Working Smarter 2018

Universities are saving now to invest in the future

Scotland’s higher education sector is world class. With the combined strengths of our diverse institutions, Scotland punches far above its weight in internationally significant research and in educational provision whose quality attracts students from across the globe. Our universities are at the heart of Scotland’s innovation landscape, making them indispensable drivers of productivity and economic growth. And as major employers themselves, and key players in Scotland’s cities and regions, higher education institutions make many other vital contributions to the Scottish economy and society.

To continue to achieve all this, universities have to make the most of their resources. To maintain high quality facilities for our students and research, and to attract the most talented people from around the world, universities must invest.

Saving to invest

For universities, efficiency isn’t only about saving public money, though they are keenly aware of the responsibilities that public funding brings. As autonomous non-profit organisations, universities have to manage their costs, and a complex mix of revenue from different sources, in order to make the long-term commitments that support and enhance their vital roles in education, research, innovation and community engagement.

Efficiency is an essential part of universities’ operations. To make necessary investments, they must manage costs to create a surplus (i.e. spend less than their income). This report sets out some of the innovative ways in which Scottish universities do this. What is saved can be invested. Surpluses also allow institutions to take on and repay debt, which is now a major source of funds for capital investment.

New shared services

Effective shared services substantially reduce costs by removing duplication of work across institutions. They also provide access to specialist services and expertise that would otherwise be unavailable or prohibitively expensive. The Scottish HE and FE sectors already benefit from a leading procurement shared service, APUC. APUC’s experience is now being harnessed to support other collaborative ventures (see below), through its subsidiary University and College Shared Services (UCSS). USET’s Digital work stream, working with the sector’s highly collaborative IT Directors’ group (HEIDS), has also been central to recent successes in this area.

Procurement

APUC Ltd is a shared service owned by the Scottish university and college sectors and is a national leader in collaborative procurement. By harnessing the combined purchasing power of the sectors, APUC secures over £20 million of savings or avoided costs annually. APUC also provides procurement expertise to many individual institutions on a shared-service basis, giving them access to specialist expertise as and when they need it. In recent years, APUC has also played an important part in supplying sought-after procurement management skills to the sector and the wider economy, through a highly successful trainee scheme, which includes placements in Scottish universities or colleges as well as in sector-level roles. The scheme is now in its fourth round. All seven of the previous participants have gone on to secure procurement roles in Scottish universities and colleges.

Sustainability & social responsibility

Universities operate at significant scale. This brings a responsibility to consider their impact on the environment and on society, a responsibility that our universities take very seriously. Many universities have dedicated staff working on sustainability and social responsibility and all work with agencies like the SFC and the Environmental Association for Universities and Colleges to minimise their footprints. With the right investment, there are many ‘win-win’ opportunities: efficient use of resources benefits the environment and saves money.

Estates

Efficient, high-quality estate is crucial to universities’ success, accommodating the facilities needed for world-leading research and the diverse teaching spaces and other facilities that ensure the best possible student experience. This brings complex challenges: alongside the drive to conserve energy and reduce carbon emissions, many of our universities must balance the stewardship of historic buildings of national significance with the need for hi-tech research and business infrastructure. A high-concentration of ageing twentieth-century buildings brings the need for costly renovation or replacement in many parts of the sector. Our institutions rise to these challenges with pro-active management of estates and careful control of other costs, in order to finance crucial investments.

Cross-sector sharing

Higher education institutions (HEIs) are autonomous organisations that have to be competitive on an international scale. But they are also highly collaborative. HEIs are deeply integrated into their communities, Scottish civic society and the wider economy. They participate in the international research networks that bring about major advances in science. Their knowledge exchange work with public and private sector organisations ensures that cutting edge research brings economic and social benefits as soon as possible. And HEIs share facilities with diverse partners where this is mutually beneficial, helping to create more efficient national infrastructure.

Business improvement

In any context, increasing productivity requires innovation and change. Expert help in stimulating and managing the right kind of change can unlock productivity gains throughout an institution, freeing staff time and improving students’ and others’ experiences. Universities increasingly use systematic business improvement techniques. Scotland has some of the leading practitioners of these approaches within higher education and our institutions regularly work together to develop and share relevant expertise. Specialists from nine universities have come together to form the Scottish HE Improvement Network (SHEIN).

Key Points

  • According to the Scottish Funding Council’s Efficient Government data, each year the sector carves out around £60 million of new savings or avoided costs for re-investment. This figure rose to £69 million in 2016/17.
  • Universities’ shared procurement service, Advanced Procurement for Universities and Colleges (APUC), now accounts for 35% of relevant spend, delivering over £20 million of savings or avoided costs annually.
  • The Scottish HE Improvement Network (SHEIN), brings together practitioners of ‘Lean’ business improvement techniques and helps to spread expertise and stimulate collaborative training events.

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