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Higher ed business leaders say this is critical for 2017

CBOs: The missional case for outsourcing in higher ed.

Here’s a striking statistic: while most Chief Business Officers (CBOs) believe higher education is in the midst of a financial crisis, these CBOs are less likely to outsource than they are to revise tenure policies and promote early retirement for faculty, according to the 2016 Survey of College and University Business Officers.

And it’s no wonder.

For many in academia, the idea of outsourcing coincides with a very real fear of predatory financial models and relinquishing control of their institution to companies who may not truly honor their history, their roots, their work, and their mission. Yet in the changing terrain of higher education—terrain marked by changing student demographics, dynamic technology, and increasing regulation—the question CBOs really need to be asking is: Is our mission to do everything ourselves, or is our mission our mission?

Understanding the Insourcing vs. Outsourcing Debate

The insourcing vs. outsourcing debate is a lively one in the academy. Reports and articles urging higher ed to build institutional capacity for analytics and to stop ceding their independence to outside entities in the name of innovation couple with a scathing undercurrent of commentary describing vendors as parasitic harbingers of debt akin to seedy payday loan companies. And as Dr. Ed Schrader, President of Brenau University, points out, “The very idea of a student being a customer is highly resisted by traditional academe in the sense that there’s a relationship between the student and the institution that, in years past, has been outside of, or higher than, a supplier/customer relationship.”

Meanwhile, vendors enter the debate explaining that higher ed institutions cannot grow and adapt to the changing landscape of higher ed alone. The question these vendors pose seems simple enough:  Hang on to the parameters of days past at the risk of the demise of your institution, or pivot to a more business-savvy model and build your capacity to grow?

What’s Missing from the Debate

And yet, what is missing from this side of the debate is the acknowledgement of higher education as the prominent collective institution it is, its role in society, and the discussion of how that role can be enhanced. Predating even the birth of our nation, higher ed’s importance to society is unquestionable. But when you contrast that fact with the shift in acknowledging post-secondary education as a public good, discouraging reports of tuition increases, the student loan debt crisis, and decreasing enrollments, the competing realities in the field become clear. If the conversation in higher ed today is about adaptation and building organizational capacity, I’m left wondering, what are we building capacity for?

(Next page: Institutional mission’s relationship with outsourcing)

Mission’s Relationship to Outsourcing

To reconcile these competing realities, conversations in higher ed should hinge around one thing: the institutional mission. Along with the articulation of the academy’s trepidation toward outsourcing, the aforementioned survey also mentioned that “Chief business officers say the future of academic programs—whether they are expanded, kept the same, cut back or eliminated—is determined in large part by the role of the program in the institution’s mission and the academic quality of the program.”

Yet, in the execution is where this gets tricky—to most effectively reach and enroll the right students for these programs, institutions have to cut through the noise in an increasingly busy marketplace while also landing their message on the ears of those who most need to hear it. The mission should absolutely be the bottom line for all institutional decisions, but how does this play out within the nuanced higher ed market?

The Case For and Against Outsourcing

The fact of the matter is that while society evolves more advanced practices in fields like marketing and data analytics, higher ed can either struggle to keep up at the expense of their budgets, resources, and focus, or they can move to outsource non-core services so that institutions can focus all of their efforts on mission-driven work.

Faculty positions and educational leadership simply cannot be outsourced. They are in the business of expertise, and it should be the job of the institutions to facilitate the growth and utilization of that expertise to the best of their abilities. The Outsourcing Revolution said it best: “If you understand your unique competitive advantage, you’re positioned to consider what work you’re doing that others could perform better,”

The very idea of outsourcing is not without controversy in many industries, yet the practice of outsourcing has proven time and again to be a mechanism of growth. While the nation is currently faced with decreasing enrollments and rising tuition costs, there’s no question that higher education is particularly poised for growth. Globalization has opened a large potential market of learners from all demographics, all over the world, and the development of many learning technologies has opened up options for flexibility and expansion.

And, to be sure, higher ed already does outsource a number of institutional activities, functions like grounds maintenance, food service, payroll, and facilities maintenance are typically outsourced in this industry. Colleges and universities nationwide embrace the fact that outside partners are likely to do a better job with these tasks than internal members.

However, for activities more closely related to business, student support, and academic programming support such as market research and instructional design, many institutional stakeholders shy away from embracing outsourcing as a solution or option for growth. Many of these tasks feel too close to an institution’s wheelhouse and present a possibility of losing control of intellectual property and independence.

What is often overlooked in services such as marketing, data analytics, enrollment management, retention services, and really any area that appeals to trends across the higher ed spectrum is the amount of resources needed to do these things really well. Often, competing in these areas requires massive budgets, time, expert human resources, and overhead. So does building out the infrastructure and channeling a massive amount of resources to activities like this really help an institution pursue its mission?

Real-World Examples

Some institutions have made a more aggressive transition to working with outsourced partners in the name of pursuing their missions. Brenau University and Judson University are two such institutions that have channeled more of their activities to outside vendors. And indeed, the benefits are financial as well as philosophical. As recently as 2012, Judson University saw its adult programs—which had been flourishing already for a couple of decades—struggling to stay afloat. Judson turned to an outsourced partner to help with the enrollment marketing and management of those programs.  As Dr. Wilbert Friesen, Provost and Chief Academic Officer of Judson noted, “It was definitely a financial decision, but it was also a decision to be able to generally continue with Judson’s mission. Without those programs continuing, it would have been a huge problem for the institution overall.”

In the spirit of full disclosure, I should mention that I do, in fact, work for an outsourced program management company. I made the transition from Dean of the undergraduate business school at Golden Gate University to Chief Academic Officer at Helix Education largely because of my desire to help students at scale. It was important for me to take my experience serving a small sector of the post-traditional student population to broader audience. I find I am now in the business of bolstering the capacity of institutions to ultimately serve more students.

Placing Responsibility

To be sure, the onus isn’t entirely on the shoulders of institutional leaders to embrace outsourcing as a means to conduct mission-driven work. The vendor side of the equation is now tasked with abating industry concerns about predatory pricing structures, lack of transparency, and intellectual property ownership.

Additionally, a piecemeal approach to higher ed services can quickly become a costly and disjointed concatenation of nonintegrated, siloed voices. When vendors cannot help the institution tackle the broader issues of enrollment growth, retention, or data analytics on a holistic level, the institution’s mission is in jeopardy.

Other industries have too been confronted with these blemishes on the conduct and reputation of outsourced vendors. As was noted in a 2012 outsourcing study conducted by the London School of Economics, “Most smart organizations are no longer evaluating shared services and outsourcing strategies in silos; while these initiatives are singularly successful at providing benefits to that individual function…these initiatives have failed, in many situations, to improve comprehensively the broader corporate strategic outcomes of these organizations.” Thus, to create a truly symbiotic partnership between outsourced vendors and institutions, vendors much take a transparent, ethical, holistic approach to supporting institutions in their missions. After all, as Brenau’s President Shrader noted, “What’s really incumbent upon administration is to do evaluation and comparison amongst professionals who are offering outsourcing. Ultimately those who hold contracts will represent your school.”

As the second oldest institution in our nation, higher education fulfills a beautiful role in society. We are in the business of developing expertise, moving society forward through research, teaching, and public service. Yet, the embarrassment of riches of the business end of higher education has come and gone, and the academy now faces myriad competition in a number of academic and administrative areas.

When looking at all the facets now required to be competitive in this landscape, facets such as marketing, data analytics, there will always be those out there who can do it bigger, better, and deeper. So now the academy faces a choice: Do you make a full-court press to bolster as many business aspects as you can in-house, or do you build your capacity to more fully pursue your mission?

eSchool Media Contributors