What is a business model?
A business model is simply a blueprint for how an institution is organised to best deliver its strategy. It typically includes information about ‘customers’, key activities, the channels used to deliver these activities, income, costs and value proposition – the distinctive features that make an organisation’s offering attractive to its audiences. Many organisations have achieved considerable success by developing an innovative business model that sets them apart from their competitors. Newspapers introduced paywalls to access online content, Netflix started streaming films and Amazon shifted to selling ebooks and server space rather than just physical products.
Why do we need a review?
Professor Alex Neill, Pro Vice-Chancellor Education and a member of the Review’s steering group, explains: “The Business Model Review is an opportunity to really re-think what we offer and how we operate in a sector that has very quickly become more competitive, more challenging and more business-minded.”
The challenges that the University faces are broad, and many are not unique to Southampton. In recent years we have successfully increased our student numbers and climbed league tables, but student recruitment has been volatile, competition has been fierce and the external landscape has remained uncertain. We have successfully grown our income, but our costs have risen too, meaning that our operating surplus has averaged only 1.8 per cent since 2007, rather than the five plus per cent we aim for to invest sufficiently in our staff, systems and estate.
Crucially, as pressures have increased, staff have found themselves spending less of their time on the things that they do best. For academic colleagues, this has meant spending more time on administration, and less on teaching and research.
Why PwC?
PwC was chosen to support this work because of its experience of similar reviews – both inside and outside the higher education sector – and because its consultants could drive our work forward with the objectivity, focus and resources necessary.
Richard Baskerville, PwC Project Manager for the Review, comments: “It is exciting to work with such an ambitious university. For us, it is about helping universities to focus on the things that really add value and that make institutions truly distinctive.
What has happened so far?
The PwC team has been on campus since the beginning of June gathering a range of information about how the University currently operates. Many staff have provided information about their daily activities, and some have taken part in a series of themed, cross-cutting workshops that have explored emerging issues in more detail and looked at potential improvements to systems and processes. PwC will be analysing these outputs alongside much of the University’s existing data.
Richard adds: “The level of engagement has been a real plus-point for the project. With this, however, comes high expectations. As we look to refine and prioritise some of the emerging themes, it will be important that people’s voices have been heard as the University looks to select the changes that will have the highest impact.”
Next steps
The PwC consultants have now completed their analysis and shared their findings with the new Vice-Chancellor, Sir Christopher Snowden. The outputs include high-level business model options, as well as emerging opportunities for early or quick improvements.
Sir Christopher will take time to consider and evaluate the outputs with his leadership team while he is getting to know the University community. It is anticipated that these considerations will result in a decision about the University’s future direction early in 2016, at which point colleagues will be engaged in designing the next steps.
Stay informed
The University’s project team will continue to keep colleagues up-to-date through the Review’s SharePoint page. If you have a question about the process you can email project-team@soton.ac.uk
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