Australian universities will not survive the next 10 to 15 years unless they radically overhaul their current business models, according to a report released today.
The Ernst & Young report, titled University of the future: A thousand year old industry on the cusp of profound change, called on universities to specialise by targeting certain student groups, use their assets more efficiently and partner more closely with industry or be left behind.
“Current university models are living on borrowed time in Australia. Government funding is tight and is going to be tighter still in the next couple of political cycles,” said report author Justin Bokor, Executive Director in Ernst & Young’s Education practice.
“While they are not exactly businesses, they will have to run like businesses. They need to be lean and mean.”
The six month study, based on interviews with more than 40 leaders from universities, private providers and policy makers, predicted fierce competition for students and staff in future. The Internet will transform universities in the same way it has the media, entertainment and retail markets, the study found.
“One of our interviewees said, ‘Our number one competitor in 10 years time will be Google – if we are still in business’,” Mr Bokor said.
Universities should abandon the model of a broad-based teaching institution and pick a student segment to focus on, he said.
“Most universities at present have significantly more support staff than academic staff — this ratio will have to change,” the report said.
Belinda Robinson, Chief Executive of Universities Australia, said the report correctly observed some key drivers of change but that the discussion around adaptation was already underway.
“Universities have been around since the ninth century and have survived any number of catastrophic changes,” she said.
“The challenge though, will be to ensure that we have the policy, regulatory and funding frameworks in place that will enable each and every institution to find their place of best fit in this brand new world.”
Vicki Thomson, Executive Director of the Australian Technology Network of universities, said the report was a wake-up call for government, industry and universities “that to prosper, grow and support our national economy, universities must be front and centre of that game change.”
“The report reinforces the role of universities as educators, export revenue earners and leaders in research but we can’t do that in isolation. We must have a system that is well supported by Government and industry,” she said.
“The ATN applauds the findings that universities need to develop significantly deeper relationships with industry to develop a competitive advantage.”