Magazine article University Business

Should You Restructure the Business Enterprise? If You're Faced with Serious Budget Challenges, Consider Restructuring Via Master Planning

Magazine article University Business

Should You Restructure the Business Enterprise? If You're Faced with Serious Budget Challenges, Consider Restructuring Via Master Planning

Article excerpt

There's no getting around it: Today's publicly and privately funded institutions of higher education are confronted by major reductions in financial support. Given the condition of almost every state budget, as well as collapses in equity values and shrinking endowments, 2004 will be a particularly tough year in the world of higher education. Colleges and universities have a limited number of options when responding to financial pressures. These include faculty and staff reductions as well as across-the-board budget cuts. While all of these options offer some budgetary relief, none provide the structural change necessary to affect the long-term realities. And though institutions have successfully survived budget cuts in the past, the challenge this time calls for more than just postponing expenditures and temporarily juggling allocations.

Put simply, the current challenge bears the hallmarks of an irrevocable paradigm shift in the economics of U.S. higher education. Just as the private sector understands the need for consolidation and rightsizing, institutions faced with serious budgetary challenges should consider restructuring the management of their business and enterprise services. And while private corporations have restructured their business models with new technology to reduce cost significantly while preserving core competencies and services (information technology has made possible dramatic improvement in overhead departments' productivity and efficiency, translating into the ability to generate much greater output with less labor), for a university, it is important to took at the way the business management of the institution is structured.

REDUNDANCY EVERYWHERE

In the overall structure of the university, often each major element--instruction, research, development, facilities management, auxiliary enterprises and services--has established its own internal management system. Although the overall degree of centralization and decentralization varies considerably by campus, often departmentalization leads to the duplication of efforts, justified by the "uniqueness" of each mission being pursued. Nowhere is this more apparent than in the area described loosely as "enterprise management." Generally these are activities that purport to be self-supporting or at least depend predominately upon sources other than tuition dollars.

At the typical large university, enterprise management is subdivided along functional lines. Therefore, research, commercial services, housing, student services, intercollegiate athletics, recreation, student unions, facilities management and operations, instructional support, ancillary activities, and development frequently have individual, internal, staff support services. These departments often include Accounting, Payroll and Benefits, Purchasing, Planning, Information Systems, Portfolio and Real Estate Management, Maintenance, Marketing, Security, and Safety and Risk Management. Given the likelihood of significant redundancy, institutions faced with serious budgetary challenges should consider restructuring the management of their business and enterprise services.

MASTER PLANNING IS THE KEY

One option that holds the promise of greatly improved campus services is to undertake the master planning of all campus enterprises. …

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