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Higher Education: Increasing costs and risks to revenue

Author: Ian Arbuthnott


The financial health of many Higher Education institutions is threatened by risks to key revenue streams and cost increases. Benchmarking reports of university administration can indicate the priority areas for improvement. However, to obtain the benefits, organisations need a road map for implementation that is grounded in experience. Unipart has created road maps for successful change in Higher Education and many other industries. With this experience our clients have the right approach to deliver successful change and improve performance.

The range of services offered by universities has grown significantly, and in many cases so have the universities themselves. At the same time, administration and support services have grown along with them; sometimes at a greater rate.

Independent faculties give rise to diverging administrative processes – be it student applications, expense claims or otherwise. With similar sets of information and stakeholders being processed, this needlessly adds cost and complexity. Whilst academic independence must be preserved, there are clear economic arguments for addressing these structural inefficiencies that can grow disproportionately with the university.

Many universities are looking to attract more students, increase the quality of their intake and ensure diversity, access and equality. This at a time when students, who are being asked to pay higher fees, are increasingly keen to ensure that they are receiving value for money.

To achieve strategic goals and deliver on increasing expectations, universities are compelled to improve the experience and service levels offered. All of which adds more to the cost of recruitment, admissions and education delivery.

Watch the video: The benefits of implementing a culture of Continuous Improvement in your  University

Key revenue streams at risk

Brexit has been threatening access to EU funding sources, as well as student and employment markets, but it also compounds a number of other issues that already exist in the marketplace.

Growth in the sector has increased competition for students and academic staff, both domestic and international. The Review of Post-18 Education and Funding* is expected to favour a reduction in tuition fees that will result in a drop in university revenues. Meanwhile, financial markets and economies are wavering – China being of particular concern. These economic conditions are likely to limit any additional government funding being made available to Higher Education.

Institutions where government and tuition fee income is a significant proportion of revenues, have a much higher exposure of risk, and there is also increased pressure to demonstrate value for money. This is a serious cause for concern for these organisations; indeed, even in those universities where the revenue split is markedly different, it is still seen as a financial threat.

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No time to stand still

Universities can’t stand still in an environment that is dynamic, competitive and financially challenging. Universities must make changes, including enabling the opportunities of digital transformation, to safeguard future profitability. But to do more than just survive in the new reality they operate in, and enable future growth, they will need to implement more transformational change.

Read the next article in this series: Creating the business case for change

*BBC News, £7,500 tuition fees plan faces Brexit delay, 2018 https://bbc.in/2Z6ApsT

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