When Neal Ottinger looks up at the sky, he sees more than clouds and stars — he sees the future. Like many other young people in America, the 21-year-old student always wanted to be an astronaut. But life wouldn’t make things easy for him.
The “Cradle of Astronauts” is addressing America’s college affordability crisis by radically rethinking higher ed’s business models.
“Studying to be an aerospace engineer is very challenging academically, and not only that, pursuing a career in space exploration can be extremely expensive,” Ottinger says. “A lot of kids aren’t able to afford it.”
These stories are all too common: America is facing a major college affordability crisis. Data from the Federal Reserve shows that student loan debt totals about $1.5 trillion, greater than any other category in the U.S. except mortgage debt. Tuition costs at public universities have risen by 344 percent since 1980, according to Debt.org, while median income has barely budged.
“Over the last decade or two, the costs have run up so high, and so fast, that it has really become a hardship on families and on students,” says Mitch Daniels, Purdue University President and former Governor of Indiana. “Institutions of higher education are notoriously inefficient, but I think many of them are going to pay much more attention to the affordability issue now, because there’s finally counter pressure from students and families. If a degree is going to cost them that much, they’ll find another way to prepare for life.”
The Purdue Miracle
Purdue is a Big Ten school known for its elite space program; the first and most recent astronauts to walk on the moon were Boilermakers, Purdue’s football team. Now, the “Cradle of Astronauts” is making headlines for a different reason and setting the pace for prioritizing student affordability and accessibility.
In inflation-adjusted dollars, the university is charging its students less to attend in 2019 than it was in 2012. Tuition fee freezes are often seen as marketing gimmicks that are not sustainable in the long run, but Purdue’s feat was accompanied by an increase in core investments. Think of it this way: Not only students are paying less to attend, but the university is also spending more in academic excellence, innovative ideas, and faculty growth, significantly lowering the student/professor ratio and increasing the number of tenured positions.
The key to “Purdue’s miracle” is a sharp focus on operational efficiencies, finding and cutting waste wherever possible, removing redundancies and duplication of efforts with digitalization, and standardizing processes across departments. Top that off with the value that Purdue’s leadership places on accountability, and you have the recipe for success. The university’s transformation gained media attention quickly, with Bloomberg Businessweek posing the question on everyone’s minds: “Can Mitchonomics Fix the Broken Business of Higher Ed?”
“People think there’s some voodoo in here; there’s not. We’re not doing anything that doesn’t make very common sense,” says Daniels. “We do three things at Purdue: teaching, research, and engagement. Anything else should be seen as optional. We need to be as efficient as possible on things that are purely supportive and administrative, and commit the saved dollars to either keep tuition and student costs low or to invest in our core mission: to deliver high-quality education at the highest proven value, at the lowest price we can manage.”
From Incremental Progress to Giant Leaps
The first step was to simplify the university’s digital foundation, improving budget and cash management. Eva Nodine, head of Financial Planning and Analysis at Purdue, says that before the transformation, virtually every process involved a paper form: “Everything was very complicated, and it took a long time to get anything done. We had to approve every transaction, even if it was a penny. A $100 transaction needed eight signatures at times, all on paper forms — no joke.”
It was time for a change, and Purdue knew it would require more than just an IT systems upgrade. It would take a giant leap and a complete change in the way the university managed its business. With a holistic transformation in mind, a new mandate was set: Simplify, Organize, Streamline, and Automate.
Nodine emphasizes that Purdue is one of the most innovative universities in the country, and needed a world-class administration to support it, with technology that would enable the school to become an intelligent enterprise. SAP S/4HANA was the engine behind this transformation.
Moving to an intelligent, next-generation ERP software suite enabled Purdue to manage information in real time, immediately eliminating 600,000 pages of paper that in the past needed to be transported manually across the campus. Imagine that: “If you were to stack that paper up, it would be taller than the Purdue’s Bell Tower, which stands 160 feet tall,” says Nodine.
The university is also benefiting from simplified user interfaces, a single work-request submission process that’s mobile-friendly, and the elimination of 400,000 approvals and pre-audits that were unnecessary. “We were able to redesign our financial hierarchy using SAP Master Data Governance in a way that would give us transparency and consistency across the university,” she says.
Perhaps the most dramatic results were achieved by eliminating the multiple spreadsheets that used to run on slow and outdated systems. With over 30,000 forms running on disparate systems, it was impossible to record a transaction consistently. Budget discrepancies in some departments were common. But now spending is automatically tracked against budget and rarely needs to be manually adjusted. And because employees don’t need to spend so much time reconciling information or working on manual, repetitive tasks, they can focus on strategic analysis and new ways to add value to Purdue’s mission.
Next on the agenda is the implementation of SAP SuccessFactors solutions, a complete recruit-to-retire solution for talent management. Nodine explains the goal is to be able to approve new hires faster and improve onboarding, so they can hit the ground running.
When You Shoot for the Moon…
With the help of technology, Purdue has set a model for how to strike the balance between being an elite institution while still expanding access. Since the tuition freeze went into effect, Purdue students and their families have saved more than $400 million according to the university.
“We’ve entered a virtuous circle. By holding tuition flat in nominal dollars for seven years, we have experienced a surge in applications and interest from outstanding students. So a policy of affordability has led to greater volumes and therefore made it easier to remain affordable,” says Daniels. “More students paying tuition has meant that we could keep the price constant, and even lower the cost of room and board and books and other things.”
Purdue is transforming higher education, while cultivating and inspiring a whole new generation of innovators who, like aspiring-astronaut-to-be Neal Ottinger, can graduate debt free.
“I’m definitely grateful. My education here was very top rated and at such a low cost. Purdue University is always in the top 10 schools for engineering and it’s just crazy how affordable it is to go here, despite that,” Ottinger says. “There’s a large alumni base of people that have done great things that come out of Purdue. I hope to be one of those people too.”