ICFAI University, a private university, is today highly visible in the press through their aggressive advertising as well as media reports on their activities, and yet I find that I do not actually know much about them - hence the reason for calling it an open secret.
I hope to learn more about them, understand what they are attempting to do, what they have achieved so far and how they are going about it, starting with this post.
The success script for the Institute of Chartered Financial Analysts of India (ICFAI), Hyderabad, was written in 1984 when two intrepid Professors of Finance joined hands to launch an institute devoted to the subject.
ICFAI came about when Dr. Besant C. Raj, a Harvard product and an alumnus of the first batch of IIM-Ahmedabad, was talked into quitting his cushy job with the Administrative Staff College (ASC) at the “ripe” age of 42 by a junior colleague, N. J. Yasaswy.
Without a blue print, financial or resource backing, they persuaded four friends (all financial wizards) to pool their resources (a princely sum of Rs. 6,000 each) to start a distance learning institute in hard core finance. It was called the Chartered Financial Analyst’s Programme. Thus was born ICFAI from a rented accommodation in Banjara Hills, Hyderabad in 1984, modelled on institutes in the US and UK.
The first milestone was reached seven years later (in 1991), when Dr. Manmohan Singh was steering the country towards liberalisation. As luck would have it, almost all the reforms introduced then had something to do with the financial sector, right up to the year 2000, when the insurance sector was opened up.
This unleashed a new bundle of training opportunities for ICFAI. The next few years saw the institute dramatically increase its budget size from Rs. 1 crore in 1991 to Rs. 10 crore by 2003. By 1994, ICFAI had a neat little kitty of Rs. 7 crore in the bank; along with an employee strength of 200; and a student base of 30,000, with 3,000 new ones being added every year.
Steadily, ICFAI’s budget size began to climb from Rs. 50 crore in 2002 to Rs. 100 in 2003, overtaking the outlay of all other accounts and finance-related institutes in the country. According to industry estimates, the annual budget of the Institute of Chartered Accountants of India is Rs. 55 crore, the Indian Institute of Cost and Work Accountants is Rs 7 crore, the Indian Institute of Company Secretaries is Rs 10-12 crore and the combined budget of all five IIMs put together is around Rs. 72 crore, of which nearly 50 per cent is a dole from the UGC.
In such a scenario, not being granted full university status was a mere technicality for ICFAI, an anomaly, which was rectified when the Chattisgarh government passed the Private Universities Act. Chief Minister Ajit Jogi notified ICFAI as the first private university of the State in September 2002, even as a dozen-odd other State governments, including Orissa and Uttaranchal, invited ICFAI to draft their legislation along similar lines.
Ask Yasaswy and he lists three factors that brought ICFAI to this present position: the founding members’ focus on creating value through quality; building a scalable model of an education institute that had a social purpose and prioritising software over hardware development. By this, Yasaswy says, means building the intellectual capital resource or a strong core faculty.
For the record, ICFAI spends heavily on research and publication. They have recently launched a comprehensive faculty development programme. They have also tied-up with the European Case Clearing House (and Harvard), so that the cases generated by ICFAI’s local faculty get published and posted on their servers, to be viewed by students and faculty of 40 leading B-schools in the world. The ICFAI staff is free to consult to increase their private earnings and their work is regularly carried in the 17 financial and accounts journals and books that the institute publishes under its own banner.
“We realise that even academicians prefer a corporate culture, though this does not mean that they shouldn’t be held accountable for their actions, as is the culture prevalent in most Indian universities,” Yasaswy goes on to add. “It’s a journey, without destination,” he declares. “We have an evolving vision and we do not want to make stupid mistakes, which you are prone to make when you are successful.”
Quoting from Gary Hamel’s book Leading the Revolution, he adds, “We want to reach a position where the competition begins to feel they’re damned if they don’t follow our business model; and damned if they do.”
They are talking and aiming big - which is not a bad thing at all. In fact, it is good to find a private enterprise aiming big in the field of education and growing at a fair pace.
And now Check this too
ICFAI's business model
Following up on my previous post, , I came across an interesting note by A. V. Vedpuriswar, Dean of the ICFAI Knowledge Centre, who describes and expands upon ICFAI's business model.
ICFAI has succeeded by changing the rules of the game in the higher education business, completely. ICFAI’s business model is scalable, software-driven and driven by a regular stream of product and process innovations
Founded in 1984, the Institute of Chartered Financial Analysts of India (ICFAI) has come a long way. From a small, single-product educational institution, it has grown into a large multi-product private university. Till about eight years back, ICFAI offered only one program, the Chartered Financial Analyst (CFA). Today, ICFAI offers a range of innovative, cutting-edge programs at both graduate and postgraduate levels. Some of these programs are offered on a distance-learning format and others on a fully residential basis. ICFAI, is now one of the largest and most cash rich educational institutions in the country. The phenomenal growth of ICFAI in the past 15 years has to a large extent been helped by a willingness to improve and innovate using a business model quite different from that used traditionally by educational institutions in India.
The founders, correctly realised that being a late entrant, they had to do things differently from the start. So, they decided that ICFAI’s working style would not resemble that of traditional academic institutions. Indeed, ICFAI’s result oriented corporate culture, backed by aggressive marketing was a major departure from tradition in a business which is known for its laid back style. Over a period of time, ICFAI has continued to introduce one innovation after the other. Some of these innovations have come in the form of new products while others have involved radical streamlining of academic processes. A combination of product and process innovations backed by a fresh mindset that has challenged conventional wisdom, has made ICFAI one of the best known examples of business model innovation in the country.
ICFAI’s Business Model
A Business Model addresses the issue of how value can be provided to customers more efficiently and effectively than competitors. ICFAI’s Business Model has been driven by three fundamental questions:
1. Who are our customers?ICFAI decided to target demanding customers who were thirsty for specialized knowledge and skills rather than those merely wanting to earn degrees churned out by Indian universities.
2. What are their requirements?ICFAI realised a small but rapidly growing segment of students was looking for high value added innovative programs.
3. What are our unique capabilities which we can leverage to serve them?ICFAI also realised its strengths lay in areas like program design, courseware development and innovative examination techniques. By introducing innovations in different segments of the value chain, ICFAI attempted to create a business model that competitors would find it difficult to replicate.
Designing and implementing such a business model necessitated a disciplined approach and making trade-offs. ICFAI had to be clear about what it would do and what it would not. ICFAI consciously decided
to invest in software than in hardware.
to keep overheads low.
to offer value added programs priced significantly higher than the corresponding offering of competitors.
not to rest on artificial props such as government recognition and government funding.
Vedpuriswar goes on to list the main differentiators of ICFAI's business model
ScalabilityICFAI realised scalability would have to be an important feature of its business model. As the Indian economy liberalised and the financial markets grew in sophistication, the demand for its programs would explode. Under such circumstances, expanding capacity quickly and efficiently would be a critical success factor. Scalability was facilitated by keeping low overheads. Heavy investments were made in educational software but hardware investments were negligible. Whenever physical facilities such as office space were required, ICFAI opted in favour of leasing than outright purchase. As a result, ICFAI could conserve its cash for serving the needs of a rapidly growing market. Today, scalability is one of the unique features of ICFAI’s business model.
Market DrivenICFAI decided not to approach the government for statutory recognition. Instead, it decided to work towards market recognition. This route was obviously tougher and longer to travel. But ICFAI realised that in the long run, it would serve two purposes. Reducing the dependence on the government would lead to financial autonomy. Gaining market recognition would result in placements, the ultimate test of acceptance for any higher education program. Today, ICFAI’s stand has been vindicated.
Evolving VisionInstead of starting out with rigid objectives, ICFAI decided to let its vision evolve. It played the game as the environment unfolded. ICFAI’s corporate culture encourages employees to scan the environment and keep contributing new ideas. ICFAI has also developed expertise in rapid implementation of new ideas. That is how ICFAI has been able to move from finance to management and technology education in a seamless manner.
Diversified PortfolioICFAI opted for a multi-product business model. Excessive focus on the CFA program would have limited ICFAI’s growth opportunities. Moreover, it would have meant leaving markets open for competitors to enter. ICFAI has continued to come out with innovative programs leveraging in its competencies in program design, courseware development and management of examinations. A good example is the program in Investment Banking, probably the only one of its type in the world. Similarly, the Treasury and Forex program is one of the most highly rated distance learning programs, in its segment, across the world. Encouraged by its success in finance, ICFAI has moved into other areas like management, technology and law.
Customer Relationship ManagementOne of the things which struck ICFAI’s top management at the time of establishing the institute was the poor quality of student service in Indian universities. Letters from students were rarely acknowledged let alone answered. Student grievances were not addressed. Routine requests such as issue of duplicate certificate took too long to process. ICFAI realised that students had to be treated like customers. ICFAI decided to take a fresh look at both pre-sales and after-sales service. Student enrolment, a nightmare in traditional distance learning programs, receives great attention at ICFAI. The enrolment process for a student is completed on the same day if the application is received before 2 pm. The course material is dispatched by the next day. ICFAI uses third party logistics providers, who are expensive but provide prompt service. Typically, most packets reach students within 4 days. In far-flung locations, delivery is made within 7 days. This is an impressive feat as close to 800 kg of study material is dispatched every day. Distance learning students expect prompt replies. These are highly customized replies and address directly the specific query posed by the student. All e-mails received before 2 pm are attended to, on the same day. Replies to e-mails received after 2 pm are sent by the next morning.Only a small percentage (3-4) of the mails are answeredby the third day. These are queries which involve more than one department. Queries received by post are cleared by the next day. All queries are stored in a database. Queries of a repetitive nature become the FAQ (Frequently asked questions) in ICFAI’s website.
Leveraging Information TechnologyIn the mid-1980s, when ICFAI began its operations, Information Technology (IT) was yet to take off in a big way. So, manual operations were unavoidable. Despite the cumbersome processes involved, ICFAI introduced various measures to respond to student requests efficiently. When PCs emerged in a big way, ICFAI had already streamlined its business processes. By the early 1990s, ICFAI had completely replaced typewriters by PCs. As time has progressed, ICFAI has embraced IT in general and the Internet in particular with great enthusiasm. Much of ICFAI’s interface with the external world is done through its website www.icfai.org.
Administration of ExaminationsICFAI’s examination department has introduced one process innovation after the other in the past 15 years. The department’s robust processes allow hundreds of examinations for different subjects to be held across the length and breadth of the country each year. ICFAI uploads the answers to questions on the same day as the examination. As soon as the grading is completed, results are uploaded on the website. An SMS alert facility, to be introduced shortly will inform the students once the results are out. Students who are not satisfied with their grade can request a detailed, customised feedback. This is provided within 10 days.Another new initiative is the processing of examination hall tickets. As soon as a student has remitted the examination fees, the hall tickets are uploaded on ICFAI’s website. So a student need not be anxious about postal delays. Irrespective of where the student is, the website can be accessed, hall ticket downloaded and a printout taken. Students can register online for an examination thanks to a recently set up payment gateway.
Please tell me how you like this post. I need response guys to keep doing research and if you don’t I am not going to STOP either.
Have a nice day……………………………..
Ambarish Kumar Verma