“trends in universities – possible implications for rm and ia”

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“Trends in Universities – possible implications for RM and IA” Ernst & Young Presentation AURIMS / ANZUIAG Conference 15 May 2013

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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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Page 1: “Trends in Universities –  possible implications for RM and IA”

“Trends in Universities – possible implications for RM and IA”

Ernst & Young Presentation AURIMS / ANZUIAG Conference 15 May 2013

Page 2: “Trends in Universities –  possible implications for RM and IA”

© 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

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© 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

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© 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

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© 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

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.6

Potential Implications for traditional University and TAFE Operating

Models…

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© 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

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© 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:

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© 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”

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© 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”

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.11

Trends across the Australian university

sector…

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© 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

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.13

Potential Implications for the University Sector…

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© 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

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© 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

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.16

Potential Implications for RM and IA…

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© 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

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.

Ernst & Young Global Risk & Opportunities Report

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.19

Potential Implications for Policy Makers

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© 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

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© 2013 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.21

Comments & Questions?

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© 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 [email protected]