Many higher-education institutions around the world are at or fast approaching a crossroads that will define their future in terms of strategy and operating models.

  • Do they transform? 
  • Do they optimize? 
  • Do they do nothing and react later? 
  • Do they do nothing and face the inherent risks of inaction?

For the majority of institutions, the realistic choice likely falls between transforming their operating model, and all that goes along with this, in a reasonably short period, or achieving the same outcome over a longer period, spreading the expense and workload – that is, optimizing – while taking the risk of fresh disruption upending them in the meantime.

The key variables in deciding which is most likely are captured in the following diagram, where the vertical axis deals with motivation considerations (is it about performance improvement, better alignment or dealing with disruption?) and the horizontal axis deals with readiness for change. Optimizers will be focusing mainly on performance improvement and may be ready for only limited change. Transformers will have greater strategic ambition and a sharper focus on disruption.

Transform or optimize?

Optimization or Transformation

Whether transformers or optimizers, the building blocks are the same:

  1. Review strategy, mission and purpose
  2. Improve core capabilities
  3. Adopt a target operating model
  4. Modernize technology

1. Strategy

In relation to strategy, much depends on a view of the future, in one's own context. A plausible view of the sector in the future may have the following features:

Seven strategies for the future

2. Capabilities

In 2018, KPMG International commissioned Forrester Consulting to conduct a study on customer-centric strategy decisions across 17 industries.2 This research identified that organizations that make a moderate or significant investment in all eight of the following capabilities are 2.1 times as likely to deliver customer experiences that exceed expectations, successfully execute on one or more customer-centric objectives, and achieve return on investment on one or more metric.

Eight critical capabilities of a connected enterprise - v2

Eight critical capabilities of a connected enterprise

  • Insight-driven strategies and actions: The ability to harness data, advanced analytics and actionable insights with a real-time understanding of the customer and the business to shape integrated business decisions.
  • Innovative products and services: The ability to develop compelling customer value propositions on price, products and services to engage the most-attractive customers and drive profitable growth.
  • Experience centricity by design: The ability to design seamless, intentional experiences for customers, employees and partners to support customer value propositions and deliver business objectives.
  • Seamless interactions and commerce: The ability to interact and transact with customers and prospects across marketing, sales and services, and achieve measurable results.
  • Responsive operations and supply chain: The ability to operate the business with efficiency and agility to fulfill the customer promise in a consistent and profitable way.
  • Aligned and empowered workforce: The ability to build a customer-centric organization and culture that inspires people to deliver on the customer promise and drive up business performance.
  • Digitally enabled technology architecture: The ability to create intelligent and agile services, technologies and platforms, enabling the customer agenda with solutions that are secure, scalable and cost-effective.
  • Integrated partner and alliance ecosystem: The ability to engage, integrate and manage third parties to increase speed-to-market, reduce costs, mitigate risk and close capability gaps to deliver on the customer promise.

3.Operating model

A further building block of transformation is adopting a target operating model. Many universities are unable to articulate clearly what is their existing operating model, or at best they post-rationalize from the status quo rather than point to a plan deliberately executed. The challenges and disruptive factors faced by the sector require a clear conceptual approach to a target operating model, showing how the enterprise will organize itself to execute its strategy and what detailed processes will be used.


Investment in technology will be key to efficient transformation, the challenge being to link seamlessly front-, middle- and back-office systems while coping with the complexity of the modern higher education institution. To reach the scale and efficiency of operations which tomorrow’s funding climate will be willing to pay for, a huge agenda of investment in technology will be required by universities over the next decade.



1 Schenker, JL. (2019, January 19). The platform economy. The Innovator.
2 A commissioned study conducted by Forrester Consulting on behalf of KPMG, September 201