University procurement: What are the UK’s top institutions buying?
In a disrupted higher education sector, the challenges universities face in attracting students have become exponentially complex.
To meet the needs of an increasingly demanding clientele, it’s no longer enough for universities to simply promise an updated curriculum delivered by experienced lecturers – they must provide proof of ROI.
Influenced by global uncertainties over the future world of work, today’s parents and students want to know their education dollars will lead to gainful employment post-graduation. They also want a learning experience that is transformative, contemporary and guaranteed to equip them with both the hard and soft skills necessary to thrive in any job market.
As De Pauw University CIO Carol L. Smith points out in CIO Review, “institutions struggle to balance the dichotomy of providing transformative student learning experiences and delivering on student outcomes” while still maintaining fiscal prudence.
She notes that institutional expenses have changed to include more than staff salaries and university upkeep – universities also have to launch new programme initiatives to meet the demands of an increasingly discerning student cohort.
As such, it’s no wonder why the annual releases of higher education league tables are such nail-biting affairs for many of the world’s biggest players. Although the reliability of their metrics continues to be the subject of much debate, how an institution performs in rankings does become a factor in how a student decides where to study.
This is especially true for universities in popular international destination markets like the UK.
Through rankings, prospecting students are able to judge universities on a whole range of factors from teaching quality to graduate outcomes and even student satisfaction rates.
For international students, this is extremely helpful; more than having a good academic reputation, they would want institutions with a stronger international outlook than others, meaning a more diverse student body and faculty, and impressive industry links with multinational corporations.
And short of them hopping on a plane to see for themselves, there’s no better way for them to gain access to such information than perusing the annual rankings.
This “gamifying” of higher education means the competition for students has become extremely cutthroat for the world’s top-ranked schools. Add to that the rising popularity of online learning, the unbundling of higher education options and the emergence of Asia as a new destination favourite and the battle to stay ahead becomes an extremely tough one to beat.
This increases the pressure on institutions to raise their profiles in the market, which means investing more on-campus facilities and other non-academic improvements to keep the students coming – a major headache for college bursars.
So what should universities buy?
According to Universities UK, higher education providers typically spend 55.7 percent of their income on teaching and research, with a little over half that portion allocated to academic staff and the remainder to running academic departments and support staff.
Only 11.7 percent is spent annually on campus maintenance such as constructing new academic buildings and health facilities, while 8.4 percent goes to investing in IT equipment, e-resources for libraries and museum upkeep and just 3.4 percent is funnelled to upgrade study and staff facilities for matters like student counselling and transport services.
The trends above, however, is forcing that to change.
From expensive IT infrastructure upgrades to state-of-the-art equipment purchases, new buildings and better facilities, the demands of 21st-century learning have definitely put a major squeeze on university budgets.
But are these investments delivering on their intended return? Did building that brand new multimillion-dollar innovation lab help the university stay ahead of competition?
Recent analysis by Tenderlake, a London-based tender information service provider, suggests there may be a correlation between what a university spends on and how they perform in rankings.
Analysing contract award notices published by UK universities across the two years preceding data collection for The Guardian’s 2019 University League Tables (published May 2018), the firm spotted patterns in investments made by the universities that performed differently in the rankings.
Here’s what they discovered.
Bigger investments, bigger returns
Unsurprisingly, one key takeaway from Tenderlake’s research is that the economic clout of a university factors greatly in its ability to stay on top of competition.
The top 20 universities in the overall ranking were on average three times more likely to spend on construction than those outside the top 20. They also invested “relatively more” in search and development services and related consulting services, which includes research laboratory services and design and execution of research development services.
Some examples of services include that relating to clinical trials, genome/DNA sequencing as well as market research and polling.
Those outside the top 20, however, spent disproportionately (compared to the top 20) in operational matters such as energy and electricity, building cleaning, pest control, refuse and paper collecting and transport services.
They also spent disproportionally on financial, banking, insurance and pension services, Tenderlake noted.
What does this mean? The UK’s highest-ranked institutions (read: Oxbridge, St Andrews, Loughborough, Durham, Bath and the like) spent more in areas most tangible to students whilst those outside the top 20 pumped more moolah into operational issues to keep the lights on.
Safety and health always wins
In the wake of mass shooting incidents from the Sante Fe and Marjory Stoneman Douglas High School gun massacres in the US last year to the most recent terror attack in Christchurch, New Zealand, campus safety has become a major issue of concern for parents and students.
It comes as no surprise, therefore, that when universities care about the safety of their students and staff, and spend money to provide them with the necessary protections, they have a higher likelihood of performing well in rankings.
Tenderlake discovered this when looking at investments made by the institutions that improved their overall rankings from 2018 in the 2019 league tables. These universities, the firm said, were four times more likely to invest in surveillance and security systems, especially cameras and other security equipment.
Separately, the improvers were also three times more likely to invest in installation services such as new radio, television and audio equipment, in addition to laboratory equipment and laundry machines.
The universities that made massive leaps in the rankings, going up 10 or more positions, were more than twice as likely to invest in television and audio-visual equipment, including broadcast production equipment, broadcasting equipment, video transmission systems, multimedia equipment and other telecommunications equipment.
The same group was also three times more likely to invest in health services such as guidance and counselling, racking up expenses for medical personnel, welfare and community health services.
The takeaway from this is simple: the more a university spends on keeping their students’ health and safety in check, the better they perform in the leagues.
Out of sight, out of mind
Meanwhile, the universities that plunged in the rankings were spending more on administrative educational and administrative services necessary to improve business operations.
The University of Roehampton, for example, issued a GBP3 million contract to manage student recruitment, admissions service and enquiry management for non-UK applicants. Middlesex University spent GBP4 million for a similar service, outsourcing administration of student and staff facing services to a company in Chennai, India.
The universities that dropped more than 10 places in the rankings were also buying new furniture like desks, cupboards and bookcases, were more likely to invest in horticultural services, weed-clearance, grounds maintenance as well as grassing and seed services, and on staff training.
These are not services that have a direct impact on students, which is suggestive of why money spent here did not coincide with any rankings improvement.
The improvers, on the other hand, were six times more likely to invest in print marketing. This is related to spending on printed matter and related products such as brochures, leaflets, cards and other bespoke printed matters.
Tenderlake also found that while the institutions that dipped in rankings spent more than those that improved on food items such as meat, wines and cheese, the latter cohort was investing in cafeteria services such as meal-preparation, canteen and beverage-serving services.
This likely means the former group of universities operate their own cafeterias, while the latter outsources the function.
The former group also invested in procuring buses and coaches (for ownership), transport services and services relating to maintenance of outdoor areas such as parks, gardens and lawns.
According to Tenderlake: “It is clear that those who dropped in the rankings were more likely to spend in areas that students are less likely to notice, but essentials that need to be in place.”
How does this affect you?
It is important to note that as with any trend, how a university spends its budget will depend on a variety of factors.
The state of the international student market, research funding avenues, demographic shifts, modern workplace trends, government policy – all these, separately and together, will have a profound effect on budget decisions.
Suppliers and vendors that rely on university business should, therefore, always stay ahead of these trends. This will help you better understand university procurement patterns and identify the institutions most in need of your products and services.
For the UK’s most reputable universities, Tenderlake’s analysis does not contain major surprises. The most notable takeaway is bigger the size of the university’s budget (think Oxbridge), the more they are able to invest on big budget items that will add that wow factor to the education they provide.
Whether or not there is a direct correlation, their performance in the rankings suggests these investments decisions are working well for them. That’s to be expected.
But if yours is a less-prestigious institution with a much smaller budget, here’s an important takeaway: investing in areas of more visible impact on students’ lives could contribute towards raising your profile. This includes beefing up security at your campus by upgrading your surveillance equipment and hiring security personnel, as well as investing in health-related services. Again, considering the recent spate of gun crimes and the rising prevalence of mental health issues affecting student populations, these are surely worthy investments.
Additionally, consider ways in which you could keep overhead costs low. As the analysis suggests, outsourcing non-core functions such as food preparation services could help you lower operating costs and free up budget for other big-ticket items that will have a direct impact on student satisfaction.
The generations of today are not just seeking an education that delivers value for money; they want meaning and they want experience. And in a highly-connected world where bad reviews bring down businesses, simply paying lip service to what your institution can do no longer cuts it. Institutions today need to deliver on all their promised fronts by putting their money where their mouths are.
And if they don’t, the rankings will be there to tell the story later.