Unravel Complexity To Realise Massive Savings In Higher Education

Director of Healthcare, Life Sciences, and Postal Industry Markets, SAP Asia Pacific Japan

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Complexity exists in education. And it costs.

A typical university supports dozens of email systems, multiple LMS platforms, BYOD, and perhaps even cloud environments, as well as a staggering number of university software applications. This places negative pressure on the university enterprise, especially in today’s digital era, that is compelling digital transformation. Complexity stifles innovation and hampers collaboration among faculty, staff, and students. It impedes agile response to changing conditions and new opportunities.

And the cost of complexity is significant. Bain & Co. estimates that University of California, Berkeley, can save US$25 million by cutting organisational redundancy. And it approximates that University of North Carolina, Chapel Hill can save US$12 million by reducing organisational complexity.

Clearly, cutting out complexity is a pressing issue. It significantly limits an institution’s ability to benefit from the increasingly digital world. But how can universities map the path to a simplified world?

Simplification: Starting where the savings are

We often talk about how simplification should begin: First, by reimagining the institution’s academic business models; second, the institution’s business processes; and third, the way the workforce works. But it is useful to bring this discussion to where institutions can save the most as it often piques the most interest.

In my earlier blog, “The Digital Future of Higher Education: Part II,” I shared how massive savings can be realised with a digitisation strategy on the enterprise side of the institution, especially on the finance side. And I shared an example from University of Colorado saving hundreds of thousands by just automating expense management from faculty and others associated with faculty.

Now, I want to highlight another area of focus that can amount to significant cost savings: strategic sourcing and procurement. Sure, it might not be the sexiest subject. But it certainly is one where massive savings can be reaped. Every year, universities and other higher education and research institutions spend a colossal sum purchasing goods and services. An illustration: In the United Kingdom higher education sector, this amounts to approximately £10 billion annually. The ability to discipline this area by digitising the supplier experience can result not merely in impressive budgetary savings, but also manpower cutback—allowing universities to redirect precious human capital to where it is required the most.

Ohio State University Medical Center: US$1M savings with a single new supplier

Let’s take a look at a fine example demonstrated by The Ohio State University Medical Center—an example I briefly touched on before. The OSU College of Medicine is consistently ranked among the top 40 medical schools in the United States, and among the top 15 public universities. Its medical center is home to more than 20 research centers and institutes, as well as 25 core research laboratories that promote collaboration among experts from virtually all departments, divisions, and branch campuses of the OSU.

The organisation wanted to maximise cost savings and time in sourcing so that it can remain focused on its core mission of improving lives through innovation in research, education and patient care. It also wanted to improve sourcing visibility and validation, and centralise all contract management to ensure contract compliance.

Prior to implementing a digital solution, sourcing projects lacked collaboration owing to lack of visibility. Many elements of sourcing and contract management were manual—such as the manual tracking of changes contract terms and conditions, or contract expirations—which was tedious and risky. There was no central repository for contracts between OSU Medical Center and the university which impeded cooperation. To deal with the challenges, the organisation decided to choose a software-as-a-service (SaaS) solution to avoid spending money or IT resources on integration. It implemented Ariba solutions to standardise and streamline its strategic sourcing process.

The result? OSU Medical Center gained improved visibility, validation, and cost savings. A quick win was the identification of a new supplier through the Ariba network, resulting in US$1 million in savings. And that’s just savings attained through a single new supplier! The organisation also achieved a 60% time reduction in quantifying sourcing event results and managing project pipeline—time that can be redirected to its advancing core mission. Furthermore, the implementation enabled increased collaboration and visibility between the medical center and university at large. And the best thing about its investment is that it gets automatic upgrades and enhancements as a SaaS solutions.

Start simple. Start now.

Universities need to tackle complexity to move forward into the future. This can start simple with a simple step in tackling digitisation on its enterprise side. The vast savings achieved can go a long way to help your institution reimagine its future, and the effects of simplification on the organisation can be transformative.

Still wondering why 97 of the top 100 world’s leading universities and research institutions run SAP? Download these resources to find out more.

This blog originally appeared in the Digitalist.


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