The perfect storm? Or the perfect opportunity?

If you want to know what the challenges are facing the HE sector right now then you won’t find yourself short of material. Articles, podcasts and social media commentary abound. Analysis of the financial challenges is omnipresent, from the squeeze on the international student recruitment market to the real-term drop in the value of fee income and the impact of inflation on the costs of maintenance. The storm which the HE sector needs to navigate shouldn’t ever have come to pass – an argument for another day – but it is here and it requires a response.

The ultimate balancing act

Subtleties aside, universities need to balance the same tensions as any other organisation in the sense they have bills to pay and services to provide. Some services are business or mission-critical, some aren’t. We can and do debate at length which services fit into which category! It’s also true to say that not all universities have a full, accurate and costed picture of all the activities they’re delivering in the first place. The bottom line, however, is that once critical services have been resourced, there’s a finite pot of money left. Choices need to be made about where to spend that remaining money, to what level of quality and in pursuit of what ROI.

Universities have a raft of measures open to them. Not all measures are applicable to all institutions but the common strand for all is the need for clear, bold but sensitive leadership. The solutions here are not in the relatively straightforward domains of departmental restructures or functional alignment of professional staff. Rather, some universities have no choice but to plan a complete overhaul of how they do business. This involves a fundamental change in how the academic mission and its supporting professional services evolve, are stood down or are delivered through an entirely different model in order to remain viable whilst protecting quality.

Explore more options at #SUMSCON24

So, what are these options which institutions are exploring? You’ll hear much more about this at #SUMSCON24 but at SUMS Consulting we’re involved in live conversations exploring mergers, takeovers and models for sharing ‘non-competitive’ resources. Importantly, there’s also increasing recognition that academic size and shape is often one of the largest drivers of inefficiency in delivery. After all, no institution can optimise for everything.

The good news is that universities don’t need to gaze into a crystal ball to understand their options. Some of these are obvious – driving more value out of non-pay, reducing layers of management hierarchy and cashing in substantial capacity through leaner processes. We’re delivering projects in all those areas. But some solutions are more adventurous. The merger of UMIST and the University of Manchester may have left some scars on the sector’s collective memory but that was twenty years ago. Within the last year we’ve seen the creation of City St George’s (and if that interests you then don’t miss our conference session with Helen Watson, their Chief Operating Officer, where we’ll look at the benefits and barriers of the move). Writtle University College also merged earlier this year with Anglia Ruskin University to form ARU Writtle.

Some might equally point to the vast number of potential mergers which didn’t gain traction in previous times or highlight that the advantages of a merger are substantially limited by the obvious tension that the core funding model for HE is broken. Our view is that something structural still needs to change in the near future, irrespective of the methods institutions use to survive and evolve in the meantime.

But other, less common methods of delivery exist too. The London South Bank University Group has taken over a number of local FE colleges as a means of offering students a genuine choice between different styles of learning. King’s College London has agreed to run a medical school at the University of Portsmouth using the expertise from academics at both institutions, fast-tracking a degree in medicine in 4 rather than 5 years. It’s a development which meets King’s College London’s long-held ambition to deliver service to society whilst helping the region itself unblock issues like scarcity of GP services.

Looking further afield

It can help to turn our attention beyond the UK too. Over in the United States, the University of Georgia developed a Shared Services Centre which delivers both functional and transactional support across no fewer than 26 institutions in line with their principle to be more efficient. The University of Wisconsin merged its state colleges with its universities, a change driven at least in part by a series of budget cuts facing the system and deep declines in enrolments. And let’s not forget the obvious need to drive value out of non-pay expenditure too. The University of California leverages the vast scale of its purchasing power to offer strategic sourcing to all its 10 campuses and 5 medical centres, managing $10bn of spend annually. It’s worth highlighting that the Procurement Value Assessment (PVA) delivered by SUMS typically identified opportunities that can be realised with a ROI conservatively estimated at 3:1. It makes sense to squeeze every penny of value out of non-pay spend before tackling weightier and more complex projects.

A glass half full

Our view is that universities can do much more than simply survive in the conditions of this new era. By shaking up traditional models, learning from other sectors and opening their doors to innovation, positive and lasting change is possible. Countless other organisations have been through their own version of these same challenges and emerged in one piece – sometimes wholly transformed – on the other side. Many of the team at SUMS Consulting have helped steer the ship through the darkest days of cost efficiency and service rationalisation in local government, retail, the NHS, charities, banking and other parts of the commercial world, both in the UK and overseas. HE has managed to avoid the worst of it – until now. This is no time for wailing and gnashing of teeth about the perfect storm, but rather the chance to see this as a perfect opportunity to tackle the issues we’ve been brushing under the carpet. We know we can be better; as stewards of our institutions, let’s grasp the opportunity and be better.

Come and speak to us at #SUMSCON24 and we’d be delighted to tell you more. SUMS Consulting members can register for free here.

Not a member? No problem! Non-members can register for a small fee here.