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

© PA Knowledge Limited Page 2 Past conditions for success will not be the same in the future “FUNDED WORLD”“MARKET WORLD” Business ImperativesMaintaining 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 ModelsDiscipline- and function- basedOpen and flexible resourcing structures Resource ManagementBudgets as spending limits (or targets) Budgets as devolved business plans Cost DriversStaff and other fixed operating costs Optimal inputs for competitive pricing Performance MeasuresDelivery of HEFCE and other public contracts Differentiation, value, cost- effectiveness

© PA Knowledge Limited Page 3 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 A capability-based business model would be self-sustaining and inherently adaptive to changing market opportunities

© PA Knowledge Limited Page 4 In this world, success will be measured by results, not inputs STRATEGIC OBJECTIVESCRITICAL CAPABILITIESSUCCESS 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

© PA Knowledge Limited Page 5 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?

© PA Knowledge Limited Page 6 A quick look shows the diversity of the sector

© PA Knowledge Limited Page 7 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?

© PA Knowledge Limited Page 8 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?

© PA Knowledge Limited Page 9 Benchmarking will become more important for…. Assessing market opportunities Market share Market size Growing Shrinking Growing Shrinking Maths Eng Media Geog Law Bus

© PA Knowledge Limited Page 10 Benchmarking will become more important for…. Assessing portfolios Invest for profit / cross subsidise Close? Grow / sustain Invest for quality/ cross subsidy Profitability Quality

© PA Knowledge Limited Page 11 …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