Universities
as Service Sector EnterprisesUniversities
as Service Sector Enterprises(Paper presented to Round Table No.5 of the National Scholarly Communications Forum, Canberra, 21-22 October, 1996.)
It is difficult to generalise about the importance of planning for information and communications management in universities. It will occur unevenly, depending on the importance institutions attach to it. My own view is that those universities that succeed in integrating their strategic and information planning will define a new model in tertiary education.
Rather than attempt a generic description of how this can occur it may be more fruitful to outline some of the features of universities that have recognised the fundamental importance of this issue.
I will call these organisations full-service universities to mark the fact that they see themselves as squarely positioned within the service sector of the economy.
It is these universities that will be the most intensive users of information technology, both in computing and communications networks.
That use will reflect decisions full-service universities have made about their strategic direction and will be reflected in their key information technology investments, and how they resolve issues associated with networks, access, terminals and services.
Some universities that have decided they are service industry players have already begun to think about how to plan and structure their institutions as service enterprises.
They will have recognised that universities that regard themselves this way will be participating in highly competitive markets where their are higher potential rewards and commensurately higher risk.
The emerging full-service universities will have analysed the market structure for education, research and professional services and will know as much as they can about their existing and likely future competitors.
Some universities may already think of themselves as organisations in transition towards service enterprises, although the speed at which they travel and indeed whether they arrive at their destination is uncertain.
One of the clearest indications that that their strategic intent is being executed is when their information and communications infrastructure and systems are appropriate to service sector enterprises.
Because their service quality will determine their success, they will have information systems that are integrated to deliver service to their customers across the range of academic, administrative and other needs.
They will have abandoned the internal institutional imperatives that have driven most decisions about IT investment and use in universities. Instead, those matters will be driven by the external necessity that they reach out to customers by applying IT to service delivery as well as administrative systems.
If some universities are to become service organisations, how well do they know their customers?
Their service industry peers use information systems to collect market intelligence on consumer preference and solicit feedback from their customers to capture their perceptions of and measure their satisfaction with service levels.
It is difficult to see why systems that gather and analyse data to shape marketing and service design and delivery in banking and retailing will not help universities come to grips with their changing customer base.
We have evidence of varying reliability about the higher education customer base of the future but little that could be confidently categorised as knowledge.
We expect the customer base to be broader and that the volume of students will continue to grow although perhaps through expanding demand for continuous learning rather than in more traditional areas.
If that is the case, secondary school matriculants entering three or four year degree course may be a smaller segment of the total market. Student age profiles may rise as continuing and professional education activity grows.
Learners who undertake the majority of their educational interaction on-campus may be overtaken in numbers by those who do so off-campus. And greater exposure of students to IT at work and home may make it their medium of choice for education.
It is likely that much more systematic feedback on demand will begin to reshape academic programs as full-service universities adopt information systems that gather reliable qualitative and quantitative data from their customers.
The current intensity of competition between universities seems set to increase, driven less by the threat from similar institutions but from the entry of entirely different enterprises.
The capacity of private providers of post-secondary education to use information technology rather than physical campuses as their key infrastructure opens the entry gate wide indeed.
Among the new entrants will be non-traditional competitors that have leveraged training programs developed initially for their own purposes into wider markets beyond the boundaries of their organisation. The approach taken by Motorola in the state of Arizona is a bell whether, as is the on-line training offered by the Gartner Group.
As full-service universities lessen their dependence on public funding sources, they can expect to compete more vigorously in the professional services market. There they will find major companies such as Anderson Consulting using information technology to create global groupware systems that are transforming the delivery of professional services.
It will be difficult for universities, no matter how well they are strategically positioned and intelligent in their use of IT, to dominate geographical market segments in the way many now do.
And while IT will erode those local quasi-monopolies it will also enable new relationships between competitors to emerge. Trends toward collaboration, cross-accreditation, franchising, sub-contracting, joint ventures and the formation of consortia are likely to intensify.
Managing service organisations involved in a series of complex commercial relationships is only possible where the technology and systems platforms exist to ensure commercial separation of collaborative, contractual and competitive activity.
The rules for competition between public and private sector players in these broader markets are already taking shape through the influence of national competition policy. The quarantining of elements of what universities do commercially, the introduction of full-cost recognition and standard business planning and accrual accounting will require from universities a standard of information systems hitherto unknown in tertiary education.
The argument that is often advanced against the emergence of the sort of scenario I am describing is that universities have a singular advantage over their competitors because they possess powers of accreditation.
But as the emergence of fully private universities and certification by professional bodies has begun to demonstrate, accreditation in higher education is an increasingly contested notion.
If one looks at the issue of accreditation from the perspective I have been describing, it begins to closely resemble a 'branding' issue for universities operating outside the limits of their current markets.
Like any branded product, a university degree relies on quality, relevance and cost to establish its value in the market.
Seen in this light, accreditation is likely to be one of the ways universities seek to differentiate themselves from their competitors. There may be many more brands competing in the market place, some from existing universities and others from quite different organisations.
None of this should inhibit collaborative development and joint accreditation of content across institutions, especially for what might be described as low rather than high maintenance subjects. But the quality of institutional branding appears likely to the jealously guarded.
The issue of branding appears in any case to move beyond the award of generic degrees where access is primarily regulated through institutional entry marks based on secondary education exit scores.
This is especially the case where universities engage in more meaningful consultation with their customers, for instance by measuring skills levels through approaches such as assessment centres in order to tailor their programs to more closely resemble commercial services.
Perhaps the central issue of the service delivery model I am outlining is acceptance by universities the notion that they will provide service in both the physical and electronic domains. One means of referring to the two domains is to describe the physical world as the 'place' and the electronic as the 'space'.
The extent to which services will be provided in one or the other domain is likely to be determined by customer choice as well as cost effective delivery.
Learning modes will be differentiated in ways that are more complex than broad-brush approaches. The traditional use of large lectures may remain effective for certain purposes such as mastery of factual material while being completely abandoned for conceptual learning.
Delivery 'across the network' will sometimes mirror and often displace delivery in the lecture theatre. But service strategies that rely on the demise of the lecture to free up resources for investment in electronic substitutes may take far too long to mature.
Considerable incentives would be required for university staff and students to transfer the learning environment completely from the place to the space.
Universities are inhibited by a low rate of return on the investment they currently have in physical facilities. It is difficult to see how institutions can generate real short-term savings by freeing up physical infrastructure for alternative use.
Similarly, staff savings created by the decline of large lectures appear likely to be more than absorbed by the task of developing courseware appropriate for delivering learning services in the space.
The result is likely to be that innovation strategies that are predicated in the space rather than the place will be market driven because they will be funded by fee revenue.
The current administrative processes and systems that sustain universities operating almost entirely in the place will not sustain them as service-driven enterprises operating in the space. They will require redesign of processes and structures to reflect the focus on needs of customers rather than existing practices in tertiary education.
Common administrative systems with standard software enable structures to change easily across the enterprise whereas proprietary and in-house systems inhibit structural change. Information systems will need to support marketing and to monitor student performance for 'early warning' action.
The concept of 'total service' to customers which is prevalent in other parts of the service sector can be applied to the interaction between universities and their customers.
Adopting a 'total service' approach to all customer needs ranges from their formal academic education to services that address their requirements for careers advice and IT expertise. The span of potential interaction ranges from individuals as secondary school students, through formal university courses to their needs as alumni for continuing and professional education.
That range and span of needs can only be met by exploiting both the place and the space in service design and delivery.
The capacity to operate as easily in the electronic and the physical domain has implications for how universities structure their service offerings. If the need is removed for common start and finish times of lectures because learning is self-paced, traditional timetabling based on the need to allocate use of physical facilities becomes almost irrelevant.
Similarly, structuring three and four year degrees in semesters in which teaching is delivered Monday to Friday and contact hours are regulated closely monitored student-staff ratios impose the constraints of place on the potential of the space.
Putting into place the information infrastructure to address this shift also enables other nascent opportunities to be exploited.
Academic expertise can be freed from the confines of single campuses to extend by networks over multiple sites, many of them across institutional boundaries, for team teaching and collaborative research.
Expanded professional services providing access to value-added information represents a significant commercial opportunity for universities.
Other opportunities exist in areas such as publishing on demand across the network, serving affiliates such as schools and professional organisations, on a fee-for-service basis. Outsourced research services delivered across networks bring a closer alignment of university research and general economic benefit.
Electronic 'pay as you go' systems and robust authentication regimes are prerequisites for establishing the commercial framework for this sort of interaction.
A range of issues require resolution if full-service universities are to be competitive in their existing and new markets. They include capital investment in infrastructure, network access and access by customers to computers.
In many service organisations strategic investment in IT systems are made according to whether they are deemed core business activities. A similar set of decisions awaits the full-service universities.
In this context, perhaps the most important question for universities is whether they regard communications networks as a source of competitive advantage or whether they are seen as a common platform across which competition occurs at the service level.
If universities follow the lead of private sector in service industries it is likely that advanced communications infrastructure, the range and price of services (eg, access to the Internet, value-added browsers and information gateways), will all become points of competition.
They are matters after all that regulate the capacity of organisations to market and deliver teaching and learning services and research.
Cooperation may be sustained between universities and with other organisations where cost reduction in operating networks is the common objective. The cost structure of service delivery favours network capacity as a commodity to buy, rather than capital investment in network infrastructure.
If that is the case, Aarnet might be regarded as just another discount bandwidth consortium and role of the regional network organisations will be principally to provide aggregation of regional demand to reduce costs.
Like their service sector competitors, the full-service universities will be early adopters of emerging technology to expand their service delivery options. They include the broadband facilities brought into reach by the pay television cable roll-out by Telstra and Optus. Cable modems linked to broadband networks will provide access to what by the standards of current educational content development, almost embarrassing amounts of bandwidth.
These networks are global in their reach. A point recently demonstrated by IBM's announcement that it had signed up more than 30 universities for its Global Campus initiative.
This exercise is driven by predictions of an electronic education market rising from $US 9.6 billion to $US 16.9 billion within four years.
The Global Campus will establish a database of electronic courses in the US, Canada, South America and in Australia (Deakin is a participant). IBM obtains revenue by charging for transactions across the network.
Full-service universities will complete the transfer of terminal costs to their customers and network access costs and communications tariffs will be built into charging schedules. Network PCs on Intranets will be packaged and marketed like digital mobile phones.
Rather than devise unique sectoral consortia, universities may find a better fit between their network needs and the telecommunications initiatives of the Office of Government Information Technology. These arrangements are likely to deliver the best savings in data communications and voice telephony through whole of government deals.
These savings also apply to IT procurement, through access to the whole-of-government panels for administrative systems delivering such standard functions as financial, human resource and records management. Whole-of-Government desktop deals for hardware and software licenses for upgrades promise similar benefits.
The full-service universities most likely to succeed in the environment I have outlined will be identifiable by these indications. The best of them will:
As full-service universities emerge, and we will know them by their integration of strategy and information management, their competitors - both old and new - will face a formidable adversary.
If they do not transform themselves into full-service enterprises providing education and research services, the opportunity exists for other organisations to do so. And whether they call themselves universities may not matter to their customers.
Send comments/suggestions/requests about this site ....
Updated 4 November, 1996