Making the grade 2011
A study of the top 10 issues facing higher education institutions
March 2012
Introduction
Louise Upton,
Partner
Deloitte
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• 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:
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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
Making the Grade 2011 - A study of the top 10 trends in higher education
About Deloitte
• 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
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Making the Grade 2011 - A study of the top 10 trends in higher education
About ‘Making the Grade’
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Idea for the study was generated in 2010;
we conducted the interviews in 2011
10 countries/regions were interviewed,
including:
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Canada
UK
Middle East
Spain
New Zealand
- US
- Australia
- India
- Netherlands
- 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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Making the Grade 2011 - A study of the top 10 trends in higher education
“As funding dries up,
some universities are heading into debt for the first time….”
- Brian McKenna, Partner, Deloitte Canada
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Making the Grade 2011 - A study of the top 10 trends in higher education
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Institutions are over-budget and underfunded
As 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
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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).
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Decreases in Funding
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Cuts in 43 US states
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Decline of 80% funding
over next four years in UK
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Decline in federal funding
levels in Canada:
• From 80% of
operating revenues
in early 90’s – to 57%
in 2007-2008
As operating margins shrink, higher education institutions
must find new ways to cut costs without sacrificing
services
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Making the Grade 2011 - A study of the top 10 trends in higher education
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The rivalry intensifies
Competition to attract the best students heats up
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
*As reported by the University World News
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Making the Grade 2011 - A study of the top 10 trends in higher education
Should you play “globally”?
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The rivalry intensifies (cont’d)
Competition to attract the best students heats up
The top five reasons for going global*
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
According to a report by the International Association of Universities
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Making the Grade 2011 - A study of the top 10 trends in higher education
Although a global
strategy makes
sense for some
institutions,
it is not right
for every school
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The rivalry intensifies (cont’d)
Competition to attract the best students heats up
“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
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Making the Grade 2011 - A study of the top 10 trends in higher education
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The rivalry intensifies (cont’d)
Competition to attract the best students heats up
Two strategies for consideration:
Align regional offerings
and meet stakeholder needs
Articulate a global strategy to attract students
and extend educational offerings
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Making the Grade 2011 - A study of the top 10 trends in higher education
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Setting priorities
The danger of making decisions in the dark
Old habits are hard to change - tough new realities challenge democratic
decision-making:
Challenges
Potential Solutions
• Internal environment is often not
conducive to stark business
approaches
• Incorporate operational aspects
into strategic planning
• Consensus decision-making
• Slow to react
• Need for innovation, difficulty
implementing it
• Complex governance structures
• Top-down accountability is
problematic
• Conflicting stakeholder
demands
• 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
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Making the Grade 2011 - A study of the top 10 trends in higher education
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Moving at the speed of cyberspace
Technology upgrades are needed across the board
• Aging technology systems challenge institutions ability to manage rising
demands from students and staff
• 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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Making the Grade 2011 - A study of the top 10 trends in higher education
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
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Moving at the speed of cyberspace (con’t)
Technology upgrades are needed across the board
• Disruptive innovation can change the way the world learns
• 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
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Making the Grade 2011 - A study of the top 10 trends in higher education
Disruptive innovations
in 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
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Rethinking infrastructure
A renewed focus on asset optimization
With looming financial insecurity, many institutions have adjusted their
operations to:
o Maximize existing
sources of revenue
(fees, parking)
o Reduce costs
o Slow spending and
defer decisions
Scaling
back or
halting
plans
Monetizing
existing
assets
Disposing of
surplus
assets
Financial
Insecurity
Partnering
with Private
Sector
Deferred
Maintenance
Fees and
Revenues
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Making the Grade 2011 - A study of the top 10 trends in higher education
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Linking programs to outcomes
Where training and market demand intersect
Current Workforce Challenges
• Colleges are starting or have
surpassed universities on postgraduate employment
• Projected growth in jobs with
vocational training
• Workforce gaps and illiteracy in
developing nations that lack a
focus on vocational training
Need for renewed focus
on vocational training
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Institutions should look to:
‒ Continue to design programs
that align with labour needs
‒ Apply common KPIs
‒ Be open to link outcomes to
funding
“Institutions must ensure their educational agendas are in sync with
forecast marketplace demands.”
Arsh Maini, Senior Consultant, Deloitte India
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Making the Grade 2011 - A study of the top 10 trends in higher education
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The best and the brightest
Attracting and retaining talented faculty
• 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
Strategic priorities
Faculty recruiting
and retention
Enhance teaching
quality
Measuring
performance
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Making the Grade 2011 - A study of the top 10 trends in higher education
Potential Barriers
• 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
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A sustainable future
Enhancing environmental performance
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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Energy-efficient
facilities
Environmental
Responses
‘Green Cleaning’
and maintenance
practices
“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
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Making the Grade 2011 - A study of the top 10 trends in higher education
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Education for all
Tackling diversity, accessibility and affordability
• Access to education crosses social, cultural and geographic lines
• Governments struggle to educate hard-to-reach students:
Potential Strategies
Income Disparity
Remote Areas
Education for All
Disabilities
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Minority Groups
Making the Grade 2011 - A study of the top 10 trends in higher education
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Online programs
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Video streaming
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Other forms of digital
education
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Financial aid programs
targeted to unique student
populations
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Diverse faculty
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Cultural diversity
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Regulations and reporting
New responsibilities require better disclosure
• Governments around the world are increasing industry oversight:
Funding
Constraints
Regulatory
Complexity
Cost
Containment
Tighter Lending
Standards
Increasing need for
transparency
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Allocation of research funds
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Student success rates
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Sustainability
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Outcomes
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Standards
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Rankings
Making the Grade 2011 - A study of the top 10 trends in higher education
Need for information
management
approaches/systems
Responding to Challenges
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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 growth
Operating
margins
The ‘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.
A key driver of institutional
profitability and how they
can improve value captured
between funding sources
and their expenses.
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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.
Making the Grade 2011 - A study of the top 10 trends in higher education
Expectations
and strengths
By leveraging true
institutional capabilities and
differentiators, institutions
can compete for students
at a lower cost than
competitors
Many higher education institutions are seeking ways to attract
additional funding and uncover new sources of revenue
Funding &
Revenue Growth
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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
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Explore innovative public-private partnership
opportunities
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Enhance institutional brands in an effort to
attract additional private investment
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Leverage social media and other online
forms of ongoing communication to establish
and maintain relationships with students,
parents and alumni
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Improve tracking of research dollars
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Consider globalization strategies
Making the Grade 2011 - A study of the top 10 trends in higher education
Higher education institutions must continue reducing their
costs to widen operating margins
Operating Margins
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Implement and/or leverage technologies
designed to streamline core business
processes, such as:
• Student services
• Finance
• Administration
• Human resources and
• Procurement
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Engage in more sophisticated planning and
forecasting
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Pinpoint opportunities to share services and
outsource non-core functions
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Eliminate program redundancies and
inefficient processes.
Making the Grade 2011 - A study of the top 10 trends in higher education
Higher education institutions can also optimize the use of
existing assets to improve performance
Asset Efficiency
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Engage in talent management strategies to
attract and retain the highest calibre faculty
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Identify and target optimal student
populations
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Streamline procurement and sourcing to
optimize the supply chain
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Review regional delivery models to eliminate
program duplication and pursue
consolidation where it makes sense
Engage in sustainability initiatives to improve
energy utilization, reduce waste and identify
ancillary opportunities to cut costs and
improve performance
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Rationalize IT and real estate portfolios.
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Extend access to programs through distance
learning and online education
Making the Grade 2011 - A study of the top 10 trends in higher education
Higher education institutions can also enhance institutional
brands to build on existing strengths
Expectations &
Strengths
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Improve information management and data
analytics to identify areas of competitive
differentiation
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Revisit existing strategies and processes
with an eye towards identifying areas for
improvement
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Solicit opinions from outside the education
sector
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Benchmark against competitive institutions
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Share best practices
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Leverage technological innovation to better
engage students and improve services
Making the Grade 2011 - A study of the top 10 trends in higher education
Closing Remarks
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Innovation in the higher education sector is limited only by the imagination
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Institutions must step up and find new ways to meet the changing needs of
their stakeholders, despite limited funding
Innovate and evolve,
do more with less, and
ensure individuals contribute to global competitiveness
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Making the Grade 2011 - A study of the top 10 trends in higher education