SAP for Higher Education and Research Blogs
Discover practical tips and insights to optimize operations and enhance learning experiences with SAP. Share your own experiences in higher education and research.
Showing results for 
Search instead for 
Did you mean: 
Why Colleges and Universities Should Operate Like Businesses

By James Krouse, Global Director of Higher Education Solutions Marketing, SAP

Even businesses with the noblest of missions are just that ‒ a business. So why aren't colleges and universities operating more like one?

That's not a criticism of higher education institutions; it's a reality that they need to face. As the pandemic unfolded and evolved, most colleges and universities, like most companies, tested their ability to respond quickly to change. However, most of their efforts were simply short-term pivots, temporary restrictions, and hybrids of already existing options.

Unfortunately, all this work is not protecting colleges and universities from significant risks that can impact the future of higher education. McKinsey research uncovered that 57% of public four-year institutions and 77% of private, not-for-profit four-year institutions could potentially suffer budgetary shortfalls of 5% or more. And declines in undergraduate enrollments of nearly one million students, as well as steep fundraising shortfalls, over the past two years are only exacerbating the problem as most universities' top revenue source is diminishing.

Clearly, universities and colleges need to reconsider how they operate. This is not to say that they need to find new ways to turn a profit by taking a stringent view on assets and liabilities like a business would. But they should look at the value they provide existing and potential students and employers.

Redefining value inside and outside the classroom

Even before the pandemic, the traditional higher education model failed to satisfy everyone's expectations. Costs were increasingly out of control. Tuition increases were becoming untenable. Even students were becoming skeptical of the value of the knowledge and skills being taught. And when classes were forced to move 100% remote, parents and students asked even more questions.

It's no wonder that public confidence in higher education is increasingly mixed at best. However, according to Inside Higher Ed, three in five college and university leaders fear that their institution is simply settling into a "new normal" despite fundamentally changing its operations in response to the pandemic. In fact, only 27% believe that opportunities were created to make needed changes before the pandemic.

For most businesses, the pandemic became an accelerant to the demise of broken business models, processes, and operational procedures. The same is true for higher education.

Take, for example, the German University of Technology in Oman (GUtech). Serving more than 2,100 students, GUtech provides a diverse student body with a world-class education guided by German excellence in science and technology and a firm grounding in Oman's culture and heritage. But preparing the next generation of Omanis for their professional careers called for a change in the university's learning experience.

"Not only do the courses provide students with the knowledge they need to work in the digital future, but they also provide them with the opportunity for critical and analytical thinking – skills that are necessary to be successful in an international marketplace, beyond Oman and the Gulf region," explains Heiderose Friederike Moossen, Manager for Vocational Training, GUtech.

To bridge that gap between the education it provided and the skills and insights students need to succeed in their future workplace, GUtech turned to a digital platform and certification program. The learning experience equips students with skills that will help differentiate them in the workplace and understand how corporations operate on a day-to-day basis today and tomorrow.

Although this digital transformation may seem simple on the surface, the impact it delivers is even more profound to the institution's reputation. Let's face it, the GPA from a top 100 university is vastly different from a local party school. However, when a future student or employer compares the quality of the education that graduates receive, the ability to ramp up quickly with relevance, skill, and expertise always wins over their opinions of the value of their diploma.

Being true to the mission and offering real benefit

For centuries, higher education institutions have followed the same vision: intellectual pursuit, inquiry, discourse, and discovery of knowledge. However, all these objectives must be achieved in a way that generates revenue, maximizes graduate value, and creates economic wealth.

The answer to attaining this level of excellence is adapting the business model in financially viable, socially valuable, and personally fulfilling ways. Most of all, colleges and universities need to be flexible and open enough to evolve as quickly and continuously as the businesses that depend on their graduates do.

Learn more: