Published on 2013/06/13

Commoditization Helps Institutions Become More Efficient and Affordable

Commoditization Helps Institutions Become More Efficient and Affordable
Commoditization pushes institutions to do more with less, but in doing so, institutions have the impetus to become more efficient and streamlined in their operations.

Higher education has long been steeped in tradition and, to many, it should be held in the highest regard. Those individuals often see higher education as a privilege or even a right. They scoff at the idea higher education would be considered a commodity; however, it is just that. A higher education can be bought from more than 6,900 accredited post-secondary institutions across in North America.

In these tough economic times, students (the primary consumer) want the most for their money. They are savvy consumers who research before buying. In order to be competitive, colleges and universities must have a quality product at an affordable price. If not, students will look elsewhere for their educational needs to meet.

Being competitive while receiving less financial support from traditional funding mechanisms (i.e. government funding, endowments or auxiliary enterprises) has become a major financial challenge. While traditional higher education leaders would never think of looking outside their “walls” for immediate solutions to their financial challenges, strong fiscal leaders do. Those leaders understand the commoditization of higher education requires institutions to adopt necessary, cost-saving measures.

Look to External Educational Resource Providers

The largest portion of any institution’s budget is personnel. As budgets start to shrink, so does the number of faculty. The question being asked on many campuses is, “How can we do more with fewer people?” It is not always financially or logistically feasible to pay a faculty member a stipend to develop new content and course materials. Why spend additional time and money when the necessary items have already been created by external providers (i.e. textbook publishers, professional organizations and vendors)? In addition to textbooks, many publishers have course curricula, instructional aids, PowerPoint presentations and exams already developed. Often, these items are provided to institutions at little or no cost once the publisher’s textbooks have been adopted for a course. The instructor simply needs to create a syllabus, which typically does not take long. Another source of course content and materials is professional associations and accrediting agencies. These organizations offer these services so students entering their professions are properly trained to meet industry’s standards.

Do Not Cast Off MOOCs

Another strategy higher education leaders are employing to keep costs down is offering Massive Open Online Courses (MOOCs). These are online courses structured to accommodate large numbers of students being taught by a single faculty member. In addition to the typical instructional materials (such as videos, case studies and assigned readings), MOOCs provide large-scale interactive participation in the form of discussion forums, chat sessions and panel discussions. It is not uncommon for some universities to join together and offer a series of MOOCs. By collaborating, each institution can decrease its expenses by allowing students to complete some courses within the institution and others externally.

Partner with Online Book Vendors

Another large expense on campuses is bookstores. The cost of staffing, stocking inventory, building maintenance and utilities can be overwhelming. Today, many students turn to online book vendors for lower prices and convenience. Why not partner with those vendors? There are several vendors that will maintain an inventory of an institution’s required textbooks and ship orders to students’ homes. The vendors share a percentage of their profit with the institution in return for partnership.

Find a Strong Marketing Ally

Another cost-saving measure being implemented by some institutions is outsourcing marketing. The old “shotgun” approach of running newspaper ads in every newspaper, placing a college catalog in libraries and visiting every high school is no longer cost effective. We live in a highly technological, global society. Whether good or bad, people turn to the Internet for most of their information. Also, we seldom look for service providers based on our immediate geographic area. We look for providers that meet our specific needs. Today, marketing must reach directly to our intended students. That requires a great deal of research and planning. Often, institutions cannot afford a staff to do these tasks. To save money and time, enlist outside vendors that specialize in various forms of marketing, such as branding, search engine placement, social media, direct email, etc.

Adopt Technologies that increase Efficiency

For years, institutions have partnered with virtual libraries, which provide their students with immediate access to e-books and various electronic databases. This saves the institutions thousands of dollars in individual subscription fees and book purchases. Institutions have also turned to IT vendors for virtual network solutions, web design/development and electronic data storage.

Commoditization of higher education has led many institutions to reassess their practices and systems. Many have found, in order to remain competitive, they must remain affordable. To do so, they must adopt cost-saving measures. Some of those measures require collaboration with external partners and providers. If not, institutions risk losing their share of the higher education market.

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Readers Comments

Eugene Partnoy 2013/06/13 at 10:34 am

I don’t know if partnerships are the magic bean for higher education’s commoditization. As Jay Halfond’s article says; the biggest problem of commoditization is that instituitons are becoming less unique.

If everyone turns to partnerships to overcome the challenges of competition, wouldn’t the higher education space be even more homogenous than it already is?

Partnerships are responding to the wrong issue caused by this problem, I think.

Shaun Wright 2013/06/13 at 1:56 pm

Actually I think this is a brilliant solution to one of higher education’s most significant problems today.

Corporations can provide colleges and universities with critical services that are needed to function, but do not impede on a given institutions’ core values or services.

James Branden 2013/06/13 at 8:51 pm

Using external education providers cheapens an institution’s value. If students can’t even count on their school taking the time to properly design a curriculum for them, why would they choose that school in the first place? It is very sad that we have a reached a point where this is even being discussed by higher education administrators.

Earl Harewood 2013/06/21 at 9:42 am

To partner or not to partner is the question of the day? But the choices an entity makes will be determined by the recognition of the environment the entity is operating in, the uniqueness of their situation, cost-benefit analysis of the partnership and the overall value to constituent members. All of these speak to self-knowledge in a complex global operating environment that entities need to have before venturing into a partnership. Anything short of these make it easy for another to define the entity out of context and history and these can be dangerous for all parties especially if it does not work. It might be possible for an entity to be less authentic and seem to be doing well, but this can also be very, very costly during this masquerade and worse if it does not work.

Deborah Cooke 2013/06/27 at 11:18 am

I think partnering makes a good deal of sense collaborating and sharing resources, covering gaps of skill and efficiency, and combining networks for greater reach. Leveraging each other’s strengths can provide a much better outcome than a single entity trying to emerge in a highly competitive, volatile global marketplace.

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