Making the grade 2011 A study of the top 10 issues facing higher education institutions
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Making the grade 2011A study of the top 10 issues facing higher education institutions
March 2012
Introduction
• Responsible for the higher education and K-12 education in Canada, and co-leads the US Higher Education practice
• More than 100 projects with education clients in the last 12 years, including:‒ Queen’s University‒ College of the North Atlantic (NL and Qatar)‒ Dalhousie University‒ McMaster University‒ Memorial University‒ Mayo Clinic College of Medicine‒ University of North Carolina‒ Florida State University‒ Pennsylvania State System of Higher Education‒ Cornell University
Louise Upton, Partner Deloitte
Making the Grade 2011 - A study of the top 10 trends in higher education2
About Deloitte
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• Serving education clients for more than 50 years.
• More than 200 higher education institutions in Canada and the U.S.
• Recognized for quality and collaboration
• Spanning business planning, process improvement and technology delivery
• Author and owner of the Total Campus™ Methodology developed specifically for Higher Education transformation projects
• Delivering pragmatic solutions
About ‘Making the Grade’
• Idea for the study was generated in 2010; we conducted the interviews in 2011
• 10 countries/regions were interviewed, including:
‒ Canada - US‒ UK - Australia‒ Middle East - India‒ Spain - Netherlands‒ New Zealand - France
What are the top 10 issues facing higher education in your country?
Most countries identified the same/similar 10 issues, with a few exceptions
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“As funding dries up, some universities are heading into debt for the first time….”
- Brian McKenna, Partner, Deloitte Canada
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Institutions are over-budget and underfundedAs funding declines, cost management is key
• Global financial crisis affected schools:• Value of endowment funds decreased • Donors began to be more cautious with
their money• Governments around the world are
cutting dollars for higher education• Many countries/provinces/states have
limited tuition increases• Governments are also taking a more
hands-on approach in the funding approval process (e.g. MOU and school innovation fund in NS).
As operating margins shrink, higher education institutions must find new ways to cut costs without sacrificing
services
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• Cuts in 43 US states
• Decline of 80% funding over next four years in UK
• Decline in federal funding levels in Canada:
• From 80% of operating revenues in early 90’s – to 57% in 2007-2008
Decreases in Funding
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The rivalry intensifies Competition to attract the best students heats up2
The number of students around the world enrolled in post-secondary
education is forecasted to double to 262 million by 2025*
Nearly all of this growth will be in the developing world, with more than half
in India and China alone.
The number of students seeking study abroad could
increase to 8 million – almost 3 times more than today
?Should you play “globally”?
*As reported by the University World News
Although a global strategy makes sense for some
institutions,
it is not rightfor every school
The top five reasons for going global*
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1. Improve student preparedness
2. Internationalize the curriculum
3. Enhance the institution’s international profile
4. Diversify faculty and staff
5. Strengthen research and knowledge production
The rivalry intensifies (cont’d)Competition to attract the best students heats up2
Making the Grade 2011 - A study of the top 10 trends in higher education
According to a report by the International Association of Universities
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The rivalry intensifies (cont’d)Competition to attract the best students heats up2
“To avoid brand erosion, higher education institutions must get very clear on their strengths and weaknesses.
They need to assess if they play on a global, regional, national or local stage. They need to decide if they plan to specialize in specific degrees or student segments.
Rather than offering a bit of everything, organizations must identify the key areas of expertise that can best support future growth.”
Loic Jouenne, Partner, Deloitte France
Align regional offeringsand meet stakeholder needs
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The rivalry intensifies (cont’d)Competition to attract the best students heats up2
Articulate a global strategy to attract studentsand extend educational offerings
Two strategies for consideration:
Setting prioritiesThe danger of making decisions in the dark
• Old habits are hard to change - tough new realities challenge democratic decision-making:
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Challenges• Internal environment is often not
conducive to stark business approaches
• Consensus decision-making• Slow to react• Need for innovation, difficulty
implementing it• Complex governance structures• Top-down accountability is
problematic• Conflicting stakeholder
demands
Potential Solutions• Incorporate operational aspects
into strategic planning• Invest in data mining, financial
analysis and IT systems to develop optimal service delivery models
• Rationalize redundant programs and discontinue costly ones
• Update curricula and align with market needs
• Enhance core competencies – look at options to outsource others
• Consider shared services and consolidation
Moving at the speed of cyberspace Technology upgrades are needed across the board
• IT as a service on campus
• Upgraded systems are still not being leveraged to their full potential
• Need to embrace social media and engage students in relevant dialogues
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Benefits to Upgrading/Leveraging Technology
• Attracts students and meets needs of disparate student groups
• Supports online learning and includes remote communities
• Reduces infrastructure demands and offers programs to higher volumes of students
• Recruiting and retention
• Aging technology systems challenge institutions ability to manage rising demands from students and staff
Moving at the speed of cyberspace (con’t)Technology upgrades are needed across the board
• Disruptive innovation can change the way the world learns
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• Reforms need to address the differences in how students learn – none have managed to do this so far
• Demand for student-centric learning is on the rise – perfect opportunity for disruptive innovation
• Disruptive technologies drive:‒ Accessibility‒ Affordability‒ Capability‒ Responsiveness
• No need to boil the ocean – start small and go around the system
Disruptive innovationsin education
• Online learning networks
• Modular system to allow customized delivery of education to individual student learning needs
• Administrators taking the view of “educating children in their district” versus responsibility for schools in a district
Rethinking infrastructureA renewed focus on asset optimization
• With looming financial insecurity, many institutions have adjusted their operations to:
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Monetizing existing assets
Disposing of surplus assets
Partnering with Private
Sector
Deferred Maintenance
FinancialInsecurity
Fees and Revenues
Scaling back or halting plans
o Maximize existing sources of revenue (fees, parking)
o Reduce costso Slow spending and
defer decisions
Linking programs to outcomesWhere training and market demand intersect
• Colleges are starting or have surpassed universities on post-graduate employment
• Projected growth in jobs with vocational training
• Workforce gaps and illiteracy in developing nations that lack a focus on vocational training
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Current Workforce Challenges
“Institutions must ensure their educational agendas are in sync with forecast marketplace demands.”
Arsh Maini, Senior Consultant, Deloitte India
• Institutions should look to:
‒ Continue to design programs that align with labour needs
‒ Apply common KPIs
‒ Be open to link outcomes to funding
Need for renewed focus on vocational training
The best and the brightestAttracting and retaining talented faculty
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Faculty recruiting and retention
Enhance teaching quality
Measuring performance
Strategic priorities
• Like other organizations, performance hinges on the talent of staff• For higher education institutions, attracting and retaining the right faculty
can spell the difference between success and failure
• Aging workforce• Low retirement rates• Difficulty in remaining
relevant to rapidly evolving student expectations
• International competition for same candidates
• Competitiveness of private sector and higher-profile academic jobs
Potential Barriers
• Institutions around the world are responding to (and in some cases, driving) evolving environmental awareness
• Higher education institutions are seeking new and better ways to reduce, reuse and recycle
• Environmental consciousness appears to cross organizational lines
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A sustainable futureEnhancing environmental performance8
Energy-efficient facilities
IT e
nerg
y re
duct
ion
‘Green Cleaning’ and maintenance
practices
‘Gre
enin
g’
inst
itutio
nal p
olic
y
Environmental Responses
“Schools also need to enhance their environment-related programs to provide students with the educational credentials they need to drive this agenda in the community at large.”
Michael Pentland, Associate Partner, Deloitte Canada
Education for allTackling diversity, accessibility and affordability
• Access to education crosses social, cultural and geographic lines• Governments struggle to educate hard-to-reach students:
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Income Disparity
Disabilities Minority Groups
Remote Areas
• Online programs• Video streaming• Other forms of digital
education• Financial aid programs
targeted to unique student populations
• Diverse faculty• Cultural diversity
Education for All
Potential Strategies
Regulations and reportingNew responsibilities require better disclosure
• Governments around the world are increasing industry oversight:
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• Allocation of research funds• Student success rates• Sustainability• Outcomes• Standards• Rankings
Increasing need for transparency
Tighter Lending Standards
Regulatory Complexity
Cost Containment
Funding Constraints
Need for information management approaches/systems
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Responding to Challenges
Making the Grade 2011 - A study of the top 10 trends in higher education
Colleges and universities can manipulate four key drivers of educational institution value to improve performance
• Wide variety of funding models, geographic reach, educational focus, student constituency and faculty talent - industry challenges affects every institution differently.
• Response to industry changes must be specific to the institution, but take into account best practices and four key drivers of performance:
Funding and revenue growthThe ‘top line’ of institutional profitability - how much institutions receive from public and private sources, in addition to monies they collect from tuition and other income.
Operating marginsA key driver of institutional profitability and how they can improve value captured between funding sources and their expenses.
Asset efficiency
How effectively institutions use their capital assets, such as IT, facilities and fleet, and whether they can squeeze additional revenue or cost savings from existing investments.
Expectations and strengthsBy leveraging true institutional capabilities and differentiators, institutions can compete for students at a lower cost than competitors
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Many higher education institutions are seeking ways to attract additional funding and uncover new sources of revenue
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Making the Grade 2011 - A study of the top 10 trends in higher education
Funding &Revenue Growth
• Incorporate an operational element into strategic planning to ensure a focus on the highest priority issues
• Streamline the governance process to empower stakeholders to quickly make informed budgetary and research allocation decisions
• Clearly define roles, responsibilities and accountabilities
• Improve information tracking to better measure and report on program outcomes
• Explore innovative public-private partnership opportunities
• Enhance institutional brands in an effort to attract additional private investment
• Leverage social media and other online forms of ongoing communication to establish and maintain relationships with students, parents and alumni
• Improve tracking of research dollars• Consider globalization strategies
Higher education institutions must continue reducing their costs to widen operating margins
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Making the Grade 2011 - A study of the top 10 trends in higher education
Operating Margins
• Implement and/or leverage technologies designed to streamline core business processes, such as:
• Student services• Finance• Administration• Human resources and • Procurement
• Engage in more sophisticated planning and forecasting
• Pinpoint opportunities to share services and outsource non-core functions
• Eliminate program redundancies and inefficient processes.
Higher education institutions can also optimize the use of existing assets to improve performance
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Making the Grade 2011 - A study of the top 10 trends in higher education
Asset Efficiency
• Engage in talent management strategies to attract and retain the highest calibre faculty
• Streamline procurement and sourcing to optimize the supply chain
• Review regional delivery models to eliminate program duplication and pursue consolidation where it makes sense
• Extend access to programs through distance learning and online education
• Identify and target optimal student populations
• Engage in sustainability initiatives to improve energy utilization, reduce waste and identify ancillary opportunities to cut costs and improve performance
• Rationalize IT and real estate portfolios.
Higher education institutions can also enhance institutional brands to build on existing strengths
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Making the Grade 2011 - A study of the top 10 trends in higher education
Expectations & Strengths
• Improve information management and data analytics to identify areas of competitive differentiation
• Solicit opinions from outside the education sector
• Leverage technological innovation to better engage students and improve services
• Revisit existing strategies and processes with an eye towards identifying areas for improvement
• Benchmark against competitive institutions• Share best practices
Closing Remarks
• Innovation in the higher education sector is limited only by the imagination
• Institutions must step up and find new ways to meet the changing needs of their stakeholders, despite limited funding
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Innovate and evolve,
do more with less, and
ensure individuals contribute to global competitiveness