Information technology and the end of the traditional university business model

The Prime Minister Malcolm Turnbull often speaks about "digital disruption" (and indeed he amassed a fortune out of being an early investor in information technology). There is a risk of digital destruction to the university business model.

Universities have seven broad roles: six of them under threat mostly but not exclusively due to information technology.

i. Conserve knowledge through libraries and scholarly collections. But Google has "democratized" knowledge. Indeed a generation has grown up expecting to get information for free.

ii. Transmit knowledge to students. But the university monopoly over higher education teaching is being eroded by the arrival of new for-profit providers.

iii. Advance knowledge. But think tanks, corporate researchers do this. Given the tendency to reduce government monopolies perhaps we will see the opening up of access to government research funds being provided to non-governmental organizations, think tanks etc. This is particularly because, with the shortage of university teaching positions, there is a generation of talented young PhDs operating outside the academy.

iv. Apply knowledge (via consultancies). But think tanks, corporate researchers also do this.

v. Refine knowledge via critical review and scholarship. While some elite scholarship remains within the academy, everyone else now assumes they have a right to comment via social media etc.

vi. Conscience and critic of society. Again academics are now only a small minority competing in the marketplace of the "attention economy"; most members of the "commentariat" are not university-based.

vii. Accreditation of graduates. At present the precious bit of paper is crucial.

There is a lesson from the movies: they remain important as entertainment - but people no longer need to go to cinemas to view them, for example, movies can be delivered via the Internet. Similarly education will remain important - but people may no longer need to go to university buildings to receive it

Another example is photography, which is about 180 years old. 3.5 trillion photographs have been taken since its invention. More photographs are now taken every two minutes (on 2.5 billion cameras) than were taken in all the 19^th century. But the Kodak company itself is broke. People no longer need to go to chemists to get their films developed; most photographs are taken on mobile phones. Photography remains important – but people no longer need the traditional providers for services.

There are, of course, some responses to information technology currently underway. For example, Massive Open Online Courses (MOOC) mean that because knowledge is now democratized and so easily available, it might as well be given away. This is done presumably in the hope that free undergraduate courses may attract post-graduates to enrol.

But newspapers have shown that giving something away means eventually that consumers expect all of it to be free. MOOCs may undermine the university business model rather than save it.

I suggest there is a risk that most universities will largely disappear. The world will eventually have only a handful of prestige boutique universities, such as Oxford, which will trade on their brand.

In short, the long-term future of Australian universities cannot be assured.

But there are a few steps to secure the immediate future. Information technology cannot provide the face to face experience for students, such as the exchange of ideas via discussion, networking, developing social skills, being exposed to other cultures, and learning to be accommodated with other people in a safe environment.

University courses provide the "hard" skill (a degree in economics, say). But the direct personal experience of being on a campus provides the "soft" skills. Hard skills may get a person a job; soft skills will help the person rise up through an organization.

Therefore students – domestic and international - will still want quality teaching and a good experience. Indeed, educational providers can achieve a marketing edge by enhancing the student experience

On international education, this is an Australian export success story. It is the country's third largest export industry.

But it is appalling that three decades after the "export of education" became an Australian Government priority we are still wrestling with matters that were identified as problems at the outset (such as the basic issue of ensuring that each jurisdiction treats international students in an equal way to domestic students with respect to things like hospital charges and transport concessions).

Therefore, if we wish to do well in the export of education, we need to address these issues. Otherwise we will stand even less chance of dealing with digital disruption.