pricing decisions, marketing and contribution analysis

Brian PlowmanDirector

Develin & Partners, Ash House, Fairfield Avenue,Staines, Middlesex TW18 4AB, UK

Tel: 01784 224207 [email protected]

Universities Finance Seminars

BRITISH UNIVERSITIES FINANCE DIRECTORS GROUP

Pricing Decisions, Marketing & Contribution Analysis

UFS

UFS Develin & Partners

Approaches we implement:

Activity Based Management

Business Process Management

Value Based Management

Performance Measurement

Change Management

Information Systems Strategy

Overhead Effectiveness

Organisation Strategy

UFS

Abbey Life AssuranceABB Kent MetersACCO EuropeAEA Technology (Harwell)Allied DomecqAllied Industrial ServicesAlstom Gas TurbinesAmocoAnglia Polytechnic UniversityAspen Business CommsAutomobile AssociationAvesta SheffieldBahrain TelecomBank of Ireland MortgagesBanque Industrie FranBaiseBARMACBBC ProductionBBC World ServiceBBC WorldwideBenfield MotorsBETBoehringer Mannheim LimitedBoots International HealthcareBoots the ChemistBoots Store PlanningBP ChemicalsBP ExplorationBP OilBAe Systems and EquipmentBritish Aviation InsuranceBritish RailBritish TelecomBT ConferencingBT Mobile BTR Graphics

Building Research EstablishmentCCH EditionsCendant Business AnswersCentury GroupCerberusChalmers & MitchellCharities Aid FoundationCharter ConsolidatedCI BakeriesCIC Banque (Paris)CLS PackagingClyde ShippingComagCo-operative BankCo-operative Retail ServicesCopystatic SystemsCostainDepartment of the Environment, Transport and the RegionsDHL WorldwideDominic GroupEast Midlands ElectricityEnronEquifaxEstonian RailwaysFactory Mutual InternationalFisons PharmaceuticalsFleet Air ArmForth River Purification BoardFranklin MintGlostalGranada Hospitality ServicesGranvilleGrattan

Guardian NewspapersGuardian Royal ExchangeGunstones BakeryHazlewood FoodsH P BulmerHepworth RefractoriesHollow ExtrusionsHolt Jackson Book CompanyHow Engineering ServicesHydrographic OfficeIlford FilmsJersey MilkKao Infosystems (UK)Kleinwort BensonKuwait Investment OfficeKyle Stewart LimitedLab of the Govnt ChemistLe Riche GroupLeeds Permanent Bldg SocietyLIFFELivpl Victoria Friendly SocietyLloyds BowmakerLombard North CentralLondon ElectricityLucas Aftermarket OperationsLucas Automotive ElectronicsLyons TetleyMeggittMercantile CreditMetal CastingsMinistry of DefenceMuraspec

Murray LawrenceNational SavingsNational Starch NatWest BankNokia TelecommsNORWEBOhmeda LimitedPearl AssurancePerot SystemsPilkington Barnes HindPro-BelPrudential AssurancePrudential Home ServicePrudential Portfolio PyrobanQuadrantRhone Poulenc RorerRoss BreedersRover GroupRoyal Automobile ClubRoyal Bank of ScotlandRTZ PillarSaudi International BankSchroder Unit TrustsScottish CourageScottish Environment PASevern Trent SystemsSG HambrosSimpson LawrenceSir William HalcrowSmithKline BeechamSouth West WaterST Microelectronics

Staveley IndustriesStryker (Howmedica International)Sun Alliance GroupSun Life AssuranceSyntegraTate & Lyle SugarsTexacoThe Mercers CompanyThe Post OfficeToad InnovationsUK PaperUnited UtilitiesUniversity of LeedsUniversity of ManchesterUniversity of SurreyVertex Data ScienceWH SmithWace GroupWaitroseWalter AlexanderWellaWhitbreadWholesale FittingsYellow PagesYorkshire ElectricityZeneca Pharma Zurich Insurance

Typical past clients: (Broad spectrum)

Typical clients in the HE/FE sector:• University of Leeds

• University of Manchester

• University of Surrey

• City University

• Anglia Polytechnic University

• Buckinghamshire Chilterns University College

• Edinburgh Telford College

UFS HE is big business

Income UK 2001/02

- 1.0 2.0 3.0 4.0 5.0 6.0

Funding Council grants

Tuition fees, grants, contracts

Research grants & Contracts

Other income

Endowment & investment income

Amount £bns

UFS

Pricing GuidelinesJCPSG Publications -•Pricing Toolkit•Developing a Pricing Strategy

Treasury letter (February 2004)- see TRAC Volume 111

OST Guidance on the Pricing of Research Projects (October 2004) - see OST website http://www.ost.gov.uk/whats_new.htm (17 November 2004)

Prices to be paid by Research Councils - see OST website http://www.ost.gov.uk/whats_new.htm (6 January 2005)

Time table for the Operation of Pricing based upon Full Economic Cost Methods (sent to VCs in March 2005) - to be included on www.jcpsg.ac.uk/resources/letters.htm by 15 April 2005

Key messages and actions that follow

1. An example of a pricing policy which an HEI might adopt

is one that aims to set prices that cover actual costs and

make a surplus on any activity, the level of surplus

reflecting what the market can bear.

3. It is recognised that an institution may not be in control

of prices for certain services, since most HEIs operate in

a variety of markets with often very different constraints

in pricing

1. The increased awareness of the costs of different activities and different units that has come about

as a result of the Transparency Review should enable institutions to have a much clearer view of

which areas are financially viable, and which are not.

3. The pricing strategy may need to address using the opportunity to review processes and seek

simplification.

UFS High quality answers are needed

Contribution

analysisContribution analysis

UFS Key points

• Meaningful information. Not buried by data.

•

•

•

•

•

UFS

Whereyou arenow

Whereyou want

to be

Capability• Methods

• Processes

• Organisation

• Technology

• Skills

• Culture

Positioning• Products/services

• Customer Needs

• Competitors

• Regulatory framework

• Environment

• Shareholders

Strategy is about Positioning and Capability•Overseas student fees•Non-publicly funded courses•Franchised programmes•Research and consultancy•Professional courses•Major teaching contracts •Short courses•Workplace nurseries•Residences, catering, conferences, •Bars and shops•Printing and publishing•Theatre performances•Room and equipment hire

UFS

Capability

PositioningActivity Based Management

Product & Customer profitability

Portfolio mix, pricing

Business Process Re-engineering

Reduce process costs, improve

service

Where youare now

Where youwant to be

The journey

Change Management


Culture Change

No pitfalls on the journey

Where are we on the journey?

Is everyone with us?

UFS Key points

• Meaningful information. Not buried by data.

• Need to work on both axes: Positioning & Capability

•

•

•

•

UFS Activities: The fundamental building blocks

ActivitiesInputsMake activities

happen

Cost driver volumes *

OutputsResult of activities

Service levels *

ResourcesLedger

Costs *

MethodsWay things are

doneUnit costs *

* All these are measurable

Activities are the engine of change

Revenue

UFS Activities

Process effectivenessUsing Business Process Re-engineering

TRAC & fEC using Activity Based Costing

ActivitiesInputsMake activities

happen

Cost driver volumes

OutputsResult of activities

ResourcesLedger

Costs

MethodsWay things are

done

Unit costs

UFS Key points

• Create meaningful information. Don’t get buried by data.

• Need to work on both axes: Positioning & Capability – plot the journey

• ‘Activities’: useful for TRAC, fEC and improving process effectiveness

•

•

•

UFS Activities vary for different reasons

Core

Adds value, meets business and customer needs

Support

Enables core activityto take place

Diversionary

Adds cost, but no value - caused by process failure

Reduce costs:

By changing the method

Reduce costs:

By making an upstream process improvement

..and by

Changing customer (& supplier) behaviours

Reduce (increase) costs:

By changing the level of service

internally & externally and identify risks

(benefits)

Show excited customer research

proposal

Travel to customer

Explain to customer why last project was

late, report had missing sections and the invoice

was wrong

UFS Process view more useful than functional view

Linked activities - with measurable inputs and outputs

Inputs

(eg Student shows up for

Registration)

Outputs

(eg Student registered and fees in the bank)

UFS Becoming price competitive (and/or fund growth plans)

C C/S C/D D

InputsOutputs

51%30%

19%

Typical starting

point

Overall less and

rebalancedBecomes

UFS Key points



• ‘Activities’: useful for FEC and improving process effectiveness

• Reducing ‘diversionary costs’ funds all your improvements (case study later)

•

•

UFS Basics of ABC modelling

Resources (on the ledger)

Activities (found by analysis)

Outputs (meaningful entities/groups/etc)

UFS The purpose of ABC is to make this link

What resources cost

PeopleEquipmentTravelMaterialsBuildingsetc

We know:

How much activities cost

SellingManufacturingFilingTrainingPaying suppliersPlanningetc

So we must find out...

What drives activity costs

such as

No. of customers

No. of products

No. of invoices

etc

…and why

ResourcesActivities/ processes

Activity drivers

Cost objects

... in order to be able to assign costs accurately to products and services

The cost of outputs

Products

Services

Channels

Customers

etc

So we can determine:

UFS

Resourcemodule

Cost Objectmodule

Activitymodule

A Short cut to reduce complexity in the model. (e.g consolidate all ‘people’ costs)

B Allocate people costs on basis of time spent on activities

C Allocate other costs on an appropriate basis (eg space used, No. of people)

D Allocate some activities to others (eg HR, Estates, etc)

E Allocate activities to ‘products’ and ‘customers’ on an appropriate basis.

F Allocate products to customers.

G Allocate costs and activities to Legal Entity and Sustaining cost objects

Ledger items:SalaryPensionStationeryRent & rates

Fully costed person

Activity 1

Activity 2

Activity 3

Activity 4

Activity 5

Activity 6A B

D

Course 1

Course 2

Rsrch proj 3

Student 1

Funder 2

Legal Entity

Sustaining

E

F

Decide the logic & assumptions

C

G

Cascading costs through the model

UFS Key points



• ‘Activities’: useful for FEC and improving process effectiveness


• ABC modelling helps to deliver fEC (and every aspect of profitability in the university – case study later)

•

•

UFS Cost categories: Activities and cost drivers

ABC Contribution line

Front-line

Internal service

Sustaining

Legal-

entity

Products/services, channels, customers

Current cost, current value - direct eg teaching, research, selling, customer service, cash collection

Current cost, current value - indirect eg quality control, training, IT network

Current cost, future value no cost drivers eg New IT development, spare capacity, brand advertising

The cost of being in business - no cost drivers eg annual audit, senate

UFS A universal law: The Hook Curve

Cumulativecustomer contribution

100%

Co

ntr

ibu

tio

n

Customers

Positive contributors

Negative contributors

100%

Highest contributing customer30% 60%

Similar though less pronounced ‘hook’ for product contribution

UFS Key points



• ‘Activities’: useful for FEC and cost reduction


• ABC modelling delivers FEC

• Contribution analysis delivers Product & customer profitability. (case studies later)

•

•

UFS Poised in the starting blocks

Capability

Positioning

Strategy:Where youwant to be

100%

Co

ntr

ibu

tio

n



Customers 100%

100%

Co

ntr

ibu

tio

n



Customers 100%

Knowledge of activities, processes,

costs, volumes

fECmodelling

51%30%

19%

UFS Key points





• ABC modelling helps to deliver fEC (and every aspect of the university – case study later)


• All functions work together concurrently on Positioning & Capability

UFS Case studies

Positioning

UFS Key points








• ABC analysis produces surprising insights.

UFS A University

1,000Courses

2,000Modules

3,500Degree

combinations

Total costs:£69.4 million

Total No. students13,000

Academic staff630Support staff690

UFS Schools, Modules and Students

Sch 1 Sch 3Sch 2Schools havetheir ‘own’students(Revenue)

Schools developand deliver theirown modules

Students selecta range of modulesfrom various schools(create costs)

Centraldepts

Schools

Cost of preparing and

delivering modules

Cost of managingown students

High

Low

Typical School

Students

Modules

Costs Used by

UFS Definitions

◆ Students: full-time, part-time, international, regional, mature, disabled, …

◆ Customers: students, companies, HEFCE, loan companies, regional partners, …

◆ Products: modules, pathways, sets, fields, advice, guidance, accommodation, awards, chaplaincy, sporting facilities, ...

◆ Resources: academic staff, admin staff, managers, buildings, facilities, networks, computers, library, ...

UFS The Model: Highest level of cost separation

Modules & Students £39.6 million

£21.3 million

£8.4 million

Total Costs Modelled £69.4 million

With Income

Without Income

£35.2 million Modules

£4.4 million Students

UFS ABC model

Activities:# 500

For Research

For Modules

For Students

Lecturing

Tutoring

Administration

Labs & Technicians

Teaching SpaceStandards & Quality

Modules

Admissions

Assessments

Registration

Counselling

Academic Time

Bursaries

Labs & Technicians

IT Services

Building Space

The University’s Outputs

Modules

Courses

Research Projects

Curriculum Development

Summer Schools

Student Accommodation

Marketing & Public Relations

Student Union & Sports Facilities

Nursery

Students

Resources:Ledger lines # 1,500

Academic Salaries

Personal Computers

Stationery

Photocopying

%

%

ResourceDriver

% of time/activity

ActivityDriverHours/module

# hrs

# hrs

Module 1

Module 2

Costs flow through the model

UFS

£0 £500,000 £1,000,000 £1,500,000 £2,000,000 £2,500,000

Internal Research

Sustaining

Infrastructure

Student Services

Previous Reorganisations

Buildings not used.

£8.4 Million

Without Income

All of these categories were further broken down in the model

UFS

£0 £2,000,000 £4,000,000 £6,000,000

External Commercial Services

Regional & Associate Colleges

Student Accommodation

Funded Research

Conference & Catering

Internal Commercial Services

Summer Schools

Funded Projects

£21.3 Million

With Income

All of these categories were further broken down in the model

UFS

£0 £10,000,000 £20,000,000 £30,000,000

Teaching

Module Administration

Library

Labs & Technicians

Teaching Space

Standards & Quality

£35.2 million

Modules - Total Cost

UFS

£0 £200 £400 £600 £800

REGO

DACS

UCANA

UCLT

CHSS

EDU

AL

APPS

LSS

HCP

ABS

LAW

Average Module Cost per StudentS

cho

ols

UFS

£0 £20 £40 £60 £80 £100 £120 £140

LAW - Teaching Lecturing

LAW - Teaching Individuals

LAW - Student Administration

LIBRARY - Readers Services

Cheltenham Campus Teaching Space

LIBRARY - Media Materials

ASA - Academic Standards & Audit

Computer Room

Resources Room

MPD - Classroom Audio Visual Equip

Timetabling

105 students

£289 each student

One module within the Law School

Element Cost for Each Student

Note: All modules costed

UFS Avge Cost of a Module by Number of Students

£0

£200

£400

£600

£800

£1,000

£1,200

10 20 30 40 50 60 70 80 90 100 120 130

Raised many questions:e.g Should modules be run with less than 10 students?

UFS Avge Number of Students/Module/School

7368

51

34 34

25 23 2118 18 18

11

0

10

20

30

40

50

60

70

80

HCPABS

LAWAPPS AL

EDU

CHSSLSS

DACS

UCLT

REGO

UCANA

Schools

UFS

£0 £20,000,000 £40,000,000

Modules

Student Assessments Tracking

Open Access

Registration

Admissions

Student Income Collection

Counselling

Financial Aid and Advice

£39.6 million

Students - Total Cost

UFS

£0 £500,000 £1,000,000 £1,500,000

Student Assessments Tracking

Open Access Facility

Registration

Recruitment and Admissions

Careers Centre

Academic Guidance

Student Income Collection

Counselling

Financial Aid & Advice

Health Promotion

Residencies Income Collection

Students - Total Cost (Excl. modules)

£4.4 Million

UFS

Language module

Language module

Service

Service

Service

Service

Service

Service

£0 £50 £100 £150 £200 £250 £300

LAW Module - Legal History 1

LSS Module - Beginners French 1

LSS Module - Beginners French 2

LAW Module - Advocacy & Negotiation

LAW Module - Sport & The Law

LAW Module - Law of Evidence

LAW Module - IT & The Law

LAW Module - Criminology

FINANCE - Student Income Collection

LAW Module - LWH1998A

CPSVE - Assessment Tracking

LAW Module - LWH2998A

FINANCE - Residencies Income Collection

CPSVE - Registration

ADMISS - Admissions

C&ITS - Open Access Facility

10 modules

£3,383 total cost

One Law School Student (Out of total 13,000 students)

UFS Full Time Average Student Costs

£0

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

ABSLAW

DACS

APPSLSS

ALEDU

HCPCHSS

UCANA

REGO IO

Typical ‘EDU’ student goes to many other Schools’ moduleseg Costly ‘Science’ modules

Schools

Can compare with average income for students at each School

UFS Attributes: To analyse data in the model

Student

A.Benson

F.Natel

H.Scott

D.Halston

C.Jones

D.Ford

N.Bryan

T.Sparke

P.Orr

P.Gibbs

Year

1

3

3

1

2

2

3

1

1

3

Course

Mst

UG

UG

HND

Basic

Mst

UG

UG

HND

Basic

Study

PT

FT

FT

Tk Snd

Tn Snd

FT

FT

FT

DR

Tn Snd

Funds

LA

OS

Own

Co

Own

LA

LA

OS

LA

Co

Accom

HoR

Home

Out own

Out Uni

HoR

HoR

Home

Home

Out own

Out Uni

Public and non-public teaching: (Similarly for modules and research projects)

Income higher than UK studentbut costs are in excess of revenue!

18 invoices unpaid, and studentnot registered on any courses!

UFS Key points








• ABC analysis produces surprising insights even in simple businesses.

• …and as many shocks and surprises in a University

UFS Case study: University

Capabilityeg Improve processes to reduce costs & improve service

1. Recruitment, Admissions and Registration (including marketing activities)

2. Timetabling

3. Assessment

4. Curriculum Development and Management

5. QA: Validation and Annual Monitoring

6. Staff Development and Training

….

….

23. Key processes

UFS

Many students do not enter through the UCAS standard system e.g. entry through NMAS, ‘route B’, direct

application, part-time, post-graduate. Nurses and design students all require interviews.

Admissions process viewed as slow, inefficient and uncertain

Lack of clarity of task split between centre and faculty admissions

Students faced with queues, delays and repetition

Fragmented impression given to student – may lose potential students

Fragmented and duplicate data collected throughout university

Inconsistency of processes in different parts of organisation

Persistent schedule slippage, deadlines felt to be unrealistic

Everyone involved in much diversionary chasing activity

Needs clear strategic direction – no real course planning or portfolio development strategy

Curriculum development tends to be faculty-driven rather than demand-lead

Academic planning process is not adhered to – 2 year lead time required for new courses by administrative

procedures

Short product life cycle but tendency to add and never cut courses (many modules may be running

uneconomically)

General consensus that too much choice is offered to students

Recruitment, Admissions and Registration

Curriculum Development and Management

Staff know of many more issues at the detailed level so more can be improved.

Ensures buy-in by the people who will be affected by the proposed changes.

Involve the people who work in the processes

UFS

Attend Open Day

FacultyD/base

MarketingD/base

Create a process perspective: Walk processes

ProspectiveStudent

Marketing

Yes

Faculty Admin

No

Student contacts BCUC with an enquiry

1

Answer query / send prospectus.

8

Answer query / provide further

detail or pass to academic

3

Admissions

Answer query about entry

qualifications

5

Accommodation

Answer query about

accommodation

6

13

Send follow-up letter - different O/D dates to

non-attendees.

14

Update Definitive course list

Update courses on Marketing

Database

Follow-up if they wish?

10

FacultyAcademics

Answer query / provide further

detail

4

Provide information on

courses

Simpleenquiry?

2

DisabilitySupportServices

Answer query about disabilities

7

Arrange suitable facilities to

enable student to attend12

Answer query / send prospectus.

Pass on names if student has shown interest in open day

15

Send out invites to Open Day and record those who

attend.11

Record in Enquiries D/base. e-mail to Faculties

weekly

9

No further followup. Student then

decides toapply / not.

16

Example shown is ‘Handling Enquiries’ a Sub process of Recruitment

The Recruitment, Admissions, Enrolment and Induction process is one of the most complex processes in a university and very prone to process failures and therefore unnecessary costs

Seeing the impact of issues within and between departments

UFS Analyse activities from a new perspective

Core

Adds value, meets business and customer needs

Support

Enables core activityto take place

Diversionary

Adds cost, but no value - caused by process failure

Forecast next year’s student accommodation needs

Keep records of suitable accommodation

Deal with all the mismatches and unexpected numbers of students. Done with haste and incurring extra costs.

UFS Uncover the scale of opportunities

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

Not in scope

Estates mgt

Human Resources

Purchasing

Housing services

Curriculum mgt

Student recruitment

Strategy, res planningStrategy, res plngCurriculum dev, QAStudent recruitment

Student inductionCurriculum mgt

Student progressStudent support

Income collectionHousing services

PlacementsPurchasing

IS/ITHuman Resources

Financial mgtEstates mgtGeneral mgt

Core Support Diversionary

Hours

Reported diversionary = 18% total time workedRemoving 50% of it releases 87,000 hours p.a.

Total hours p.a. 970,000FTEs 565 £11,338,000

UFS

Dept A Dept B Dept C Dept D

Task Task

Task TaskCheck/decision

MarketingD/base

NoFurtheraction

Bring people together linked in a process

Very often the people in different functions linked by a process will not have been together before to solve process problems.

The event is a revelation.

Why do the Schools and the Centre both do

it?!

It is nowonder it

takes so long!

I'm confused!No wonder the

student is!

No chance that the HEFCE returns will

be on time

A Process Review Meeting

One per process

Issues and problems

Ideas for improvements

Inputs

Agreement to make changes

Implementation path – who, how, when

Outputs

UFS

RecommendationsStgGp Recruitment is and increasingly a key issue for Uni. Develop Uni-wide recruitment

strategy to ensure that Faculties work within a common framework and direction. Recruitment strategy to define approach to be taken with different target groups:

Do they have different ‘recruit’ / ‘sell’ priorities? What are the messages that staff should be giving to the different groups?

Clarify the image that the Uni is trying to portray…. ‘suits or jeans’?

UCAS Late entrantsClearingDirect entry

Define and implement process to generate and maintain a Definitive Course List comprising:

List of all courses, both full-time and part-time

Status e.g. validated / to be validated, running / not running, in prospectus

Fee

Timing (for part-time courses)

(e) Short-term solution (quick-win): paper based

(f) longer-term solution: database of all information, accessible via the web

PST

Example: Process #1. Recruitment, admissions, enrolment and induction

UFS

StgGp

Assign clear roles and responsibilities:

(a) Each Faculty to have a Recruitment and Admissions Tutor (academic) and a Recruitment and Admissions Officer (administrative staff)

(b) Create a ‘Recruitment Action Team’:

Develop recruitment ideas, share best practice

Ensure common approach and consistency (e.g. open days, enquiries handling and follow up)

Enable communication between marketing, enquiries and faculties

Ensure standardisation of Joining Instructions

Marketing

Admissions

FacultyRecruitment &

AdmissionsTutor


AdmissionsTutor


AdmissionsTutor


AdmissionsTutor


AdmissionsTutor

Local SchoolLiaison

Coordinator

Head of Strategy

& Planning


AdmissionsTutor

Recruitment Action Team

Inputs:•Market intelligence•Trends & forecasts•Uni strategy•Recruitment plan

Extended team (within faculties)

•Recruitment & Admissions Officer•Field Chairs•Course Leaders•HoDs

Example: Process #1. Recruitment, admissions, enrolment and induction

Many aspects considered:• Processes

• Organisation structures• Cultural barriers

UFS Example: Process #1. Recruitment, admissions, enrolment and induction

StgGp

Create a ‘call centre’ with the longer term aim of re-locating this group into the ‘Student Recruitment’ department

Invest in an integrated enquiries database StgGp

PST Standardise part-time and post-graduate applications process.

Set turnaround-time targets for applications (both domestic and overseas) – prevent wastage of applicants due to delay in offer process. PIT

PIT1. Review and implement quick fixes for enrolment and induction

Implement systematic late enrolment process PIT

PIT Standardise Joining Instructions.

Introduce withdrawal interviews for students who wish to suspend studies or withdraw from a course.

SG

Something everywhere probably needs changing

UFS A mechanism to achieve cost reduction/rebalance

Current costs,

methods, service levels

Process change

SupportCore

Diversionary

Reduce costs Improve service

New activity

Reduce service

Enhance service

New costs,

methods, service levels

Method change

Enables price competitiveness

Puts resources behind growing income

UFS Outcome - University internal services review

Currentservice

leveland cost

-8.3%

Current service level at lower cost

from methods changes

-6.5%

Minimum service level in some services

low risk savings only

9% savings and better service where it counted

- 9%

+5.8%

Enhanced service level in some services

high benefit increases only

Net savings

UFS Key points








• ABC analysis produces surprising insights even in simple businesses.

• …and as many shocks and surprises in a University

• Process analysis uncovers ways to improve methods and reduce/eliminate process failures. The savings can be used to finance growth and improve service levels.

UFS Implications for 2005 onwards

The bigger picture

UFS Sources of income

5,692,090 3,338,194

Research Councils 805,360 UK charities 606,885 UK central gov, LAs, Health 413,163 UK industry 250,232 EU sources 188,864 Other Overseas 115,605 Other 53,309

2,433,418 Course validation fees 17,791 Teaching companies 25,638 UK central gov, LAs, Health 208,743 UK industry 137,866 EU sources 61,287 Other Overseas 30,572 Other operating income 1,025,441 Residences & catering ops 967,802 Grants from LAs 872 Income from Health & Hospital 227,303 Release of deferred capital 45,858 Income from IP rights 19,874

2,769,047 Specific endowments 117,180 General endowments 26,971 Interest receivable 113,975

258,126

Total: UK 14,490,875

Endowment & investment

income

Other income

Funding Council grantsTuition fees & education grants & contracts


Income UK 2001/02

- 1.0 2.0 3.0 4.0 5.0 6.0

Funding Council grants

Tuition fees, grants, contracts


Other income

Endowment & investment income

Amount £Ms

UFS Sources of income: Into the detail

170 HE

Institutions

T&R

England Wales ScotlandT&R T&R

PhD benchfees

Variabletuition fees

Courses& Confs

Hire of sports

facilitiesNHS

Local and National Gov

Research Councils(80%)

Charities(research)

Uni ‘Ltd’companies

RDAs

Donations &endowments

Industry

EU

L

L/M

S

M S/M

M S

M

M

M

S

S

S/M

For you, is it:L = LargeM = MediumS = Small

UFS Where do your sources of income plot?

Variable tuition fees

PhD bench fees

Course & conferences

Hire of sports facilities

Research councils

Local Gov

National Gov

RDAs

Donations & endowments

Industry

Charities

NHS

University’s own companies

EU

Other….

Other….

% ofincome

Net margin+3 to - 3

100%



100%

100%



# Customers 100%

Cu

m C

on

trib

uti

on

Source

? ?

UFS The Journey

Capability

Positioning

For your chosen markets and sources of

income maximise profitability and enhance

your reputation

Do your chosen things very well

Where youare now

Strategy:Where do youwant to be?

?

?

?

?• Facilities

• Skills/experience

• Processes

• Contribution

• Outcomes

• Vfm

Plot the journey

Use suitable vehicles

Take all the team with you

UFS

Capability

Positioning

Where do you have to take action?

PhD benchfees


Courses& Confs

Hire of sports

facilities

NHS


Research Councils

Charities(research)


RDAs


Industry

EU

World renowned.

High £s contribution

Unique facilities

Cost effective &

efficient processes

Common facilities

Failing processes

No special reputation.

Low £s contribution

UFS The journey

PhD benchfees


Courses& Confs

Hire of sports

facilities

NHS


Research Councils

Charities(research)


RDAs


Industry

EU

Capability

PositioningActivity Based Management

Product & Customer profitability

Portfolio mix, pricing

Business Process Re-engineering

Reduce process costs, improve

service

Where youare now

Where youwant to be

Change Management


Culture Change

No pitfalls on the journey

Where are we on the journey?

Is everyone with us?

UFS

Thank you

Brian PlowmanDirector

Develin & Partners, Ash House, Fairfield Avenue,Staines, Middlesex TW18 4AB, UK

Tel: 01784 224207 [email protected]

www.develin.co.uk

pricing decisions, marketing and contribution analysis

Documents

fairfield avenue

ash house

middlesex tw18