Evolving higher education business models

Data is getting more granular and more actionable in areas such as student learning, the journey of students through institutions, and financial data.

Now, institutions must determine how to link performance and outcome data to financial data, according to a white paper published by the American Council on Education (ACE) -- and develop leadership capable of extracting actionable information from the data in their information systems.

“Our ability to link outcome and performance data to to financial data at a course-level is evolving very quickly," said Louis Soares, Vice President, Strategy, Research and Advancement at ACE and co-author of the report.

“We’ll soon be able to link performance and outcome data and financial data, allowing us to do ROI analysis in ways never before seen in higher education,” Soares said. “Using these we’ll be able to transform the delivery of higher education.”

Unlocking the black box

“The current business model of higher education is often analogized to a ‘black box’ in which spending decisions are often made without linking revenue and output data to expenditures,” the authors write. Further:

Institutions cannot innovate effectively without knowledge of costs in relation to revenue: both historically, in terms of what they have actually done, and prospectively in terms of what they might do in the future. This is particularly important for the cost of teaching, the ‘business of the business.’ The required data go far beyond what can be gleaned from financial statements or even from conventional cost accounting. What’s needed are structural models that describe how resources are applied to particular activities in sufficient detail to allow in-depth understanding of what’s being done at what cost, and ‘what-if analysis’ of what might be done to effect improvements.

Tools for the future: Leadership and transparency

“Once you’ve unlocked that black box of data, you need new conceptual tools to understand how to optimize the delivery of higher education,” Soares said.

Those tools include financial transparency and network organization analysis, which will move the business model of higher education from institutional coherence to institutional performance. To accomplish this goal, institutions will require a new kind of leadership: a network organization leader.

Soares will bring this innovative conversation to the AACRAO Annual Meeting as the plenary speaker at the 
Graduate and Professional Schools Luncheon. Register now for the Annual Meeting, April 2-5 in Minneapolis.

Read the full report, "Evolving Higher Education Business Models: Leading with Data to Deliver Results" by Soares, Patricia Steele (Higher Ed Insight), and Lindsay Wayt (ACE).

About Louis Soares. Soares joined ACE in June 2013. With more than 20 years of experience in postsecondary education policy and practice, Soares is responsible for positioning ACE as a thought leader on emerging trends in higher education. In 2016, the Council expanded Soares’ responsibilities to include organizational strategy with a focus on advancement. In this role, Soares leverages decades of experience in campus-based and nonprofit organization fundraising to enhance the Council’s relationships with corporate and philanthropic partners.

Soares has developed and successfully implemented projects with support from the Bill & Melinda Gates Foundation, Lumina Foundation, Russell Sage Foundation, TIAA Institute, ACT, Verizon Foundation, Fleet Bank, CVS, Bank of America, U.S. Department of Education and U.S. Department of Labor. Soares was also appointed by Secretary of Education Arne Duncan to serve on the National Board of the Fund for the Improvement of Postsecondary Education in 2011-14. He holds a master’s in public administration from Harvard University (MA) and a bachelor’s in business economics from Brown University (RI).