Universities must swap physical for digital estates − at warp speed

Like retailers, institutions must adapt to new circumstances by accelerating transformation or face long-term extinction, says Paul Baines

January 29, 2021
Taking off
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Covid-19 has laid waste to retailers globally. Consider Debenhams and Arcadia in the UK, or Brooks Brothers in the US. According to Coresight Research, 20,000 to 25,000 retailers were forecast to close in the US in 2020, accelerating a pre-pandemic trend.

Other retailers are similarly devastated. Those in travel and food service, such as pubs and restaurants, have gone to the wall for lack of customers and government subsidies. Airlines are reeling from high debt levels, travel bans and passenger restrictions, as well as quarantine measures. According to travel data company Cirium, at least 40 commercial airlines ceased operating in 2020 as global airline passenger volumes plummeted to their lowest levels in 20 years. Could universities meet the same fate?

The answer is “yes”. Few consider universities to be like retailers or airlines, yet they share characteristics with both sectors.

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Most universities have large, costly bricks-and-mortar estates in which to teach and house their students. Like airlines, universities have high fixed costs, associated with “unfunded” research, the salaries of the relatively expensive knowledge and professional services workers they employ, the upkeep of expensive laboratories, and the construction and maintenance of their campuses and student accommodation blocks. Like airlines, they offer a perishable service − places on degree programmes, which, if not taken up, are lost forever, the revenue never to be recovered.

In the UK, the Institute for Fiscal Studies (IFS) warned that, in the midst of the pandemic, 13 universities faced bankruptcy. Most universities face income shortfalls as a result of dwindling international student numbers, mothballed student accommodation and conference centres, and spiralling pension deficits. Estimates of losses to the UK university sector range from £3 billion to £19 billion in one year. The University of Edinburgh’s vice-chancellor estimates his university’s Covid-19 losses to be in the region of £70 million to £150 million this year.

Given the scale of these potential losses, and with further losses on the horizon as vaccination drives drag on and travel bans continue, universities should consider downsizing their physical, and transforming their digital, estates − at warp speed. This means curtailing or limiting existing campus building ambitions and investing in digital infrastructure. They must adapt to the new circumstances or face long-term extinction.

To be fair, universities are dipping their toes in the water. Australia’s Deakin University has partnered with IBM to use the company’s artificial intelligence (AI) platform, Watson, to improve student satisfaction by answering student questions on everything from admissions queries to car parking. The University of St Thomas (Minnesota) offers students a website app to enable chat with librarians online.

University leaders need to go further by considering the benefits of digitalisation in every department. This means leveraging new applications in mobile, AI, cloud computing, blockchain and internet of things (IOT) technologies. AI could be used to create a culture of data-driven decision-making, blockchain for the record-keeping of degrees, cloud computing for collaborative online working for teaching and research, and the internet of things could create truly immersive and connected educational spaces.

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This year has taught us that shifting our teaching provision online, at pace, is possible and desirable, but this is just the beginning of the change. This great enforced experiment with digital transformation affords institutions a valuable learning opportunity: to pick the best approaches that increase student performance and satisfaction while removing those that reduce them.

That’s not to say that little to no teaching should take place face to face in future. Rather, universities should transform their environments to offer their students the choice of how and when to access their higher education, and their faculty and professional services staff the opportunity to work from anywhere.

Such omnichannel experience is commonplace in retail now, where shoppers are given the opportunity to browse and purchase by phone, in a physical store and online. Retailers who had already transformed their estates digitally when the pandemic hit were better placed to weather the Covid-19 storm.

The question is whether universities will follow suit. Surely, organisations that invented penicillin, genetic fingerprinting, the seatbelt, ultrasound and the internet itself are up to the challenge. Having transformed the world, it’s time to transform themselves.

Paul Baines is professor of political marketing and associate dean (business and civic engagement) at the University of Leicester in the UK. The views expressed in this article are his own and are not necessarily reflective of the views of his employer.

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