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Higher Education Needs Better Business Analytics

Better business analytics will not, on their own, solve our higher education funding problems, but they would certainly help address some of the most dysfunctional aspects of higher education finance.

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Business analytics are the use of quantitative measures of past financial performance to inform future planning and decision making. These are the data tools many private-sector firms use every day to get a return on the investments they make in people, technology, and processes to keep per unit costs down, improve efficiency, enhance quality, and drive competitiveness. It’s safe to say that most spending decisions by higher education institutions are not guided by business analytics. Colleges and universities boast neither common language about costs and prices nor well-established metrics for evaluating how resources are used within their institutions or across the higher education landscape.

This leads to confusion about revenues and spending and cost structures inside the institutions, in dialogue with public policymakers, and with the general public. It also contributes to weak use of fiscal data to inform planning, and to poorly informed decision making about how to match spending with priorities, whether for academic programs within a single institution or to advance public goals for higher education. The result is that it is difficult for policymakers and college leaders to even think about how to increase return on investment or target resources to problem areas.

Better business analytics will not, on their own, solve our higher education funding problems, but they would certainly help address some of the most dysfunctional aspects of higher education finance.

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