University of the Future Envisioned by Consulting Company

Business consulting company Ernst & Young has released the report "University of the Future". This, not surprisingly, sees a larger role of the private sector in education and use of online education.

Much of what the report predicts has already started at universities, but is taking time to become mainstream. Australian universities have already started transforming their physical campuses, replacing libraries with learning commons and moving routine study materials online.

Innovations such as Massively Online Open Access Courses (MOOCs) are not as revolutionary as they sound. Universities have been in the business of producing low cost mass market packaged versions of learning materials for hundreds of years (called "textbooks"). The MOOC is just an update to the idea of the book, with pre-packaged materials for self study (a useful slogan would be "MOOCs are like Books").

Students soon realise that just the course materials on their own do not make for a course: you also need a tutor, assessment and other students to work with. The tutor and assessment will continue to be a major part of the cost of a course, even if these are done online. Since 2009 I have been teaching and assessing ICT Sustainability at ANU on-line. This was a successful transition to online work integrated learning.

Ernst & Young may have underestimated the sophistication of the business models beyond modern universities, their ability to adapt to change and the work already done to make that change. E&Y predict change in the next 10 to 15 years, but I expect that change to be all but complete in the next five to ten years.

Introduction and executive summary

The current Australian university model — a broad-based teaching and research institution, with a large base of assets and back office — will prove unviable in all but a few cases.

Ernst  Young’s view is that the higher education sector is undergoing a fundamental transformation in terms of its role in society, mode of operation, and economic structure and value. To explore these themes and future directions, we have conducted an industry-wide study of the main forces impacting the higher education industry globally and locally, and the opportunities, challenges and implications for Australian universities. ...

Our primary hypothesis is that the dominant university model in Australia — a broad-based teaching and research institution, supported by a large asset base and a large, predominantly in-house back office — will prove unviable in all but a few cases over the next 10-15 years.

At a minimum, incumbent universities will need to significantly streamline their operations and asset base, at the same time as incorporating new teaching and learning delivery mechanisms, a diffusion of channels to market, and stakeholder expectations for increased impact.

At its extreme, private universities and possibly some incumbent public universities will create new products and markets that merge parts of the education sector with other sectors, such as media, technology, innovation, and venture capital. Exciting times are ahead — and challenges too.
We have summarised the drivers of change of this brave new world into five key trends:

1. Democratisation of knowledge and access — The massive increase in the availability of ‘knowledge’ online and the mass expansion of access to university education in developed and developing markets means a fundamental change in the role of universities as originators and keepers of knowledge.
2. Contestability of markets and funding — Competition for students, in Australia and abroad, is reaching new levels of intensity, at the same time as governments globally face tight budgetary environments. Universities will need to compete for students and government funds as never before.
3. Digital technologies — Digital technologies have transformed media, retail, entertainment and many other industries — higher education is next. Campuses will remain, but digital technologies will transform the way education is delivered and accessed, and the way ‘value’ is created by higher education 
4. Global mobility — Global mobility will grow for students, academics, and university brands. This will not only intensify competition, but also create opportunities for much deeper global partnerships and broader access to student and academic talent.
5. Integration with industry — Universities will need to build significantly deeper relationships with industry in the decade ahead — to differentiate teaching and learning programs, support the funding and application of research, and reinforce the role of universities as drivers of innovation and growth.

The university sector is critical to Australia’s future. Universities educate our leaders and entrepreneurs of the future, create new ideas and knowledge, and earn much needed export income. Universities provide opportunities for students of all backgrounds to increase standards of living for themselves and future generations. But, to succeed, universities will need to forge new business models that are dynamic, modern and fit for the decades ahead.
We see university business models becoming more diverse, and anticipate three broad lines of evolution.

1. ‘Streamlined Status Quo’ — Some established universities will continue to operate as broad-based teaching and research institutions, but will progressively transform the way they deliver their services and administer their organisations — with major implications for the way they engage with students, government, industry stakeholders, TAFEs, secondary schools, and the community.
2. ‘Niche Dominators’ — Some established universities and new entrants will fundamentally reshape and refine the range of services and markets they operate in, targeting particular ‘customer’ segments with tailored education, research and related services — with a concurrent shift in the business model, organisation and operations.
3. ‘Transformers’ — Private providers and new entrants will carve out new positions in the ‘traditional’ sector and also create new market spaces that merge parts of the higher education sector with other sectors, such as media, technology, innovation, venture capital and the like. This will create new markets, new segments and new sources of economic value. Incumbent universities that partner with the right new entrants will create new lines of business that deliver much needed incremental revenue to invest in the core business — internationally competitive teaching and research. ...

From: "University of the Future", Justin Bokor, Ernst & Young, 2012