Higher Ed Services

Bundling Auxiliary Services

How do we do better with what we have? Here is a new approach to the organization of service lines to consider.

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Photo © alphaspirit

Colleges and universities are growing accustomed to hearing the prognosis: the financially unsustainable business model, declining state funding, increasing competition for a shrinking population of college-aged students... you know the list. But there is simultaneously so much to feel encouraged by — indeed many schools are thriving, new populations are gaining access to education and so much more. Plus there is always the opportunity to better deliver on your institution’s mission. As administrators and their budgets get stretched, creativity and determination prevail. This article recognizes that important idea, and looks at an operating model that can not only increase operational efficiencies, but also make a school more effective.

The Concept

The new idea here is realizing synergies between service units as a way to better deliver on the institution’s mission, and as a way to maximize these services’ financial and non-financial value to the school. This concept can be applied throughout the whole enterprise.

The Opportunity

If the purpose of departments is to provide services essential to the academic and administrative success of the institution and its students, then the purpose of realizing synergies among services is to align and maximize the institutional value of assets through innovative solutions.

As an example, consider auxiliary services. Units here might be dining, housing, security, conference services, parking, the bookstore, the golf course, storage, etc. The concept discussed in this article looks at the impact of realizing synergies among these services, with the assertion that institutions that reflect on, acknowledge, foster and rethink their approaches in response to surfaced synergies can reap a long list of benefits. Such benefits include:

1. More effective operating expenses. It’s not about what you spend, but what you spend it on. Allocating resources in response to impact ensures that operating expenses are strategic.

2. More effective allocation of human capital. Person A works on Project A over here, while Person B works on Project B over there. Projects A and B are in fact quite related, and if we could just get Persons A and B in a room together, they would have the opportunity to collaborate for a greater impact, at perhaps a lower cost of intellectual capital.

3. Streamlined idea generation and approvals process. How do you effectively put people together to think on topics that share a common goal? How might an improved feedback process increase the likelihood and speed of approval?

How Does This Actually Look?

Realizing synergies between service units must begin with the biggest question there is for an institution in higher education: What are we trying to accomplish with our assets, and are our resources allocated in a way that best enables us to fulfill our mission? Answering this question is critical for everything that follows; depending on the answer, a strategy can emerge as related to service units.

Some schools will be able to do this on their own. Some will need advisors. And some might find benefit from identifying one or more private-sector partners to help them achieve their new vision.

New Mexico State University (NMSU) is a prime example, as it continues its investigation of what value — both financial and non-financial — might result from establishing a public-private partnership that spans a critical mass of its auxiliary assets (e.g., student housing, conference services, foodservice, special events, etc.) when compared to the traditional delivery model.

Why Consider Partnering?

Unleashing value across multiple units can, but absolutely does not necessitate outsourcing through a private partner; it is simply one of many strategies that should be evaluated for its potential to provide efficiency and improve effectiveness. For schools that don’t possess the resources to unleash maximum value on their own, partnering might be useful.

Partners whose values and practices align with those of the institution can bring benefits like funding outside of traditional avenues, risk mitigation, operational expertise, technology, agility, new revenue generation opportunities and cost savings. The results can be impactful — creating economies of scale, increasing efficient business practices, delivering better services to students and generating resources for reinvestment in student success initiatives. And again, all in the service of better delivering on the institutional mission.

Doing It Right

Any school considering engaging with the private sector to realize synergies between service units must be very careful to select the right partner. Otherwise the benefits don’t outweigh the downsides. This means the core value of mission alignment must be understood, if not shared by, the private sector partner. Once that is satisfied, schools need to think about how to select a partner willing to invest in understanding the political, market and strategic forces that drive decision making. Based on our experience, successful partners will demonstrate these five attributes:

  1. The right partner with the right business model.
  2. Demonstrated knowledge and experience to not only reduce operational costs and enhance services to campus stakeholders but also to meet current and future college or university challenges.
  3. Aligned values and desired outcomes with the school in operating philosophy and organizational culture so constituents cannot tell the difference between the third party and the college or university.
  4. Demonstrated agility and scalability to respond to increases and changes in demand for services as the school evolves.
  5. Commitment to employing college or university staff for a specified period and providing formalized and regular training, upward mobility opportunities, equal or better benefits and the option to stay employed by the school.

Again, a partner isn’t a necessity, just one strategy.

Should My School Explore Realizing Synergies Among Service Units?

The reality is that what we’re talking about here won’t be the answer for all schools. It won’t even be the answer for most. But where it is the answer, schools will be able to position themselves for long-term success and mission delivery.

This article originally appeared in the January/February 2020 issue of Spaces4Learning.

About the Author

James Vigil ([email protected]) is a former CFO and vice president for Administration in higher education and is currently a senior associate at Brailsford and Dunlavey (www.bdconnect.com), a management and development advisory services firm.

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