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					                               UFS


        Universities Finance Seminars
BRITISH UNIVERSITIES FINANCE DIRECTORS GROUP
Pricing Decisions, Marketing & Contribution Analysis


                           Brian Plowman
                                Director
            Develin & Partners, Ash House, Fairfield Avenue,
                    Staines, Middlesex TW18 4AB, UK
            Tel: 01784 224207 brian.plowman@develin.co.uk
                           www.develin.co.uk
Develin & Partners                                    UFS


                     Approaches we implement:
                      Activity Based Management
                      Business Process Management
                      Value Based Management
                      Performance Measurement
                      Change Management
                      Information Systems Strategy
                      Overhead Effectiveness
                      Organisation Strategy
Typical past clients: (Broad spectrum)                                                                                                                  UFS

 Abbey Life Assurance             Building Research Establishment Guardian Newspapers               Murray Lawrence          Staveley Industries
 ABB Kent Meters                  CCH Editions                    Guardian Royal Exchange           National Savings         Stryker (Howmedica
 ACCO Europe                      Cendant Business Answers        Gunstones Bakery                  National Starch          International)
 AEA Technology (Harwell)         Century Group                   Hazlewood Foods                   NatWest Bank             Sun Alliance Group
 Allied Domecq                    Cerberus                        H P Bulmer                        Nokia Telecomms          Sun Life Assurance
 Allied Industrial Services       Chalmers & Mitchell             Hepworth Refractories             NORWEB                   Syntegra
 Alstom Gas Turbines              Charities Aid Foundation        Hollow Extrusions                 Ohmeda Limited           Tate & Lyle Sugars
 Amoco                            Charter Consolidated            Holt Jackson Book Company         Pearl Assurance          Texaco
 Anglia Polytechnic University    CI Bakeries                     How Engineering Services          Perot Systems            The Mercers Company
 Aspen Business Comms             CIC Banque (Paris)              Hydrographic Office               Pilkington Barnes Hind   The Post Office
 Automobile Association           CLS Packaging                   Ilford Films                      Pro-Bel                  Toad Innovations
 Avesta Sheffield                 Clyde Shipping                  Jersey Milk                       Prudential Assurance     UK Paper
 Bahrain Telecom                  Comag                           Kao Infosystems (UK)              Prudential Home          United Utilities
 Bank of Ireland Mortgages
 Banque Industrie Franaise
                                   Typical clients in the HE/FE sector:
                                  Co-operative Bank
                                  Co-operative Retail Services
                                                                  Kleinwort Benson
                                                                  Kuwait Investment Office
                                                                                                    Service
                                                                                                    Prudential Portfolio
                                                                                                                             University of Leeds
                                                                                                                             University of Manchester
 BARMAC
 BBC Production                    • University of Leeds
                                  Copystatic Systems
                                  Costain
                                                                  Kyle Stewart Limited
                                                                  Lab of the Govnt Chemist
                                                                                                    Pyroban
                                                                                                    Quadrant
                                                                                                                             University of Surrey
                                                                                                                             Vertex Data Science
 BBC World Service                Department of the Environment, Le Riche Group                     Rhone Poulenc Rorer      WH Smith
 BBC Worldwide                     • University of Manchester
                                  Transport and the Regions       Leeds Permanent Bldg Society      Ross Breeders            Wace Group
 Benfield Motors                  DHL Worldwide                   LIFFE                             Rover Group              Waitrose
 BET
 Boehringer Mannheim Limited
                                   • University of Surrey
                                  Dominic Group
                                  East Midlands Electricity
                                                                  Livpl Victoria Friendly Society
                                                                  Lloyds Bowmaker
                                                                                                    Royal Automobile Club
                                                                                                    Royal Bank of Scotland
                                                                                                                             Walter Alexander
                                                                                                                             Wella
 Boots International Healthcare
 Boots the Chemist                 • City University
                                  Enron
                                  Equifax
                                                                  Lombard North Central
                                                                  London Electricity
                                                                                                    RTZ Pillar
                                                                                                    Saudi International
                                                                                                                             Whitbread
                                                                                                                             Wholesale Fittings
 Boots Store Planning             Estonian Railways               Lucas Aftermarket Operations      Bank                     Yellow Pages
 BP Chemicals                      • Anglia Polytechnic University
                                  Factory Mutual International    Lucas Automotive Electronics      Schroder Unit Trusts     Yorkshire Electricity
 BP Exploration                   Fisons Pharmaceuticals          Lyons Tetley                      Scottish Courage         Zeneca Pharma
 BP Oil                            • Buckinghamshire Chilterns University College
                                  Fleet Air Arm                   Meggitt                           Scottish Environment     Zurich Insurance
 BAe Systems and Equipment        Forth River Purification Board  Mercantile Credit                 PA
 British Aviation Insurance
 British Rail
                                   • Edinburgh Telford College
                                  Franklin Mint
                                  Glostal
                                                                  Metal Castings
                                                                  Ministry of Defence
                                                                                                    Severn Trent Systems
                                                                                                    SG Hambros
 British Telecom                  Granada Hospitality Services    Muraspec                          Simpson Lawrence
 BT Conferencing                  Granville                                                         Sir William Halcrow
 BT Mobile                        Grattan                                                           SmithKline Beecham
 BTR Graphics                                                                                       South West Water
                                                                                                    ST Microelectronics
HE is big business   UFS
Key messages and actions that follow                                                                          UFS
                                                         1. An example of a pricing policy which an HEI might adopt
                                                            is one that aims to set prices that cover actual costs and
                                                            make a surplus on any activity, the level of surplus
                                                            reflecting what the market can bear.

                                                         2. It is recognised that an institution may not be in control
                                                             of prices for certain services, since most HEIs operate in
                                                             a variety of markets with often very different constraints
                                                             in pricing




 1. The increased awareness of the costs of different activities and different units that has come about
    as a result of the Transparency Review should enable institutions to have a much clearer view of
    which areas are financially viable, and which are not.

 2. The pricing strategy may need to address using the opportunity to review processes and seek
    simplification.
High quality answers are needed                       UFS




                              Contribution
                              Contribution analysis
                                analysis
Key points                                         UFS

   • Meaningful information. Not buried by data.
   •
   •
   •
   •
   •
Strategy is about Positioning and Capability                      UFS
                                      • Overseas student fees
                                      • Non-publicly funded courses
                                      • Franchised programmes
                                      • Research and consultancy
 Capability                           • Professional courses
                                      • Major teaching contracts
                                      • Short courses
  • Methods                           • Workplace nurseries
  • Processes                         • Residences, catering, conferences,
                                      • Bars and shops
  • Organisation            Where     • Printing and publishing
                           you want   • Theatre performances
  • Technology               to be    • Room and equipment hire
  • Skills
  • Culture

                                      Positioning
                   Where              • Products/services
                    you
                    are               • Customer Needs
                    now
                                      • Competitors
                                      • Regulatory framework
                                      • Environment
                                      • Shareholders
The journey                                                                                  UFS

                Capability                                                         Where you
                                                                                   want to be



                                                   Culture Change

 Business Process
                                                                                   Is everyone
  Re-engineering
                                                                                     with us?
 Reduce process                    Performance Measurement
 costs, improve
    service
                                                                            Where are we
                                                                           on the journey?
                             Change Management


                                                          No pitfalls on
                                                           the journey



                                  Activity Based Management
                                                                             Positioning
    Where you
     are now                    Product & Customer profitability
                                     Portfolio mix, pricing
Key points                                               UFS

 • Meaningful information. Not buried by data.
 • Need to work on both axes: Positioning & Capability
 •
 •
 •
 •
Activities: The fundamental building blocks                                   UFS



                        Costs *   Resources
                                     Ledger


                                                         Service levels *


        Inputs                                               Outputs
                                  Activities                                Revenue
      Make activities                                         Result of
        happen                                                activities

      Cost driver
      volumes *
                                  Methods
                                  Way things are   Unit costs *
                                      done




                        * All these are measurable
                 Activities are the engine of change
Activities                                                                        UFS


                             Process effectiveness
                             Using Business Process Re-engineering



                             Costs Resources
                                           Ledger


     TRAC & fEC
     using Activity Based Costing

             Inputs                                                  Outputs
                                        Activities                   Result of
           Make activities
             happen                                                  activities

          Cost driver
           volumes
                                        Methods          Unit
                                        Way things are
                                            done         costs
Key points                                                                  UFS

 • Create meaningful information. Don’t get buried by data.
 • Need to work on both axes: Positioning & Capability – plot the journey
 • ‘Activities’: useful for TRAC, fEC and improving process effectiveness
 •
 •
 •
Activities vary for different reasons                                     UFS
             Reduce costs:
                                        Show excited
       By changing the method         customer research
                                           proposal

                                     Core
               Travel to
               customer              Adds value, meets         Reduce (increase)
Support                              business and                   costs:
                                     customer needs             By changing the
Enables core                                                    level of service
activity                                                           internally &
                                                                 externally and
to take place                                                     identify risks
                                                                    (benefits)
                                  Diversionary

             Reduce costs:
                                  Adds cost, but no value -
                                  caused by process failure
       By making an upstream
        process improvement           Explain to customer
                ..and by              why last project was
                                    late, report had missing
          Changing customer (&      sections and the invoice
           supplier) behaviours             was wrong
Process view more useful than functional view           UFS




 Inputs                                           Outputs
                                                 (eg Student
    (eg
                                                  registered
 Student
                                                 and fees in
  shows
                                                   the bank)
  up for
 Registrat
   ion)


  Linked activities - with measurable inputs and outputs
Becoming price competitive            (and/or fund growth plans)       UFS


                  C     C/S     C/D          D
                                                                    Outputs
   Inputs




 Typical                                                      Overall less
 starting                                                        and
  point                                                       rebalanced
                          51%
            30%                 Becomes


                  19%
Key points                                                                   UFS

 • Create meaningful information. Don’t get buried by data.
 • Need to work on both axes: Positioning & Capability – plot the journey
 • ‘Activities’: useful for FEC and improving process effectiveness
 • Reducing ‘diversionary costs’ funds all your improvements (case study later)
 •
 •
Basics of ABC modelling                                        UFS

   Resources (on the ledger)




             Activities (found by analysis)




                        Outputs (meaningful entities/groups/etc)
The purpose of ABC is to make this link                                                            UFS


 We know:                 So we must find                                              So we can
                          out...                       …and why                        determine:

  What resources              How much                     What drives                       The cost of
       cost                  activities cost              activity costs                      outputs


 People                   Selling                      such as                         Products
 Equipment                Manufacturing
                                                       No. of customers                Services
 Travel                   Filing
 Materials                Training                     No. of products                 Channels
 Buildings                Paying suppliers             No. of invoices
                                                                                       Customers
 etc                      Planning                     etc
                          etc                                                          etc



                               Activities/                    Activity                         Cost
   Resources                   processes                      drivers                         objects


         ... in order to be able to assign costs accurately to products and services
Cascading costs through the model                                                                UFS

        Resource                       Activity                      Cost Object
         module                        module                         module
       Ledger items:                                                                         F
                                       Activity 1                      Course 1
       Salary
       Pension            C            Activity 2                      Course 2
                                                        D
       Stationery                      Activity 3                      Rsrch proj 3
       Rent & rates                                           E
                                       Activity 4                      Student 1
       Fully costed person             Activity 5                      Funder 2
 A                    B                Activity 6     G
                                                                       Legal Entity
Decide the logic & assumptions                                         Sustaining
 A       Short cut to reduce complexity in the model. (e.g consolidate all ‘people’ costs)
 B       Allocate people costs on basis of time spent on activities
 C       Allocate other costs on an appropriate basis (eg space used, No. of people)
 D       Allocate some activities to others (eg HR, Estates, etc)
 E       Allocate activities to ‘products’ and ‘customers’ on an appropriate basis.
 F       Allocate products to customers.
 G       Allocate costs and activities to Legal Entity and Sustaining cost objects
Key points                                                                        UFS

 • Create meaningful information. Don’t get buried by data.
 • Need to work on both axes: Positioning & Capability – plot the journey
 • ‘Activities’: useful for FEC and improving process effectiveness
 • Reducing ‘diversionary costs’ funds all your improvements (case study later)
 • ABC modelling helps to deliver fEC (and every aspect of profitability in the
   university – case study later)
 •
 •
Cost categories: Activities and cost drivers                               UFS




              Legal-     The cost of being in business - no cost
                         drivers eg annual audit, senate
              entity
                            Current cost, future value no cost
                            drivers eg New IT development, spare
            Sustaining
                            capacity, brand advertising

                                                  ABC Contribution line
         Internal service       Current cost, current value - indirect
                                eg quality control, training, IT network

            Front-line              Current cost, current value - direct
                                    eg teaching, research, selling,
                                    customer service, cash collection

        Products/services,
       channels, customers
A universal law: The Hook Curve                                                      UFS

                                                     Cumulative
                                                customer contribution



                  100%
                        Contribution


                                               Positive             Negative
                                             contributors         contributors




                                                      Customers
Highest contributing customer
                                       30%                60%                 100%

             Similar though less pronounced ‘hook’ for product contribution
Key points                                                                           UFS

 • Create meaningful information. Don’t get buried by data.
 • Need to work on both axes: Positioning & Capability – plot the journey
 • ‘Activities’: useful for FEC and cost reduction
 • Reducing ‘diversionary costs’ funds all your improvements (case study later)
 • ABC modelling delivers FEC
 • Contribution analysis delivers Product & customer profitability. (case studies later)
 •
 •
Poised in the starting blocks                             UFS

                        Capability                 Strategy:
                                                   Where you
                                                   want to be




      30%         51%


            19%



                                       fEC
                                     modelling
                                                 Positioning



       Knowledge
       of activities,
        processes,
      costs, volumes
Key points                                                                          UFS

• Create meaningful information. Don’t get buried by data.
• Need to work on both axes: Positioning & Capability – plot the journey
• ‘Activities’: useful for FEC and cost reduction
• Reducing ‘diversionary costs’ funds all your improvements (case study later)
• ABC modelling helps to deliver fEC (and every aspect of the university – case study
  later)
• Contribution analysis delivers Product & customer profitability. (case studies later)
• All functions work together concurrently on Positioning & Capability
Case studies                 UFS




               Positioning
Key points                                                                            UFS

 •   Create meaningful information. Don’t get buried by data.
 •   Need to work on both axes: Positioning & Capability – plot the journey
 •   ‘Activities’: useful for FEC and cost reduction
 •   Reducing ‘diversionary costs’ funds all your improvements (case study later)
 •   ABC modelling delivers FEC
 •   Contribution analysis delivers Product & customer profitability. (case studies later)
 •   All functions work together concurrently on Positioning & Capability
 •   ABC analysis produces surprising insights.
A University                                             UFS




                                        Total costs:
                                        £69.4 million
    2,000
   Modules                              Total No. students
                                        13,000
                1,000       3,500
               Courses     Degree       Academic staff
                         combinations   630
                                        Support staff
                                        690
Schools, Modules and Students                                          UFS

                                            Typical School
  Schools have
  their ‘own’       Sch 1   Sch 2   Sch 3
                                                   Cost of
  students                                     preparing and    High
  (Revenue)                                  delivering modules

                                             Cost of managing
                                                                Low
                                               own students


Schools develop                             Costs        Used by
and deliver their
                                            Central       Students
own modules
                                             depts



                                                          Modules
  Students select                           Schools
  a range of modules
  from various schools
  (create costs)
Definitions                                           UFS


    Students: full-time, part-time, international,
     regional, mature, disabled, …
    Customers: students, companies, HEFCE, loan
     companies, regional partners, …
    Products: modules, pathways, sets, fields,
     advice, guidance, accommodation, awards,
     chaplaincy, sporting facilities, ...
    Resources: academic staff, admin staff,
     managers, buildings, facilities, networks,
     computers, library, ...
The Model: Highest level of cost separation                        UFS




               Without         £8.4 million
               Income


             With Income           £21.3 million


                                                    £35.2 million
                                    £39.6 million     Modules
          Modules & Students
                                                    £4.4 million
                                                     Students

 Total Costs Modelled £69.4 million
ABC model   UFS
Without Income                                                                                      UFS


     Buildings not used.



Previous Reorganisations
                                                                           £8.4
                                                                           Million
        Student Services



           Infrastructure



              Sustaining



       Internal Research



                            £0    £500,000    £1,000,000   £1,500,000     £2,000,000   £2,500,000



          All of these categories were further broken down in the model
With Income                                                                                    UFS


                   Funded Projects


                   Summer Schools
                                                                                 £21.3
                                                                                 Million
      Internal Commercial Services


             Conference & Catering


                  Funded Research


           Student Accommodation


     Regional & Associate Colleges


      External Commercial Services


                                     £0           £2,000,000        £4,000,000    £6,000,000


    All of these categories were further broken down in the model
Modules - Total Cost                                                UFS

   Standards & Quality


       Teaching Space                       £35.2 million

   Labs & Technicians


               Library


 Module Administration



             Teaching



                         £0   £10,000,000    £20,000,000    £30,000,000
Average Module Cost per Student                UFS


            LAW

            ABS

            HCP

             LSS

            APPS
 Schools




             AL

            EDU

            CHSS

           UCLT

           UCANA

            DACS

           REGO

                  £0   £200   £400   £600   £800
One module within the Law School                                                              UFS

                        Timetabling

MPD - Classroom Audio Visual Equip                                 105 students
                    Resources Room
                                                               £289 each student
                    Computer Room

 ASA - Academic Standards & Audit

        LIBRARY - Media Materials
                                                               Note: All modules costed

Cheltenham Campus Teaching Space

       LIBRARY - Readers Services

      LAW - Student Administration

        LAW - Teaching Individuals

          LAW - Teaching Lecturing


                                     £0   £20    £40     £60     £80     £100   £120   £140

                                                Element Cost for Each Student
Avge Cost of a Module by Number of Students                                      UFS


  £1,200


  £1,000


    £800


    £600


    £400


    £200


      £0

               10   20    30    40    50    60    70    80    90   100   120   130


           Raised many questions:
           e.g Should modules be run with less than 10 students?
Avge Number of Students/Module/School                             UFS



80   73
          68
70

60             51
50

40                  34   34

30                               25     23   21
                                                  18   18   18
20                                                               11
10

 0




                              Schools
Students - Total Cost                                           UFS


    Financial Aid and Advice

                 Counselling

   Student Income Collection
                                        £39.6 million
                  Admissions

                 Registration

                Open Access

Student Assessments Tracking

                    Modules


                                £0   £20,000,000        £40,000,000
Students - Total Cost (Excl. modules)                                      UFS

 Residencies Income Collection

            Health Promotion

       Financial Aid & Advice

                  Counselling
                                                 £4.4 Million
    Student Income Collection

          Academic Guidance

               Careers Centre

  Recruitment and Admissions

                  Registration

          Open Access Facility

 Student Assessments Tracking


                                 £0   £500,000   £1,000,000   £1,500,000
 One Law School Student                                (Out of total 13,000 students)       UFS

           C&ITS - Open Access Facility   Service
                 ADMISS - Admissions      Service
                  CPSVE - Registration    Service                            10 modules
FINANCE - Residencies Income Collection       Service
              LAW Module - LWH2998A                                    £3,383 total cost
         CPSVE - Assessment Tracking                Service
              LAW Module - LWH1998A

   FINANCE - Student Income Collection               Service
             LAW Module - Criminology

            LAW Module - IT & The Law

         LAW Module - Law of Evidence

         LAW Module - Sport & The Law

  LAW Module - Advocacy & Negotiation

       LSS Module - Beginners French 2                    Language module
       LSS Module - Beginners French 1                    Language module
          LAW Module - Legal History 1


                                         £0    £50      £100   £150   £200    £250   £300
Full Time Average Student Costs                                               UFS


                  Typical ‘EDU’ student goes to many other Schools’ modules
 £6,000                           eg Costly ‘Science’ modules

 £5,000


 £4,000


 £3,000


 £2,000


 £1,000


     £0




                                    Schools

          Can compare with average income for students at each School
Attributes: To analyse data in the model                                                UFS
   Public and non-public teaching: (Similarly for modules and research projects)


  Student          Year        Course         Study         Funds        Accom

  A.Benson         1           Mst            PT            LA           HoR
  F.Natel          3           UG             FT            OS           Home
  H.Scott          3           UG             FT            Own          Out own
  D.Halston        1           HND            Tk Snd        Co           Out Uni
  C.Jones          2           Basic          Tn Snd        Own          HoR
  D.Ford           2           Mst            FT            LA           HoR
  N.Bryan          3           UG             FT            LA           Home
  T.Sparke         1           UG             FT            OS           Home
  P.Orr            1           HND            DR            LA           Out own
  P.Gibbs          3           Basic          Tn Snd        Co           Out Uni



                                                      18 invoices unpaid, and student
     Income higher than UK student
                                                      not registered on any courses!
   but costs are in excess of revenue!
Key points                                                                            UFS

 •   Create meaningful information. Don’t get buried by data.
 •   Need to work on both axes: Positioning & Capability – plot the journey
 •   ‘Activities’: useful for FEC and cost reduction
 •   Reducing ‘diversionary costs’ funds all your improvements (case study later)
 •   ABC modelling delivers FEC
 •   Contribution analysis delivers Product & customer profitability. (case studies later)
 •   All functions work together concurrently on Positioning & Capability
 •   ABC analysis produces surprising insights even in simple businesses.
 •   …and as many shocks and surprises in a University
Case study: University                                                             UFS


                              Capability
         eg Improve processes to reduce costs & improve service


  1.   Recruitment, Admissions and Registration (including marketing activities)
  2.   Timetabling
  3.   Assessment
  4.   Curriculum Development and Management
  5.   QA: Validation and Annual Monitoring
  6.   Staff Development and Training
  ….
  ….
  23. Key processes
Involve the people who work in the processes                                                              UFS

 Recruitment, Admissions and Registration
    Many students do not enter through the UCAS standard system e.g. entry through NMAS, ‘route B’, direct
     application, part-time, post-graduate. Nurses and design students all require interviews.
    Admissions process viewed as slow, inefficient and uncertain
    Lack of clarity of task split between centre and faculty admissions
    Students faced with queues, delays and repetition
                    Staff know of many more issues at the
     Fragmented impression given to student – may lose potential students
                    detailed level so more can be improved.
     Fragmented and duplicate data collected throughout university
    Inconsistency of processes in different parts of organisation

                   Ensures buy-in by the people who
 Curriculum Development and Management will be
                   affected deadlines felt to be unrealistic
  Persistent schedule slippage, by the proposed changes.
    Everyone involved in much diversionary chasing activity
    Needs clear strategic direction – no real course planning or portfolio development strategy
    Curriculum development tends to be faculty-driven rather than demand-lead
    Academic planning process is not adhered to – 2 year lead time required for new courses by administrative
     procedures
    Short product life cycle but tendency to add and never cut courses (many modules may be running
     uneconomically)
    General consensus that too much choice is offered to students
Create a process perspective: Walk processes                                                                                                          UFS
    Prospective          Marketing                 Faculty Admin            Faculty          Admissions        Accommodation      Disability
      Student                                            Provide           Academics                                              Support
                                                      information on                                                              Services
                     Update courses                      courses                                Update
                      on Marketing                                                             Definitive
                       Database                                                                course list
1   Student
contacts BCUC
with an enquiry               2
                          Simple           No
                         enquiry?

                                            Faculty 3 Answer query /     4 Answer query /   5 Answer query      6 Answer query   7
                                  Yes       D/base provide further                                                                Answer query
                                                                          provide further      about entry           about
                                                    detail or pass to                                                            about disabilities
                                                                              detail          qualifications     accommodation
                                                       academic
                     8
                      Answer query /
                     send prospectus.             Answer query / send
                                                      prospectus. 15
                                                    Pass on names if
                                                   student has shown
                                                  interest in open day

                     9 Record in
           Marketing Enquiries D/base.              Follow-up if they
            D/base e-mail to Faculties                   wish?
                                                   10
                          weekly

                                                                    Seeing the impact of issues
                     Send out invites                                                                                            Arrange suitable
                    to Open Day and
                                                                  within and between departments                                    facilities to
                    record those who                                                                                             enable student to
                    11 attend.                                                                                                   12 attend

    13
     Attend Open
         Day
                    14Send follow-up
                      letter - different          Example shown is ‘Handling Enquiries’ a Sub process of Recruitment
                        O/D dates to
                      non-attendees.
                                                  The Recruitment, Admissions, Enrolment and Induction process is one of the
                                                  most complex processes in a university and very prone to process failures
                    16
                     No further follow
                                                  and therefore unnecessary costs
                     up. Student then
                        decides to
                       apply / not.
Analyse activities from a new perspective                      UFS

                                Forecast next year’s student
                                accommodation needs
 Keep records of suitable
 accommodation                 Core
                               Adds value, meets
Support                        business and
                               customer needs
Enables core
activity
to take place
                            Diversionary
                            Adds cost, but no value -
                            caused by process failure
                            Deal with all the mismatches and
                            unexpected numbers of students.
                            Done with haste and incurring
                            extra costs.
Uncover the scale of opportunities                                                                    UFS
                                      Total hours p.a. 970,000
                                      FTEs 565 £11,338,000
                                                                   Hours
     Strategy, res plng
         Strategy, res planning
  Curriculum dev, QA
  Student recruitment
           Student recruitment
    Student induction
       Curriculum mgt
              Curriculum mgt
     Student progress
      Student support
    Income collection
     Housing services
              Housing services
             Placements
             Purchasing
                   Purchasing
                         IS/IT
   Human Resources
             Human Resources
          Financial mgt
            Estates mgt
                   Estates mgt
            General mgt
                   Not in scope

                              0        20,000    40,000   60,000   80,000   100,000   120,000   140,000   160,000

                                          Core                Support           Diversionary

                                  Reported diversionary = 18% total time worked
                                  Removing 50% of it releases 87,000 hours p.a.
Bring people together linked in a process                                                          UFS

                                    Dept A    Dept B     Dept C   Dept D

       It is no                     Task      Task                          I'm confused!
     wonder it                                                              No wonder the
   takes so long!                             Check/
                                             decision
                                                          Task    Task        student is!
                                                                    No
                                                        Marketing Further
                                                         D/base    action
    Why do the                                                                No chance that the
  Schools and the                                                             HEFCE returns will
  Centre both do                                                                  be on time
       it?!
                                                                            Outputs
      Inputs
                                                                            Agreement to
 Issues and problems            A Process Review Meeting                    make changes
 Ideas for improvements                One per process                      Implementation path
                                                                            – who, how, when



                       Very often the people in different functions linked by a process
                       will not have been together before to solve process problems.
                                             The event is a revelation.
Example: Process #1. Recruitment, admissions,                                                         UFS
         enrolment and induction
 Recommendations
                                                                                                       Stg
 1.   Recruitment is and increasingly a key issue for Uni. Develop Uni-wide recruitment                Gp
      strategy to ensure that Faculties work within a common framework and direction.
      Recruitment strategy to define approach to be taken with different target groups:

               UCAS              Direct entry            Clearing          Late entrants

      Do they have different ‘recruit’ / ‘sell’ priorities? What are the messages that staff should
      be giving to the different groups?
      Clarify the image that the Uni is trying to portray…. ‘suits or jeans’?

 2.   Define and implement process to generate and maintain a Definitive Course List                   PST
      comprising:
           List of all courses, both full-time and part-time
           Status e.g. validated / to be validated, running / not running, in prospectus
           Fee
           Timing (for part-time courses)
      (a)   Short-term solution (quick-win): paper based
      (b)   longer-term solution: database of all information, accessible via the web
Example: Process #1. Recruitment, admissions,                                                                                UFS
         enrolment and induction
 3.    Assign clear roles and responsibilities:                                                                                   Stg
                                                                                                                                  Gp
       (a)    Each Faculty to have a Recruitment and Admissions Tutor (academic) and a
              Recruitment and Admissions Officer (administrative staff)
       (b)    Create a ‘Recruitment Action Team’:
                       Develop recruitment ideas, share best practice
                       Ensure common approach and consistency (e.g. open days, enquiries
                        handling and follow up)
                              Many aspects considered:
                        Enable communication between marketing, enquiries and faculties
                                        • Processes
                       Ensure standardisation of Joining Instructions
                                 • Organisation structures
                                     • Cultural barriers
                                                            Admissions
                                                                           Local School
                                            Marketing                        Liaison
                                                                           Coordinator
                              Faculty                                                                          •Recruitment &
                                                                                            Head of
                           Recruitment &          Recruitment Action Team                                      Admissions Officer
                                                                                            Strategy
                            Admissions
                                                                                           & Planning          •Field Chairs
                               Tutor
                                                                                                               •Course Leaders
                                                                                                               •HoDs
                             Faculty                                                         Faculty
                          Recruitment &                                                   Recruitment &   Extended team (within faculties)
                           Admissions                                                      Admissions
                              Tutor                                                           Tutor
 Inputs:
 •Market intelligence                         Faculty                         Faculty
                                           Recruitment &                   Recruitment &
 •Trends & forecasts                                          Faculty
                                            Admissions                      Admissions
 •Uni strategy                                 Tutor       Recruitment &       Tutor
 •Recruitment plan                                          Admissions
                                                               Tutor
Example: Process #1. Recruitment, admissions,                                                        UFS
         enrolment and induction
 4.    Create a ‘call centre’ with the longer term aim of re-locating this group into the ‘Student    Stg
       Recruitment’ department                                                                        Gp

 5.    Invest in an integrated enquiries database                                                     Stg
                                                                                                      Gp

 6.    Standardise part-time and post-graduate applications process.                                  PST
 7.    Set turnaround-time targets for applications (both domestic and overseas) – prevent
       wastage of applicants due to delay in offer process.                                           PIT
                          Something everywhere
 8.    Review and implement quick fixes for enrolment and induction
                         probably needs changing                                                      PIT


 9.    Implement systematic late enrolment process                                                    PIT

 10.   Standardise Joining Instructions.                                                              PIT

 11.   Introduce withdrawal interviews for students who wish to suspend studies or withdraw           SG
       from a course.
A mechanism to achieve cost reduction/rebalance                                 UFS

                                    Support
                                         Core
                                Diversionary

                 Method
                 change


                          Process
                          change                           New
                                                          activity
                                     Reduce    Enhance
      Current                        service    service
        costs,
      methods,
       service                                                          New
        levels                                                         costs,
                   Reduce costs                Improve service       methods,
                                                                      service
                                                                       levels


                  Enables price competitiveness
                  Puts resources behind growing income
Outcome - University internal services review                       UFS


                 -8.3%                                 - 9%    Net savings

                                   -6.5%              +5.8%



  Current
  service        Current        Minimum             Enhanced
   level      service level   service level in    service level in
    and       at lower cost   some services       some services
   cost
              from methods     low risk savings      high benefit
                 changes              only         increases only




     9% savings and better service where it counted
Key points                                                                            UFS

 •   Create meaningful information. Don’t get buried by data.
 •   Need to work on both axes: Positioning & Capability – plot the journey
 •   ‘Activities’: useful for FEC and cost reduction
 •   Reducing ‘diversionary costs’ funds all your improvements (case study later)
 •   ABC modelling delivers FEC
 •   Contribution analysis delivers Product & customer profitability. (case studies later)
 •   All functions work together concurrently on Positioning & Capability
 •   ABC analysis produces surprising insights even in simple businesses.
 •   …and as many shocks and surprises in a University
 • Process analysis uncovers ways to improve methods and reduce/eliminate process
   failures. The savings can be used to finance growth and improve service levels.
Implications for 2005 onwards      UFS




              The bigger picture
Sources of income   UFS
Sources of income: Into the detail                                                UFS
                         England            Wales            Scotland
                           T&R               T&R                 T&R

 For you, is it:
 L = Large
 M = Medium
 S = Small
                                            170 HE
      L/M                                 Institutions            S
              Variable                                                  RDAs
            tuition fees

       S                          L                               S
           PhD bench                  Research Councils            Donations &
             fees                           (80%)                  endowments

      M                     S/M                 M                  M
            Courses           Local and              Charities         Industry
            & Confs          National Gov           (research)
                             S                  M                 S/M
      M      Hire of
                                   NHS               Uni ‘Ltd’
             sports                                 companies            EU
            facilities
Where do your sources of income plot?                                                         UFS
                                % of   Net margin
 Source                       income    +3 to - 3
 Variable tuition fees
 PhD bench fees
 Course & conferences
 Hire of sports facilities
 Research councils                                  100%


 Local Gov




                                                     Cum Contribution
 National Gov                                                                 Positive        Negative
                                                                            contributors     contributors

 RDAs
 Donations & endowments
                                                                               # Customers             100%
 Industry
 Charities
                                                                        ?                          ?
 NHS
 University’s own companies
 EU
 Other….
 Other….
The Journey                                                                           UFS
                                                                                Strategy:
                   Capability                               ?                 Where do you
                                                                               want to be?
                                                                    ?
  Do your chosen
  things very well                                                        ?

    • Facilities
                                                                                  ?
 • Skills/experience
    • Processes                    Plot the journey
                                 Use suitable vehicles
                                   Take all the team
                                      with you




                                                                           Positioning
    Where you                                          For your chosen markets
     are now                    • Contribution          and sources of income
                                 • Outcomes              maximise profitability
                                                          and enhance your
                                    • Vfm                     reputation
Where do you have to take action?                                                             UFS
        Capability



    Unique
   facilities                         Variable
                                    tuition fees
     Cost            PhD bench
  effective &          fees                        RDAs
   efficient
  processes                         Research              Donations &
                                    Councils              endowments

                      Courses                   Charities
                      & Confs                  (research)

                                    Local and               Industry
                                   National Gov
                       Hire of
                       sports                   Uni ‘Ltd’
                      facilities               companies

  Common                               NHS                    EU
  facilities
    Failing
  processes
                                                                                Positioning
                  No special                                                World
                  reputation.                                            renowned.
                    Low £s                                                 High £s
                 contribution                                           contribution
The journey                                                                                              UFS

                Capability                                                                     Where you
                                                                                               want to be


                                                Variable
                                              tuition fees
                               PhD bench                      Culture Change
                                 fees                        RDAs
 Business Process
                                              Research              Donations &                Is everyone
  Re-engineering                              Councils              endowments                   with us?
 Reduce process                      Performance Measurement
                                Courses                   Charities
 costs, improve                 & Confs                  (research)
    service
                                              Local and               Industry          Where are we
                                             National Gov
                                                                                       on the journey?
                             Change Management
                                Hire of
                                 sports                   Uni ‘Ltd’
                                facilities               companies

                                                 NHS                  No pitfalls on
                                                                        EU
                                                                       the journey



                                    Activity Based Management
                                                                                         Positioning
    Where you
     are now                     Product & Customer profitability
                                         Portfolio mix, pricing
                                                   UFS




               Thank you

               Brian Plowman
                     Director
Develin & Partners, Ash House, Fairfield Avenue,
       Staines, Middlesex TW18 4AB, UK
               Tel: 01784 224207
         brian.plowman@develin.co.uk
               www.develin.co.uk