|27th July 2020|
LUPC’s Nicola Hill summarises the LUPC/SUPC webinar delivered in June by Joel Arber, managing consultant and group head of business development, SUMS Group and Linda Crotty, associate consultant, Procurement Shared Services. They looked at how universities need to become more efficient in the wake of the coronavirus pandemic. You can read the full Linked Magazine here.
Joel started by setting the scene; before the pandemic, universities were already in the middle of a ‘perfect storm’ with increased competition for students, debates about value for money, fewer 18-year-olds, greater regulatory burdens, rising pension costs and the impact of Brexit. Out of the 194 Higher Education Institutions (HEIs) that submitted data to the Higher Education Statistics Agency (HESA), 119 (61%) were in deficit t the end of 2018/19. And then COVID-19 came along.
In a remarkably upbeat talk, Joel advised embracing the financial challenge and using it as a compelling reason to transform structures and systems for good. Given that we have now all been forced to use IT to conduct meetings conferences, lectures, webinars and tutorials, Joel believes universities should capitalise on this digital transformation. He suggested re-shaping physical spaces and creating smaller, higher quality, high-tech campuses.
He also advocated a radical re-think of the university calendar, which would make business models more robust. “COVID-19 exacerbated the reality of universities reliance on a rigid calendar. We should be more student-centric to allow students to access learning at multiple tart dates, so they don’t miss out on a whole academic year if something goes wrong, while de-risking universities income streams.”
COVID-19 presents sharp income challenges, colliding with escalating operating costs, especially as universities have large infrastructures given their size. HESA’s data returns show only 29 universities have more than 20,000 full-time equivalent students in 2018/9. Yet, 64 had more than 2,000 staff, 39 had more than 3,000. On top of this, more than half of HEIs have more administrative staff than academics, with 22 universities having ratios above 60:40.
Before the pandemic, many universities were looking at needing to make savings of up to £20m; now some universities are talking about having to find savings of up to £100m, which is an unprecedented level of cuts. In light of this, Joel advised that procurement needs to be seen as a source of innovation and a starting point for driving efficiencies. Procurement specialists should present a balanced view of outcomes from procurement activity aligned to the strategic aims of the university.
Linda Crotty outlined what’s required to achieve sustainable change:
- A firm and clear commitment from leadership to make the change
- A simple and consistent description of success and clearly endorsed benefit
- A clear focus on outcomes, not deliverables
- An appropriate level of stakeholder support and engagement at all levels in the organisation
- Skills to sustain the change
She advocated asking the following questions:
- Where to start?
- Where do we want to be?
- How can we deliver further efficiencies?
- What changes do we need to make?
The process of reaching the goals involves benchmarking, spend analysis and stakeholder engagement, cost-benefit analysis and prioritising the savings plan. Crotty said now is the time to make tough decisions about programmes and services that are no longer required. HEIs need to consider mergers, as well as sharing spaces and resources. Crotty urged universities to act quickly and decisively not just to save next year’s finances but to reshape their long-term financial future. “Procurement should be central to executive thinking. It should be about changing institutional behaviour and culture and acting as a strategic partner.”
Joel concurred, adding that universities will need to be creative and think ambitiously. COVID-19 has created a ‘burning platform’ to drive innovation in operating models. Facing up to these challenges could mean universities exploring shared space, shared services, special purpose vehicles or even mergers. Taking a strategic approach to procurement and the savings it can realise is a great starting point. What do we want the perception of procurement to be?
Post Covid-19 how procurement could be perceived in the new normal?
- Procurement needs to be seen as a source of innovation.
- There is a need to present a balanced view of outcomes from procurement activity – aligned o the aims of your university.
- We need to sell the narrative about how procurement adds value, and, lives up to this narrative.
- Procurement needs to take the lead on managing the supply base and driving strategic alliances.
- We need to ensure that the procurement key performance indicators drive the right culture, behaviour and outcomes.
- We should be seen as proactive commercial partners.
If you would like to watch the full webinar, you can access the recording on the LUPC and SUPC Events YouTube channel here.
Joel Arber joined the SUMS Group in February 2019 to take a leadership role in higher education consultancy balanced with leading business development across the Group’s services. He has an extensive background in marketing and communications and as previously a Pro-Vice-Chancellor at the University of Central Lancashire.
Linda Crotty is a senior procurement professional with over 18 years’ experience within the public and private sectors, working with clients to achieve performance improvement through procurement.