Canadian higher education sector faces critical technology challenges: Report unveils top 10 most pressing issues

Good Morning,

 

Today Deloitte Canada, in consultation with Deloitte education practitioners from around the world, launched a report that identifies the top 10 issues that will prove the most pressing in the coming year to post-secondary institutions. The report uncovers some interesting story angles in terms of the critical challenges the Canadian higher education sector now faces, including much-needed upgrades to back-office systems, use of online communications, and investments in web-based training.  As nations work to recover from the global financial crisis, and as post secondary institutions around the world head into debt for first time, the business landscape has changed and Canadian educational institutions must meet a new host of costly demands just to stay competitive.

 

According to the report, Making the grade: A study of the top 10 issues facing higher education institutions, Canadian colleges and universities, along with their international counterparts, are facing new competitive pressures as they confront shrinking resources and increased business demands. Canadian post secondary institutions can no longer maintain the status quo, but must radically transform the way they do business in order to survive economic hardships and meet the educational needs of the future.

 

The top 10 issues Canadian higher education institutions will face in the coming year include:

1.       Over budget and under-funded: As funding declines, cost management is key

2.       The rivalry intensifies: Competition to attract the best students heats up

3.       Setting priorities: The danger of making decisions in the dark

4.       Moving at the speed of cyberspace: Technology upgrades are needed across the board

5.       Rethinking infrastructure: A renewed focus on asset optimization

6.       Linking programs to outcomes: Where training and market demand intersect

7.       The best and the brightest: Attracting and retaining talented faculty

8.       A sustainable future: Enhancing environmental performance

9.       Education for all: Tackling diversity, accessibility and affordability

10.   Regulations and reporting: New responsibilities require better disclosure

 

Louise Upton, Canadian Higher Education Leader, Deloitte Canada and co-author of the report is available for interviews to provide a detailed discussion of the issues, and insight into what institutions can be doing to address these challenges. We can also provide a copy of the report upon request.

 

I look forward to your feedback on this important story.

 

Thank you,

Heather

 

Heather McCulligh
Associate
Broad Reach Communications
C| 613.797.8949  F| 416.480.0209   
broadreachcommunications.com

 

Canadian higher education sector faces critical challenges, as institutions around the world head into debt for first time; Deloitte unveils top 10 most pressing issues facing post-secondary educational institutions

TORONTO, April 19, 2011 — Spending on Canadian higher education is coming under increasing pressure. As nations around the world work to recover from the global financial crisis, they are tightening their budgets, leaving fewer funds available to the educational sector. As well, market weakness has reduced the value of many of the endowments educational institutions rely on and private donations have declined. Yet at the same time, the costs of doing business are on the rise. According to a new report by Deloitte, as financial conditions deteriorate, Canadian tertiary institutions can no longer maintain the status quo, but must radically transform the way they do business in order to survive economic hardships and meet the educational needs of the future.

 

“As funding dries up, some universities are heading into debt for the first time,” says Louise Upton, Canadian Higher Education Leader, Deloitte Canada. “This is constraining dollars for classroom delivery and research, creating tension among different departments for scarce financial resources.”

 

According to the report, Making the Grade: A study of the top 10 issues facing higher education institutions, Canadian colleges and universities, along with their international counterparts, are facing competitive pressures as they confront shrinking resources and increased business demands. For starters, deferred maintenance is catching up with campuses with aging infrastructure badly in need of upgrades. The costs of attracting and retaining high-calibre faculty are on the rise as staff retire in increasing numbers. Furthermore, colleges and universities are under ever more scrutiny and compelled to invest in systems that provide the highest levels of transparency and accountability.

 

“The business landscape has changed and Canadian educational institutions are now finding that they must meet a host of costly demands just to stay competitive,” says Upton. “In addition to developing and maintaining state-of-the-art campuses, competing internationally to attract top students and professors, and meeting new transparency requirements, the new generation of students now expects user-friendly, self-service administrative options as well as access to the latest technologies.”

 

“However, these unprecedented and combined challenges create a unique opportunity for transformation. Educational institutions willing to think laterally can position themselves to outperform into the future,” Upton explains further.  “To succeed, Canadian higher education institutions must take a good, hard look at their organizing principles. Ultimately, the most successful players will be those who remain open to fundamental changes in management practices and support their decision-making with a sound, forward-looking business case.”

 

The top 10 issues Canadian higher education institutions will face in the coming year

To help higher education institutions take a forward-looking approach to their strategic planning in the face of these new challenges, Deloitte Canada, in consultation with Deloitte education practitioners from around the world, has identified the top 10 issues that will prove the most pressing in the coming year:

 

1.       Over budget and under-funded: As funding declines, cost management is keyWhen the global financial crisis hit, the education sector was disproportionately affected. Private schools, as well as public institutions that rely on private investment, saw the value of their endowment funds fall as declining markets took their toll. This affected many private donors as well, who lost either the ability or will to invest significant sums within the industry. At the same time, regulations limiting tuition fee increases are making it harder for many institutions to establish their own pricing and restricting them from delivering on their mandates.  Most notably, however, government budget challenges are leading to reductions in higher education spending around the world. In Canada in particular, the proportion of federal funding to the sector fell from 80% of universities’ operating revenues in 1990-91 to 57% in 2007-08. Beyond simply cutting budget allocations, governments are also taking a more hands-on approach in the funding approval process. Rather than providing funding upon student enrolment, governments like Canada’s are examining linking funding to the number of students retained to graduation. Therefore, as operating margins shrink, higher education institutions must find new ways to cut costs without sacrificing services.

 

2.       The rivalry intensifies: Competition to attract the best students heats up Top-tier institutions rarely have difficulty attracting students, but the same cannot be said of most second- and third-tier schools. The economic climate is partly to blame, as students shy away from higher-tuition private and market-funded institutions. However, other factors are also at play. Demographic trends in many developed nations have resulted in declining enrolment in elementary schools, which will ultimately affect enrolment levels at higher education institutions. International competition also plays a role by siphoning off the best students of many countries. As the rivalry intensifies, higher education institutions must find ways to gain a competitive advantage by differentiating themselves in an effort to attract top students as well as research dollars and top faculty. “To avoid brand erosion, higher education institutions must get very clear on their strengths and weaknesses,” explains Upton. “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.”

 

3.       Setting priorities: The danger of making decisions in the dark Educational institutions operate in environments that are frequently not conducive to stark business approaches. In the area of budgeting, decisions are often made democratically as opposed to strategically. Extra money frequently goes to the stakeholders who bring it in, rather than being deployed to the areas of greatest need. Institutions are slow to phase out programs that no longer meet evolving student needs or to introduce new programs that lack a proven track record. As well, high degrees of organizational fragmentation and decentralization also prevent various departments from working together towards common goals or to realize improved operational efficiencies. To succeed into the future, institutions must invest in data mining, financial analysis and IT systems that can help them identify optimal service delivery models and ensure they align to student needs. As well, they must rationalize redundant programs, evaluate the continued relevance of costly ones and ensure their curricula keep pace with market changes. And they must look for ways to enhance their core competencies and outsource the rest.

 

4.       Moving at the speed of cyberspace: Technology upgrades are needed across the board While stakeholders across the campuses all have different needs, they expect access to equivalent levels of service. For faculty, this translates into a need to access critical information seamlessly. For students, it manifests in the growing expectation for integrated services, such as one-stop enrolment, web-based interaction and the ability to access educational support online. Although higher education institutions understand these requirements, aging technology systems make it exceptionally difficult to deliver on these promises. In many cases, back-office systems used to manage student information, finances and HR are outdated, hampering organizational ability to streamline the student enrolment process, realize cost efficiencies or hire staff—and even schools that have invested in new technology in recent years often are not leveraging its full capacity. Moreover, schools that have not yet embraced online forms of communication —including Facebook and Twitter —are losing a critical opportunity to build student loyalty and cement long-term relationships. Finally, in addition to system upgrades, higher education institutions must also respond to the growing demand for web-based training. Beyond lowering the costs of delivering education, reducing infrastructure demands and offering programs to higher volumes of students, this type of online education could have positive implications for declining enrolment.

 

5.       Rethinking infrastructure: A renewed focus on asset optimization When endowments seemed endless and financial security assured, many institutions committed significant resources to expanding their campuses. Yet much has changed since the economy shifted. As the value of endowments declined, institutions were forced to scale back on their capital expansion plans or halt them entirely. Schools that already built new facilities are now struggling to pay ongoing operating and maintenance costs. And even those that did not build are grappling with the consequences of deferred maintenance, particularly as their facilities, technology, equipment and campuses continue to age. As Upton states, “In the wake of the global financial crisis, higher education institutions must explore new ways to reduce their infrastructure costs. This involves more than addressing their deferred maintenance fees or converting properties to multiple uses. It requires a wholesale assessment of how they can use their assets more effectively.”

 

6.       Linking programs to outcomes: Where training and market demand intersect In countries around the world, there has long been a distinction between university education and vocational training. Yet, despite their reputational challenges, vocational schools may be trumping universities in one of the most critical performance metrics: post-graduate employment. This means higher education institutions must take steps to design programs that align with marketplace demands and employer needs. It also means they must engage in more focused research and analysis in an effort to correlate their educational offerings with their students’ ability to secure gainful employment. As students and parents increasingly come to assess degrees based on the economic value they confer, institutions will need a way to demonstrate the practical outcomes of the programs they offer.

 

7.       The best and the brightest: Attracting and retaining talented faculty Despite the critical role of faculty, many higher education institutions lack a solid strategy for attracting and retaining talent, measuring performance and enhancing teaching quality. Given these trends, higher education institutions may find themselves facing a critical talent gap in the near future, and must develop focused talent management strategies designed to help them become employers of choice within the sector at large.

 

8.       A sustainable future: Enhancing environmental performance Public scrutiny, media attention, regulatory mandates and ongoing student demands continue to exert pressure on organizations to improve their environmental performance. This is starkly highlighted by the release of the annual College Sustainability Report Card, published by the Sustainable Endowments Institute. After assessing 322 U.S. and Canadian universities and colleges, the Report Card “grades” each school’s sustainability practices. The comprehensive report reviews performance across 52 indicators in nine categories: Across organizational lines. Institutions that earn top marks must generally do more than reduce their carbon emissions and improve energy efficiency. They also need to examine a range of non-traditional practices, such as managing a campus garden or farm, introducing trayless dining, composting organic waste, incenting students to reduce water and electricity use, introducing bicycle-sharing programs and constructing green buildings.

 

9.       Education for all: Tackling diversity, accessibility and affordability While very few issues cross social, cultural and geographic lines, access to education is one of them. In countries around the world, governments and citizens grapple with the challenge of educating hard-to-reach students, particularly those who struggle with income disparity, have an illness or disability, live in remote communities or are members of disenfranchised ethnic groups. For instance, the Association of Universities and Colleges of Canada views increased Aboriginal access, participation and success in higher education as a national priority. However, in most cases, universities and colleges are not equipped to resolve these issues on their own and government assistance and regulation tend to go a long way towards making education more accessible. While simple solutions may not exist, access to education remains a critical issue that should impel institutions to design programs that best meet their unique constituencies.

 

10.   Regulations and reporting: New responsibilities require better disclosure In the wake of the international market meltdown, governments around the world have been stepping up industry oversight by flexing their regulatory muscles. In light of these new responsibilities, many institutions find themselves struggling to comply with an increasingly complex disclosure environment. However, to meet growing expectations in this area, institutions will need to do more than simply comply with the letter of the law. If they hope to differentiate themselves in an increasingly crowded marketplace, they will need to invest in more sophisticated information systems that allow them to track and report their performance across the criteria of greatest interest to each of their stakeholders.

 

Obtain a copy of the report

For a more detailed discussion of the issues facing higher education institutions in the coming year and potential response strategies, the full report is available at www.deloitte.com/ca/higher-education.

 

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 7,600 people in 57 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Deloitte & Touche LLP, an Ontario Limited Liability Partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

- 30 -