As part of their series on the ‘business of college’, BusinessWeek magazine looked at the growing practice of collaborative purchasing between colleges. The article describes how colleges are banding together to improve their purchasing power with vendors, thus reducing the cost of goods and services such as information technology, health plans for employees, and administrative services.
This practice can be understood as part of a larger trend in college management that takes one of two forms: collaboration and alliances such as described by BusinessWeek, and outsourcing. Of the two, I think outsourcing has the greatest potential. In both cases, colleges are recognizing that there are better ways to provide services for their students, staff and faculty. When well executed, significant improvements in services and reductions in expenses are possible.
We are all familiar with some of the earlier manifestations of outsourcing services on campus: bookstore management and food services, for example. How far will this trend go? Which services are next to be outsourced? And how quickly? Obviously, it’s hard to predict. What I would argue, though, is that there are many goods and services still managed by colleges that could be managed more effectively, and offered more cheaply, by external providers. So, from a purely commercial perspective, there is plenty of opportunity for companies that understand the needs (and culture) of higher education.
Note: the firm highlighted in the article is Horizon Resource Group.