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Taking the university challenge: CFO Matthew Walsh

Taking the university challenge: CFO Matthew Walsh

Open Universities Australia's CFO Matthew Walsh talks to CFO World about strategic focus and ICT spending in the fast-growing online education space

The online education sector is growing at a rapid pace internationally. According to research undertaken by analysts at IBISWorld, the sector is one of the top five growing industries, worth $5bn in annual revenue in Australia. It employs nearly 20,000 people and is also expected to outperform the overall economy through 2017-2018.

National online education provider, Open Universities Australia (OUA), has led the online learning push locally and experienced significant year-on-year growth as a result. However, the university-owned group is facing increasing challenges as it strives to maintain a commanding leadership position and capitalise on sector growth in the face of rising competition.

One staff member with direct responsibility for improving OUA's commercial focus is its CFO, Matthew Walsh. He was appointed to his post six months ago at the same time as a staff recruitment and reshuffle aimed at helping improve the group’s commerciality, best practices and strategic focus.

Walsh’s background is a diversified one and includes roles with companies in technology provision and financial services to logistics and accounting consulting. These include KPMG, Colonial and Mayne and most recently, private equity-backed technology group, Aconex.

“In my more recent roles, these companies have generally been backed by private equity businesses and have been looking to list in the near future. In my last couple of roles I was specifically helping the organisation prepare for an IPO,” Walsh explained. “Listed and private-equity backed companies are very commercial organisations and that grounding is what I bring to the table at OUA.”

OUA has grown significantly year-on-year in the past few years, although the focus of the organisation up until very recently had been on just keeping up with and supporting that growth, Walsh said.

“As online learning has become a more competitive environment, what I was brought in to do was work with the CEO, board and executive team to provide a more commercial focus across the organisation,” he said. “This is about helping to prioritise business initiatives, capital expenditure management and those sorts of big ticket items we need to work towards as part of our business strategy going forward.”

The size of OUA surprised Walsh when he joined six months ago and it’s likely to surprise readers too. The group has 350 staff with annual revenues of $190m and has grown 20 to 30 per cent annually on average for the last four to five years. It is equally owned by seven universities and has partnerships with 21 institutions and providers to deliver a range of tertiary education services.

The leap up from its relatively small business roots requires a different mindset from both Walsh as well as the OUA executive team. “It requires different focuses and like anything that matures, there are different lifecycles,” he said. “We’re entering the new and more mature lifecycle now.”

Strong sense of initiative

To date, OUA’s core business has been university-backed undergraduate and postgraduate study. Its forward strategy is to diversify these offerings in what is increasingly becoming a competitive environment. Spearheading this strategy is OUA CEO, Paul Wappett, who joined 14 months ago.

Walsh identified three key current priorities to achieve diversification. The first is offering a tertiary portfolio in the TAFE sector. The second is expanding OUA’s ‘education services’, a series of white-label offerings utilising its operational competencies.

“The whole university sector is recognising the need to provide an online offering and we feel we can partner with some of these providers to help their speed to market,” Walsh said. “It’s a win-win for both of us.”

The third initiative, launched in March 2013, sees OUA offering free online courses to students through its ‘Open2Study’ brand. These are a direct response to the rise in free online education services globally, termed ‘MOOCs' (massive open online courses).

“As one of the market leaders in online education, it was important for us to show leadership in this [free services] area,” Walsh said. OUA initially offered 10 courses but hopes to deliver up to 50 by the end of the year.

“We see that helping towards legitimisation of online education by giving people a new experience in a risk-free environment, and encouraging a greater understanding of what online education can offer to those who haven’t yet been exposed to it,” Walsh added.

Taking up the challenge

The increased level of competition in the online education sector means things are at a disruptive stage, Walsh said – a challenge for any business and its CFO. OUA was one of the first players in Australia’s online education arena; today, most university providers are either seeking to enter this market or already have. The sector is also becoming an increasingly global one.

“MOOCs, for example, have only come out in the last year and grown significantly,” Walsh said. “As these are free ‘taster’ tests, the whole sector is still trying to work out what the revenue model is around that. We are also trying to work out the implications of that model on our business.

“That competition also brings a lot of complexity with it, and that’s why we need to make key business decisions, prioritise and stay on top of that.

“However, this rise in competition also act as a catalyst – from our point of view, it is legitimising online education as an alternative to the traditional education method.”

In partnership with its priorities is the need to invest in ICT systems that support OUA’s business focus. Walsh said the group is investing significantly in infrastructure and highlighted a new CRM system and data warehousing practices as key investments this year.

“We need to support the business decisions that are critical in the more complex world we’re entering and that calls on more data,” he said. “The key ICT investment we’re currently implementing is a new CRM system to help manage the business in a more real-time way. This will help us support processes, particularly our call centre, and make decisions about how we need to adjust our business in a timely fashion.”

The CRM system is currently being implemented and is expected to launch mid-year. After that, OUA will be implementing a new data warehouse. Walsh said this second investment was an additional commitment to developing the right environment and experience for students.

“We have to understand a lot of data and analyse what is really important to the student, and what helps them become successful,” he continued. “Ultimately we’re about helping and encouraging the student to become more successful. We have spent a lot of time and focus on technology that gives us greater insight into how we achieve that.

“By having a data warehouse that combines all the information sources across our systems, we’ll have greater visibility over what will help the student experience. Managing the data giving us insights into learning analytics is a really important part of our strategy. We feel we have so much information on how students learn, we wish to leverage that and improve the sector’s ability to understand what works and what doesn’t.”

Being in one of the top growth industries in Australia, it’s more important than ever for OUA to invest and maintain market leadership in online education for the short and long term, Walsh said. All of the current initiatives and ICT plans require significant upfront capital to invest and a healthy risk mindset.

“We are confident in this investment as well as the criticality of investing to maintain our market position,” he said. “This will help propel us and share in the growth in the sector.”

Longer term, the data analytics and expansion plans OUA is focusing on now will help it understand how to be a market leader in the future, Walsh concluded. And supporting that growth and longer-term focus is just what being a CFO is all about.

“We know this won’t happen overnight, so we have to build the systems and capabilities, and develop quite a bit more to reach maturity,” Walsh added.

Walsh on what makes a good CFO

“To be good CFO today, your technical skills are accepted; you are just expected to do all the technical aspects associated in the role. What differentiates you is helping drive the strategic and commercial direction of the business. A good CFO needs to partner with the CEO and work with the broader executive team to drive that strategy and commercial focus. It’s about instilling a level of confidence with the board and the CEO that the strategic and commercial decisions being made have the appropriate rigour and focus. It’s also about supporting the strategic framework and helping businesses to evolve. That is where a CFO really needs to be involved.”

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