Feb 22 2022

Disruptive Innovation Helps Universities Overcome Financial Obstacles

Fast-growing universities are using digital transformation strategies and solutions to create financially sustainable business models.

Higher education has been struggling. During COVID-19 alone, colleges and universities lost an estimated $183 billion. Even before the 6.5 percent drop in college enrollment seen over the past two years, enrollment was dipping; this backs up a 2021 Google and Boston Consulting Group study that showed almost a third of leaders at higher education institutions said their schools’ economic well-being had declined.

“As an industry, the financial landscape is pretty bad,” says Mark Lombardi, president of Maryville University.

Still, there are exceptions. The Chronicle of Higher Education maintains a list of the country’s fastest-growing colleges, and they share a common factor: investment in technological innovation and digital transformation. Let’s take a look at the DX strategies and solutions that fast-growing universities like Maryville are using to create financially sustainable business models.

FIND OUT: How higher ed institutions manage long-term digital transformation projects.

Transformational Philosophy Is Key to Technological Innovation

Pursuing financial stability through technical innovation requires the right philosophy.

“True digital transformation is placing our students first,” says David Morales, CIO and senior vice president of technology at Western Governors University. “We need to make sure our students are achieving their objectives with the least resistance possible, and that technology is making their lives better and enabling them to achieve their goals.”

In other words, strategically integrating new technology in higher education requires thinking about student success, not quarterly revenue reports.

At the same time, it’s important to remember that colleges and universities are businesses. Students are like customers: The better you serve them with a high-quality product, the better off you’ll be.

“It is really about value proposition,” Shawn Strong, president of State Technical College of Missouri, neatly summarized in a school blog post.

Click the banner below to learn about North Central Missouri College's digital transformation.

It's Time to Rethink Budgets and Partnerships

In the Google/Boston Consulting Group study, over 40 percent of university and college leaders said it was their goal to reduce technology costs. Pursuing digital transformation — which requires taking on more tech — might seem like it would cost more, but not if approached in the right way. Leaders at Maryville University, for example, found it was important to rethink and reprioritize budgets.

“It’s really less about containing those costs and more about shifting away from the things you used to spend money on,” says Lombardi.

In other words, instead of going forward with a three-year computer refresh of on-campus hardware, it may be better to invest in something more innovative — or in a partner. Turning to others for help with digital transformation can be a critical step for many in higher education.

“When institutions want to do something, they tend to look inward and say, ‘Let’s create this,’” says Lombardi.

Building a private cloud or developing an in-house data analytics algorithm can be costly and time-consuming. Forming partnerships with institution-friendly companies like Google, Apple or Salesforce has become a much easier and rewarding path.

“If you use partnerships right, it gives you the power to expand opportunity for students in a whole host of ways that dramatically drive down costs in certain areas,” says Lombardi.

Click the banner below for exclusive content about cost containment in higher ed.

Embracing Critical Solutions Is Necessary for DX Success

Three solutions stand out as common among fast-growing colleges and universities: use of the cloud, offering students increased access and the use of data analytics.

Because automation is a critical part of streamlining student experiences, the cloud is a necessary solution. It also carries financial benefits: Some IT infrastructure becomes unnecessary, thereby lowering costs. Those savings improve an institution’s bottom line and can be passed on to students.

“We’ve been able to do that with frozen tuition five out of the last six years, and we began the process of lowering it 20 percent,” says Lombardi. That presents an alluring financial incentive for prospective students and can draw higher enrollment.

The digitization of course materials is another solution that offers benefits to students and institutions.

EXPLORE: Creating a strong financial future for HBCUs.

“You’ve reduced student costs, you’ve improved their access to the information and tools they need and you’ve also leveled the playing field,” says Lombardi. That means higher education is not reserved for the privileged. Students with financial challenges, adults looking to study while maintaining a job and others will have an easier time budgeting for enrollment.

Everyone in a higher education environment, especially students, are producing vast amounts of data about how they live, learn and how they want services delivered, Lombardi says. Institutions pursuing technical innovation are applying artificial intelligence to all that data in order to yield powerful insights into their services and students.

AI can identify students at risk of dropping out and send out alerts to help them, improving the chances they’ll stay enrolled. Through student engagement, AI can identify what services or courses are working — or not. All of that can produce better and more tailored offerings to students from the course level to the administrative level. That can lead to better recruitment and retention, both of which are good for financial health.

RELATED: Building a sustainable higher ed business model.

Don’t Fear Cultural Change

For institutions in the earliest days of digital transformation, the road ahead won’t be without its speed bumps, especially as temporary pandemic measures become more permanent as hybrid and blended education models. It may even seem risky, which is why moving ahead requires what Morales calls cultural change.

“You need to remove the fear of failure and try new things,” says Morales. “I’ve seen a lot of people with amazing ideas that they’re not afraid to implement in a digital transformation, but then they forget about the operational excellence and how to bring the costs down of what they’re implementing.”

As Maryville, WGU and others demonstrate, rewards await the persistent.

“If you’re going to do it, stick to it and just keep pushing through it,” says Morales.

Illustration by Ryan Olbrysh

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