The time is fast approaching for a radical change to the university business model, according to a new report released by Ernst & Young (E&Y).


The report found that new technologies, increased competition and ‘flat-lining’ government funding will force Australian universities to adapt or perish in the coming decade.


The University of the Future report is the culmination of a six month long study by E&Y on the changes occurring in Australian and international universities. The study included interviews with more than 40 leaders from universities, the private providers and policy makers – including extended interviews with 15 Vice-Chancellors around Australia.


“We’ve seen fundamental structural changes to industries including media, retail and entertainment in recent years – higher education is next. There’s not a single Australian university than can survive to 2025 with its current business model,” says report author Justin Bokor, Executive Director in Ernst & Young’s Education practice.


“At a minimum, universities will need to get much leaner, both in terms of the way they run the back-office, and in use of assets.”


The study found five key drivers of change that in the global university environment – the democratization of knowledge and access, contestability, new technologies, global mobility and integration with industry.


According to the report, the sum total of these drivers of change will mean universities will be very different in 15 years from now and will need to:

  • Increasingly orient their strategies and organisations around particular student and industry segments;
  • Create new, leaner business models as competition increases for staff, students, funding and partners;
  • Innovate the higher education value chain, for example forming partnerships and areas of specialisation in particular areas of the value chain - content aggregation, mass distribution and certification;
  • Increasingly fund, conduct and commercialise research in partnership with industry;
  • Face new competitors in Australia and internationally – both online and campus-based competitors, especially as emerging market universities move up the rankings and private providers develop successful segment-focused models


The report sets out three models for how universities might evolve in the decade ahead. Model one, which Ernst & Young has labelled “streamlined status quo” runs similar teaching and research programs to today, but uses digital technologies in teaching and learning, is much leaner and has deeper partnerships with industry and international collaborators.


Model two – “niche dominators” – focuses on a small range of teaching and research programs, but is truly world class in those programs and integrates work experience, career opportunities, life-long learning and research commercialisation into the programs.


Model three – “transformers” – sees universities form partnerships with media companies and global technology providers to change the way education and knowledge is accessed and delivered – in Australia and in a range of cities and rural areas in Asia, Latin America and Africa. This model will transform the world, creating new opportunities for millions of young people, their families and the societies they live in.


The full report can be found here (.pdf)