Universities through the Looking Glass Measuring success in the new economics of higher education HESA Benchmarking seminar 1 st March 2011

Universities through the Looking GlassMeasuring success in the new economics of higher education

HESA Benchmarking seminar1st March 2011

© PA Knowledge Limited 2011. Page 2

Past conditions for success will not be the same in the future

“FUNDED WORLD” “MARKET WORLD”

Business Imperatives Maintaining and supplementing public funding

Self-sustaining business portfolio

Conditions for Sustainability

Break-even or slightly better for solvency

>5 -10% surpluses for self-sufficiency

Competitive Success Factors

Peer-rated teaching and research

Value-adding service propositions

Organisation Models Discipline- and function- based

Open and flexible resourcing structures

Resource Management Budgets as spending limits (or targets)

Budgets as devolved business plans

Cost Drivers Staff and other fixed operating costs

Optimal inputs for competitive pricing

Performance Measures Delivery of HEFCE and other public contracts

Differentiation, value, cost- effectiveness


Universities need to develop new, capability-based business models

EXPECTEDFUNDING

“THIRD STREAM”REVENUES

CORE OPERATIONS

BUDGETALLOCATIONS

ContractedActivities

Inherited Cost

Structures

IncrementalResources

EXPECTEDFUNDING

“THIRD STREAM”REVENUES

CORE OPERATIONS

BUDGETALLOCATIONS

ContractedActivities

Inherited Cost

Structures

IncrementalResources

DISTINCTIVEASSETS

INCOME &MARGINS

OPERATINGSTRUCTURES

COMPETITIVEPROPOSITIONS

MarketInsights

SharedPurpose

IntegratedDelivery

Investment& Renewal

DISTINCTIVEASSETS

INCOME &MARGINS

OPERATINGSTRUCTURES

COMPETITIVEPROPOSITIONS

MarketInsights

SharedPurpose

IntegratedDelivery

Investment& Renewal

The current funding-led business model is geared to sustaining a fixed cost base, and

depends on continually rising revenues – this is not sustainable

A capability-based business model would be self-sustaining and inherently adaptive to

changing market opportunities


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

Extend domestic education earnings

employer and professional body links agile programme design marketing and channel mgt.

Grow international earnings ( in UK and offshore)

effective brand management productive overseas partnerships excellent student service

Maintain research and development profile

targeted research priorities leverage of research strengths managed R&D relationships

Develop new services and business opportunities

business account management external relationships (HE &

business) enterprise mgt. systems/skills

Improve operating efficiency and margins

flexible and productive staffing innovative delivery models year-round operations

demand vs. places fee revenue/student high employability ratings

part-time and work-based offers CPD and short course numbers e-learning and flexible channels

positive brand associations strong in-country relationships reputation for student success

top-end research capacity research earnings per academic private research income

earnings from knowledge services

income from new services collaborative partnerships net costs/margins from T and R output per academic (T, R and KX) value from service operations


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?


A quick look shows the diversity of the sector


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?

http://www.ucreative.ac.uk/


Benchmarking will become more important for….

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?

The student ‘deal’

Is there an RoI metric for students which combines prices and outcomes?



Assessing market opportunities

Market share

Mar

ket s

ize

Gro

win

gSh

rinki

ng

Growing Shrinking

Maths

Eng

Media

Geog

LawBus



Assessing portfolios

Invest for profit / cross

subsidise

Close?

Grow /sustain

Invest for quality/

cross subsidy

Profitability

Qua

lity


…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

Documents

Universities through the Looking Glass Measuring success in the new economics of higher education HESA Benchmarking seminar 1 st March 2011