Higher Education Reform:

The Profit Imperative

November 2014

Dr Michael Evans

Outline

The profit imperative: management lessons from the

private education sector

• Looking inward: systems for collecting data, identifying inefficiencies

and driving improvements

• Looking outward: leveraging market insights and spotting strategic

opportunities

• Where are the greatest efficiency gains to be found, and what can

be learned from practices in private tertiary education?

Kaplan

• Kaplan founded: 1938. Acquired by The Washington Post Company: 1985,

now Graham Holdings

• GHC Majority shareholder: Don Graham

• 2013 Kaplan Revenue: $3.5 billion

• Kaplan is one of the largest global, diversified education companies

• 1M students, 23,000 staff and a presence in 600 locations in 30 countries

Operating divisions:

• Kaplan Higher Education US

• Kaplan Test Prep

• Kaplan International

Kaplan Global Footprint

Canada: Toronto, Vancouver

United States: New York, Boston, Chicago,

Washington DC, Philadelphia, Miami, Utah,

Berkeley, Seattle, Portland, Santa Barbara,

San Francisco, San Diego, Irvine, Los Angeles

United Kingdom: London, Oxford,

Cambridge, Nottingham, Brighton,

Sheffield, Manchester, Edinburgh,

Glasgow, Bristol, Bath, Bournemouth,

Liverpool, Salisbury, Torquay

Ireland: Dublin

China: Beijing, Shanghai,

Chengdu, Chongqing, Suzhou,

Qingdao, Shenyang, Changchun,

Kunming, Hong Kong,

United Arab Emirates: Abu Dhabi Singapore: Singapore

Australia: Sydney, Manly,

Melbourne, Adelaide,

Brisbane, Cairns, Perth

New Zealand: Auckland

KI Schools

UK

Embedded (on campus)

• Bournemouth University

• University of Brighton

• University of Glasgow

• University of Liverpool

• Nottingham Trent University

• University of Sheffield

• University of West of England

Non Embedded (off campus)

• City University London

• Cranfield University

• Westminster University

UAE & Other Middle East• Institute of Applied Technology (IAT)• Abu Dhabi Vocational Education & Technical Institute (ADVETI)

• Koya University, Kurdistan

Our University Pathway Partners

US• Northeastern University• University of Utah• Pace University

Australia• University of Adelaide• Murdoch University

China & Other Asia• UK Northern Consortium Partner• US Uni. Consortium Partner

Kaplan is also involved in on-line, degree and

transnational partnerships with UK, US and

Australian universities.

Outline

The profit imperative: management lessons from the

private education sector

• Looking inward: systems for collecting data, identifying inefficiencies

and driving improvements

• Looking outward: leveraging market insights and spotting strategic

opportunities

• Where are the greatest efficiency gains to be found, and what can

be learned from practices in private tertiary education?

Comparing P&L’s

Aust Uni AResearch intensive

Aust Uni BRegional

Aust Uni CMid rank

Expenses expressed as percentage of revenue

Marketing 0.30% 1.55% 1.13%

Admin 25.94% 33.68% 26.91%

Academic 25.65% 33.16% 25.78%

Services 34.39% 26.94% 27.48%

Write downs 2.29% 1.55% 0.85%

Dep / R&M 7.16% 6.22% 7.08%

Finance 1.69% 0.52% 0.57%

Tax

Total 97.42% 103.63% 89.80%

Profit / Loss 2.58% -3.63% 10.20%

What does the revenue tell us?Aust Uni A

Research intensiveAust Uni BRegional

Aust Uni CMid rank

Grants 48% 16% 9%

CGS 7% 38% 24%

HELP 6% 25% 17%State 0% 1% 1%

Stud Contrib 1% 2% 2%

Course fees 12% 9% 19%

Sub Students 27% 75% 63%

Charges 6% 1% 4%

Consultancy 6% 3% 5%

Investment 8% 1% 9%

Other 6% 5% 9%Sub Other 25% 9% 27%

Total 100% 100% 100%

Comparing P&L’sAust Uni A

Research intensiveAust Uni BRegional

Aust Uni CMid rank

Aust Private HEP

Expenses expressed as percentage of revenue

Marketing 0.30% 1.55% 1.13% 14.92%

Admin 25.94% 33.68% 26.91% 45.56%

Academic 25.65% 33.16% 25.78% 22.89%

Services 34.39% 26.94% 27.48% 0.00%

Write downs 2.29% 1.55% 0.85% 3.42%

Dep / R&M 7.16% 6.22% 7.08% 2.85%

Finance 1.69% 0.52% 0.57% 0.91%

Tax 3.64%

Total 97.42% 103.63% 89.80% 94.19%

Profit / Loss 2.58% -3.63% 10.20% 5.81%

Comparing P&L’s

Aust Uni AResearch intensive

Aust Uni BRegional

Aust Uni CMid rank

Aust Private HEP

US Private Ed Group A

US Private Ed 61Group B

Expenses expressed as percentage of revenue

Marketing 0.30% 1.55% 1.13% 14.92% 17.98% 24.75%

Admin 25.94% 33.68% 26.91% 45.56% 25.13% 10.38%

Academic 25.65% 33.16% 25.78% 22.89% 42.90% 61.50%

Services 34.39% 26.94% 27.48% 0.00% 0.00% 0.00%

Write downs 2.29% 1.55% 0.85% 3.42% 4.73% 1.38%

Dep / R&M 7.16% 6.22% 7.08% 2.85% 4.40% 1.81%

Finance 1.69% 0.52% 0.57% 0.91% 0.00% 0.00%

Tax 3.64% 0.76% 0.31%

Total 97.42% 103.63% 89.80% 94.19% 95.90% 100.13%

Profit / Loss 2.58% -3.63% 10.20% 5.81% 4.10% -0.13%

Higher Education Reforms

• 20% reduction in CSP funding

• CSP for sub-degree and private providers at 70%

• Private Fee Help 25% loan fee removed

… need to do things differently

Higher Education Reforms

• 20% reduction in CSP funding

• CSP for sub-degree and private providers at 70%

• Private Fee Help 25% loan fee removed

Need to do things more efficiently

• Greater need for the voice of employers into curriculum

• Questions over the work readiness of graduates

• GDS results going backwards in some areas

• Need for more cost effective models

Need to do things more effectively

Kaplan International Services as a Recruitment and Delivery Partner

Partner University

Our recruitment agencies

On Campus Pathway College

Residential and Teaching

Facilities

Kaplan University Placement

Service

Transnational Delivery

Channels

Use of our in-country

offices

In-country Pathway Colleges

On-line recruitment for

direct entry students

Cooperative Learning Centre

• Modelled on Cooperative Research Centres www.crc.gov.au

• Main participants: VET and HE providers, Universities, Corporate

partner(s), professional associations

• Partnerships for the design and delivery of programs in areas of

demand.

• To tackle high priority training and education problems and issues.

• Focus on teaching and learning innovation, related research, and

developing and delivering programs that satisfy areas of

demonstrated demand.

Cooperative Learning Centre:

Developing the concept

A learning partnership of key providers and industry to:

• Research and develop focussed curriculum

• Deliver in a tailored manner

• Minimise overlap and ensure RPL

• Balance competencies with learning outcomes

• Focus on work ready at all levels

• Deliver at all relevant AQF levels

• Discussed with government, Universities and employers

• Concept received a high level of support

• Opportunity to lobby for support in 2015 budget

Cooperative Learning Centre:

Developing the concept

Potential CLC Themes

• Profession driven curriculum

• Learning science

• On-line collaborations

• Teaching and learning projects

Evidence-Driven Instructional Design

Overviews Information Examples Practice AssessmentLearning

Outcomes

Guidance (for motivation and metacognition)

Design

Delivery

The evidence about learning points to a sequence of

activities that optimizes learning.

18

Design goes one way...

... delivery the other.

Different kinds of projects drive

learning performance

Market Leader Projects – Projects that impact student and business outcomes

through the application of evidence based learning science and assessment at

scale.

Enabler Projects – Projects focused on developing organizational capabilities,

tools, and instruction to enhance our capabilities to apply advanced learning

science and assessments.

Learning Innovation Leadership – Transformative projects that will disrupt

current paradigms and develop competitive expertise in advanced learning

science and assessments.

Thank youmike.evans@kaplan.edu.au