Ignoring Changing Economics In Higher Education Can Be Fatal

Malcolm Woodfield

As the world goes digital, higher education needs to follow along. As I wrote in the recent white paper Digital Education: Leading and Shaping, “digitization will affect every activity, interaction, transaction, and outcome at higher education institutions.” One area that is shifting is higher education economics. Institutions of higher learning will need to adapt to these new economics to survive.

How are higher education economics changing? And how can digitization and technology help your institution adapt to these changes?

New economics of higher education

Higher education is changing within today’s digital economy, and digital transformation and technology are creating this change. While the changes to higher education affect learning models and other aspects of an institution, they also disrupt economic aspects in the business component of the school.

Technology is also helping to make education more available and affordable to a wider variety of students. In Money magazine, Stephen M. Smith discussed various technologies and changes making college less expensive. For example, online tools can help students find scholarships and discover the right school to fit their needs, which can help them stay on track, graduate on time, and reduce costs.

Also, new forms of online education are competing with traditional higher education institutions. With the cost of traditional colleges rising, more students may opt for the lower cost and greater flexibility of online options, so colleges must find ways to compete with these alternatives.

How to adapt to economic changes

While digitization is creating changes that higher education must respond to, it can also help institutions adapt to new business models. For example, digitization can provide support for changing management and staffing models. Schools can use advanced analytics and artificial intelligence to come up with new workforce and staffing structures. Ideas for improving finances include changing the model to hire more adjunct faculty, create automated support, and use shared support staff.

Schools can use also Big Data to shape their models and reduce costs for students. For example, many students go to college longer than they need to, but as Smith discusses in his article, technology can reduce this problem. Big Data can show institutions, advisors, and educators when students are struggling so they can provide timely solutions. They can also create customized paths for students through new systems. Measures like these can improve success rates and help students go through school faster, which can streamline the system and reduce tuition costs for students.

Colleges can also use technology to compete with online education alternatives. For example, they can create a blended learning experience that uses both classroom and mobile learning. This increases flexibility while also offering benefits of an in-person experience and the credentials of established institutions. They can also offer a progressive learning experience enhanced by technology and advancements. Further, institutions can use data and predictive insight to improve operations and management. This can help institutions keep up with changes and remain competitive.

Further, the Internet of Things (IoT) is becoming as important to higher education as it is to the rest of society. This form of technology could affect the economic aspect of institutions. An article for EDUCAUSE Review explains that colleges could follow the model of “smart cities” to integrate the different aspects of the school into a new organizational structure. This could streamline the working of the school and create economic growth.  An article in Digitalist Magazine discusses how the IoT can help institutions cut costs by, for example, reducing energy use on campus.

Eric Stoller points out that educational institutions can be reluctant to progress since education and research generally take precedence over running the business. Also, many colleges and universities tend to prefer traditional, tried-and-true approaches. He explains that shifting the perspective of the institution can help it move forward with technology. After all, digitization can improve learning and research just as much as the business model.

Overall, the shape of the higher education field and higher education economics are changing with digitization and technology. Institutions are facing economic changes, and they need to respond to these to remain competitive. Technology can help them adapt while supporting new models that provide growth and competitiveness.

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”


Malcolm Woodfield

About Malcolm Woodfield

Malcolm Woodfield is the Global Vice President, Head of Industry Business Unit Education & Research, at SAP. He manages a global team accountable for the overall business, market, customer, and revenue success of the Higher Education / Public Services portfolio (including all Applications, Analytics, Mobile, HANA, and Cloud) globally.