During the first half of 2000, the Information and Education Services Division of the University of Newcastle undertook an activity based costing (ABC) study into its library and IT services. The study followed the methodology and objectives of the DETYA-sponsored study to develop a costing methodology for the Australian Higher Education Sector, the final report of which was released in May 2000, concurrent with the completion of this study.
The Information and Education Services Division (IESD) of the University of Newcastle has responsibility for the delivery of library and IT services to all faculties and divisions of the University. Some organisational units within the University retain responsibility for a small proportion of IT services, and these costs were omitted from the study.
The study was not undertaken by the Division as an accounting process, but rather as a strategic exercise that can provide information and feedback on activities to inform decision making and planning. The Division saw its potential as a cost management strategy, to assist in setting of goals and tracking progress towards their attainment in an environment of intensifying competition and resource constraint, both internally and externally.
As this Report highlights in the discussion and recommendation sections, the framework and systems for studying costs through such methodologies as ABC should continuously be challenged to ensure relevance in the data and activities, and that the overall focus is informed as strategies change to meet competitive pressures and opportunities. ABC can assist managers and staff to better understand their actions and decisions by focusing attention on those activities that help them achieve their goals, through a structured and methodical process.
The study offered the opportunity for managers within the Division to approach cost management and budgeting from an alternative strategy to that which normally prevails within universities, generally involving financial performance measurement by comparing actual and budgeted results. ABC offered an approach that could inform management of the actual costs of the services they provide, how these costs might vary with changes in demand from client groups, the cost of different student types enrolled, or the unit cost of providing particular services in comparison to other universities or providers.
Among the primary objectives of this study was the opportunity it presented for Divisional staff to be trained and exposed to cost management methodologies. This experience will be used to inform future studies of this type within the Division and more broadly across the higher education sector through strategic partnerships.
This Report identifies a total of 37 recommendations for consideration by the IESD Executive and Management Team. Some of these relate to future ABC studies, while others identify the need for improved data collection and monitoring within particular activities. A further group of recommendations question some of the underlying assumptions and approaches to the provision of services within the Division, and provide the basis for critical follow up within Programs.
Encouragingly, several areas of the Division have already taken the information and data identified within the study and used it as the basis to review or evaluate activities or particular approaches within the Program, and several of the recommendations reflect these initiatives.
While potential for improvement has been identified with respect to any future ABC studies and much still remains to be addressed, this Report provides the basis for the Division to engage in critical evaluation of its library and IT activities, the costs which make up those activities, and the decisions and preferences of clients which have the capacity to impact upon those costs within the Division.
The true value of the investment in this study is therefore still to be extracted by the Division.
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