• Reallocation of Resources– Reduced effort on transaction processing– Removal of parallel systems, further reduction in effort– Resources reallocated either to better finance support,

e.g. more time on analysing and interpreting information, or to front-line activities

• Better decision-making– Better reporting– Better analysis

• More efficient and effective budgeting and planning processes

Common Messages

• Our processes have developed in an ad-hoc way• Many tasks are done by people who are not

adequately supported or trained.• Growth means we can’t manage this by informal

networks anymore• A lot of time is wasted looking for information• Many departments are too small to do all the

things they are expected to do

Why is this important?

• Growth in research and teaching needs to be supported by appropriate processes and infrastructure

• Too much resource is being wasted

• Not a problem for the finance department

• If we don’t change things academic development will be constrained

Asset UtilisationCE/CP Ratio Comparisons

Lancaster University 2.27

Sector - Research Intensive 2.2

Sector - Small & Specialist 2.6

Sector - All other 1.9

Sector overall - England 2.1

Teaching Space Utilisation

(2005 EMS)

• Median frequency 54%

• Median occupancy 49%

• Median utilisation 27%

(0900 to 1700 Monday to Friday)

Percentage Pension Costs2002/03 to 2010/11

Average fee (price) increases compared with turnover (volume) growth 2005/06 to 2008/09

Cumulative Percentage Increases on Turnover and Pay 2002-2011

% increase in staff costs by type

HEFCE (T) Grant£000’s

2007/08 26,526

ASNs (246)

ELQ (597)

WP (346)

Inflation/other 776

2008/09 26,113

HEFCE (R) Grant

£000’s

2007/08 17,752

Mainstream increase 166

Business research element (151)

Other (21)

2008/09 17,746

Staff Balance

Academic Staff - total 31%

- (exc T & R only) 20%

Clerical (& related) 21%

(Faculties 11 -24%)

Things are Changing (internal)

2002 2007 % change

Turnover £95m £149m 56%

Staff FTEs 1,680 2,120 26%

Student Numbers 8,520 9,765 15%

Things are Changing (external)

• League Tables

• Metrics

• Fees/student influence

• Accreditation and audit

• Expectations and choice

• HR legislation

Are we changing fast enough?

Management Information

• KPI’s for Council

• Thematic reports

• Decision Support (Admissions)

• Decision Support (Registration)

Things that still surprise us

• How many students drop out within and between years

• How many sessional staff we have

• How big the estate is

• Not to mention reconciling HESA/HESES

/EMS/TRAC

Organisational Issues

• Faculties restructured

• Basic departmental structure remains (although this is changing)

• The administration has not changed significantly

Organisational muddles

• Jobs that can’t be done

• Lack of scale in “departments”

• Huge variety in organisation structures and reporting lines

• High level of dependence on individuals

Flexibility

How quickly can we adapt to…….

• Changing application patterns?

• Changing student needs?

• Changing legislation?

• Changing political priorities?

Governance

• Not just about committees

• Authorities and accountability

• Volume of paper vs clarity of decision

• What does consultation really mean?

• Ending silos

Change Management

Directed or devolved?

Directed Devolved

•clear•time bound•concerted•consistent

•owned•appropriate•accepted

Change Management

• What do you need to make it effective?– Information?– Project management Resource?– Training?– ……………?

HR Strategy

An underpinning theme

• Performance Partnership

• Modern policies and procedures

• Effective processes and systems

• Management information

• Succession planning

Final thoughts

• Life is getting tougher

• We can’t change everything

• But we can’t stay still either

• Over to you