The recent government announcement to cut nearly $3 billion of university funding to help pay for the Gonski school reforms shines the spotlight on universities and its need to redefine itself as a competitive business, rather than just a place for teaching and resource.
From January next year, the government will decrease the discounts offered to students who make upfront payments on HECS loans, and cap the tax concessions for educational expenses.
The implications of these changes are two-fold: firstly, students will be forced to carry a greater financial burden if they are to study at a university and secondly, universities will be under greater pressure to generate revenue in order to better support students.
Naturally, companies in all industry sectors face challenges when it comes to funding and resources, but it is particularly problematic in the field of education. Tackling this structural shift will require innovative thinking and innovative technology.
The fine line between quality and costs
Like any other business, universities are subjected to improving the bottom line, but its first priority will always be to educate students and provide high quality teaching.
The recent government announcement raises some important concerns on how education institutions can find the fine line between providing high quality teaching that attracts students and staff, without losing sight of the business side of things.
Another key issue that has forced universities to rethink themselves as businesses in recent years is the student visa policy shifts that resulted in poor publicity for the Australian education market.
The fact that student visas were subject to mandatory and often spontaneous cancellations has resulted in thousands of students having to interrupt their studies and leave the country. In addition, visa rules dictate that overseas students must return home after completing their studies without the opportunity to achieve permanent residency or sponsored employment in Australia.
Such policies mean that international students have no options of a career path in Australia, and this sends a strong global message about the Federal Government’s attitude on, and treatment of, international students.
The education industry has since realised that the inflated reliance on revenues generated from international students, an industry worth $18 billion per year, eventually placed them into a situation where they faced a real risk of obsolescence when this very ‘bubble’ burst.
The drastic need for universities to become more commercially-orientated has been detailed in a recent Ernst & Young report which found that no Australian university can survive to 2025 under current business models.
The survey also unveiled that 14 out of the 15 participating universities have more support staff than academic staff, which means that Australian education providers are not utilising their resources effectively enough to ensure economic survival.
One of the key issues that impact higher education funding is the government’s amplified compliance regulation which involves regular audits and verification of student data. Working in an increasingly punitive environment for non-compliance can lead to transgressions which affect an institution’s reputation and revenue, and so it creates a strong incentive for providers to play by the rules.
In order to become more competitive and business-focused, education providers have had to prioritise the courses and research that were essential first for survival and then for new strategic direction.
For example, over the past 18 months the focus has shifted away from primarily attracting international students to rapidly aligning strategic intent with government funded courses available for domestic students.
Streamlining through software
Many Australian universities have cut their curriculums in half, focusing on the most profitable courses that attract most students. This has also led to a push to optimise the workforce.
In fact, the Ernst & Young report indicates that this is the first step towards a leaner, more successful business model that can stand the test of time.
In order to survive, universities need to streamline their current processes, focus on a smaller range of courses and form more extensive domestic and international partnerships.
Technology can also play an important role in helping education providers better streamline current administrative practices, and redirect resources toward academic staff as opposed to support staff.
Education Centre Australia (ECA) is one example of an education provider using innovative technology to meet its compliance requirements.
ECA initially approached Sky Software to help them customise their student management system to better support the complexity of their financial and compliance reporting.
By streamlining its internal processes through technology, ECA are able to run a more transparent business which allows them to increase overall enterprise productivity and redirect resources to what’s really important – which is providing our students with excellent teaching and learning facilities.
Undoubtedly, education is arguably the defining sector that will shape Australia’s future as a high performing knowledge economy and tertiary education providers will need to find a healthy balance between becoming more business minded without compromising on the quality of its teaching.
Marcel Creed is a senior executive at Sky Software