Academic dinosaurs?

A strand of the public discourse around higher education, since the coalition’s funding reforms in 2010, has been about how alternative providers (ie the private sector) will enter the market, compete with established universities and force those ‘academic dinosaurs’ to improve their offer to students, to compete on successful terms.

Two friendly academic dinosaurs

Now no doubt there is a market – you can see some evidence for this in the UCAS data – but I’m not sure that it’s as simple as the ‘more competition = better all round” narrative might have you believe.

Markets are segmented. There are different types of customer; and different types of supplier. This is true for all markets; and hence true for higher education.  Higher education differs in that price is not only about money, but also about entry tariff: you aren’t able to go to some universities unless you have the right qualifications.

On the supplier side (and for simplicity let’s focus on undergraduates only here), you have differentiation by

• length of study (accelerated degrees versus ‘traditional’ degrees; foundation years; part-time study)
• range of subjects (specialist institutions versus multi-faculty)
• mode of study (distance learning versus campus based; daytime versus evening)
• focus on teaching versus focus on research
• qualifications needed to gain entry
• price
• location (near home; another city; a rural location; a different nation)

On the ‘customer’ side, you have differentiation around:

• Price sensitivity (in relation to living costs; total fees; willingness to commit time)
• Confidence (in their own ability)
• Focus (are they looking for ‘the student experience’ or for a qualification?)
• Willingness or ability to travel to university
• Instrumentality (that is, are they focused on the career options open to them, or looking only at the educational aspects)
• Flexibility (that is, how flexible a university must be in the facilities and options it offers the student: think childcare on campus; 24/7 library opening)

This isn’t a simple marketplace. It also strikes me that the alternative providers are seeking out particular niches – a particular subject or a rigorous focus on the learner – and that only one private provider – the University of Buckingham – seeks to play on level terms with other universities.  Not a surprise, but also not a revolution.

My prediction (and it is just that! no value judgments are made here!) would be that private providers will compete mostly with some of the newer universities: attracting students with less familiarity with higher education; focusing on the learner; offering flexible study.  The older universities will continue to be popular with students who have familial experience of university, and for whom ‘going to university’ has been part of their life plan since before they knew it, in short, who come from ‘traditional’ backgrounds..

If this is right, the effects of competition won’t be on the sector as a whole, but on a subset of existing institutions only. And not, noticeably, on those institutions with a strong focus on research, which I’ve heard as a particular bugbear of the alternative providers (why subsidize research with fees? they ask).

Back to the dinosaur metaphor, this is consistent with what know – evolution is a slow process, impacting on particular ecosystems and subspecies; changing a food chain here and there; but passing almost unnoticed from one generation to the next. In the absence of a metaphorical meteorite hitting the UK university sector, the dinosaurs may be successful for some time yet.

Say hello, wave goodbye

UCAS release regular statistics on applications and entry to UK universities, and there’s some really interesting data available to download.  One aspect that caught my eye recently was the growth in the number of institutions which recruit through UCAS:

Year of entry	Institutions
2008-09	307
2009-10	306
2010-11	306
2011-12	302
2012-13	320
2013-14	361

Aha! I thought – that’ll be the growth in alternative providers. But I looked at the data more closely and found that it wasn’t as simple as that.

Firstly, the data show more entry to and exit from the UCAS sector than I’d expected:

	2013-14	2012-13	2011-12	2010-11	2009-10
Total institutions	361	320	302	306	306
Total new this year	45	24	7	12	8
Total gone from year before	4	6	10	12	9

In total, 402 establishments had recruited through UCAS in the period.

Secondly, the new entrants and leavers were quite varied:

	Coming				Going
	Renaming	FE	HE	Alternative	FE	HE	Alternative
2009-10	1	2	3	3	3	2	1
2010-11	6	6	2	1	4	1	1
2011-12	1	2	0	3	5	1	1
2012-13	2	11	0	8	4	0	0
2013-14	2	36	1	6	0	2	0

(The numbers don’t quite tally because some of the changes happened over several academic years, with parallel running in the UCAS lists)

My conclusions? Firstly, the growth in ‘HE in FE’ Colleges having direct entry through UCAS is likely to be connected to the legislative and regulatory changes which came about in 2010-11 as a result of the coalition government’s changes.  But I suspect that it is too early (and the data set here is too small an evidence base) to make any larger prognostications.

Secondly, there is a real growth in alternative providers.  Here is a little more data, showing total UCAS acceptances by providers for the past five sessions, with providers analysed into higher education institutions, further education colleges offering HE, and alternative HE providers:

	2009-10	2010-11	2011-12	2012-13	2013-14
HEIs	451,040	461,305	482,035	428,115	465,380
FECs	18,155	16,735	19,710	18,675	20,235
Alternative	705	1200	2560	2095	3090
Total	469,900	479,240	504,305	448,885	488,705

And in percentages:

	2009-10	2010-11	2011-12	2012-13	2013-14
HEIs	95.99%	96.26%	95.58%	95.37%	95.23%
FECs	3.86%	3.49%	3.91%	4.16%	4.14%
Alternative	0.15%	0.25%	0.51%	0.47%	0.63%
Total	100.00%	100.00%	100.00%	100.00%	100.00%

And my final conclusion? There’s a real opportunity for the Times Higher to run a ‘births, marriages and deaths’ column: only 267 of the 402 establishments hadn’t stopped or started using UCAS during the period.

Happy Birthday, Janet

(Or, five things you need to think about to make a shared service idea work)

Janet – the Joint Academic Network – is thirty this month. There’s a website giving some of the history of Janet, and fascinating it is. (I particularly like the second upgrade to a whopping 256kb/s. At the time this would have been spectacularly fast – but my! how things have changed.)

It’s a good example of a shared service. Undoubtedly Janet provided staff with connectivity on a uniform and high quality basis which they wouldn’t otherwise have had, and thereby enabled collaboration between universities. This makes it very important: the UK’s universities are very impressive internationally, and it’s only by making the most of our strengths that they can continue to be so.

Janet’s just one of the shared services in higher education which makes a positive difference. Other examples of sector-wide shared services include UCAS and the Leadership Foundation for Higher Education. And smaller groups of universities collaborate: internal audit services such as UNIAC or the Kingston City Group; and there’s a fascinating development in Wales: the Wales Higher Education Library Forum (WHELF), which includes all HEI’s in Wales, the National Library of Wales, and NHS libraries in Wales, is jointly procuring a library management system. These are all good things which grow the capacity of individual universities, and which enable more value to be had for less money – what’s not to like?

And for this reason shared services have been very popular with governments and funding councils. But it’s felt to me that the promise has never been fully realised. The 2012 Finance Act included provision for cost-sharing groups to have VAT exemption, which removed one barrier. But there are others, more practical, about managing the transition to a shared service. Here are five things which you should think about, if considering whether a shared service approach might work for you.

How core is the service to your operation? If you share the service you inevitably lose some control, whether it’s over the details of things are managed and prioritisation when things get tough, or whether it’s in the specification and working out what matters in designing the shared service in the first place. If the service that you’re thinking of sharing is critical to your offer – because it’s a fundamental building block, or because the specific quality, price or location matter to those who you serve, think hard about whether sharing is right for you. It’s an expensive mistake to rectify later.

How stable is the environment for the service? Sharing is a long-term activity, and if there’s foreseeable disruption round the corner, you need to factor this into your considerations. Many shared services have at their heart a common database or IT system for managing processes. How would the model look if the technology underpinning it changed completely? In the same way that cloud computing changed fundamentally the business model of many organisations in the field, so other technological (or legislative) changes will make a difference too. This need not be a show stopper, but time spent thinking about the core of the shared business model and how stable this is will be time well spent.

What is the business model? There are many activities in universities which get cheaper and better by being larger – think about the many processes which involve bulk handling of data, and once you’ve got the workflow it doesn’t cost much for a computer to repeat a calculation or a process. But if this is true for universities it is true for other sectors as well. Take payroll, for example: if several universities shared their payroll operation then the unit cost of managing a salary payment would certainly be cheaper. But banks and other commercial providers are managing payroll systems which pay millions of people every month: that’ll be cheaper still. Unless a shared service provides a benefit which is unique to the sector, then it’s quite likely that the financial savings will be outweighed by those available by looking at a different sort of provision. And that’s a big impact upon the business case.

Are you doing it for efficiency or for service quality? Shared services can deliver either, but if you’re thinking of sharing an existing service then you need to be very clear about this. You’ll have staff, buildings, customers and systems involved in what you currently do, and thinking about the change that a shared service will mean for them, thinking about how you’ll manage this, and whether the efficiency savings will really materialise is an important exercise. You’ll get more buy-in from staff and customers if you’re talking about making things better; you’ll have a stronger business case if you’re talking about efficiencies and cost saving. And it’s really hard to do both at the same time.

Do the sharers have the commitment to learn to trust each other? The human dimension is really important, and easy for management teams to overlook. Put simply, the people who will make this work come from all of the different sharing organisations, and unless they trust each other enough to work openly, honestly, and without a hidden agenda, then even mighty efforts can be frustrated. Time spent at the outset of a shared service project in bringing teams together, letting them get to know each other, and learning to work well, is critical to the project’s success. Remember the forming, storming, norming and performing model for team-building? You need to go through all four stages, and do so consciously. Make sure that it’s someone’s job to see that this happens, and listen to their concerns.

Don’t let these issues put you off – the benefits of good shared services are real and long lasting. But if it was easy, there’d be more of them.