Defining the Essentials of the Education and Research Industry

SAP offers software solutions for education and research institutions to operate efficiently within limited budgets while dedicating resources to help equip students for the future.

In this course, we focus on the higher education institutions. To understand the usage and benefit of SAP solutions for those institutions, first review the international standards of the educational system and the structure of the educational market to get a global view on the topic.

International Standard Classification of Education (ISCED)

The following graphic shows the classification of the educational system according to the International Standard Classification of Education (ISCED) defined by the UNESCO (United Nations Educational, Scientific and Cultural Organization). According to the ISCED standard, the educational system is structured into three stages. In this course, we focus on the third stage, tertiary education.

As illustrated, basic education comprises primary education and lower secondary education. It also covers a wide variety of non-formal and informal public and private activities intended to meet the basic learning needs of people of all ages.

Secondary education typically takes place after six years of primary education, followed by higher education, vocational education, or employment. While the lower level is considered as the final phase of basic education, the upper secondary education is seen as the stage before tertiary education. In most countries / regions, primary and secondary education are compulsory until 16 years.

Higher education is also known as tertiary education and requires the completion of secondary education. While primary and secondary education are compulsory, tertiary education is optional.

Note

If you are interested to learn more about the ISCED standards, go to Higher Education | UNESCO UIS. You can also search for terms in the glossary Glossary | UNESCO UIS

Global Education Market Taxonomy by HolonIQ

HolonIQ, a rapidly growing marketing analytics platform recognized for its impact in the education, climate, and health sectors uses the Global Education Market Taxonomy, an open-source framework, providing a common structure and terminology for identifying, tracking, sizing, and segmenting the global education and training market.

The taxonomy includes four key sectors: Early Childhood Education, K-12 Education, Post-Secondary Education, and Workforce Training & Development. Each sector is structured into sub-sectors capturing core functions of the market.

• Early childhood is defined as the age from 0 to 5–6 years.
• The expression K-12 is a shortening of kindergarten (K) for 5–6 year olds through twelfth grade (12) for 17–18 year olds. It covers primary and secondary education according to the ISCED standard.
• The post-secondary education sector in this framework includes higher education. Universities and colleges belong to the cluster post-secondary education delivery.
• The fourth sector is workforce training and development. It covers educational offerings for professionals considering the fact of lifelong learning.

Post-secondary education delivery is the business of higher education institutions such as colleges and universities. The terms can be used interchangeably. The following graphic provides an overview of established college or university types.

• Community or Junior Colleges / Technical Schools​ provide programs that are usually less than 2 years and prepare a student for a certificate or associates degree. They usually also provide workforce development programs.​ Some community colleges have consortium agreements with 4-year colleges / universities.

• 4-Year Colleges / Universities​ are undergraduate degree granting institutions that lead to a bachelor's degree in a specific area of study. Depending on the institution, they can have a research, liberal arts, or vocational (professional) focus.​ In parts of Europe, bachelor’s degrees are called a license. Many take a minimum of 3 years to complete.

• Post Graduate Colleges / Universities prepare students for graduate diplomas, master, and doctoral (Ph.D.) degrees with a scientific focus and a vocational qualification, too. They usually build on bachelor degrees. A master degree can usually be gained within 1–2 years.

According to HolonIQ, higher education will be marked by new forms of competition and collaboration in the future. Credible alternatives for post-secondary learning will give rise to changes in university program design. New forms of credentials are set to play a critical role in higher education.

Play the video to get an introduction into the global demand and funding of higher education.

According to the data of HolonIQ, the global education market is valued at USD 7.6 trillion in 2025 and primarily funded by governments, which contribute 60–70% of total education spending (status 2025). K-12 and post-secondary education represent a combined market share of 80%.

The education market is growing. The growth in post-secondary education is mainly driven by the increasing acceptance of online learning and government incentives for vocational education. Rising competition from alternative credentials, strict immigration policies, and high education costs could dampen this growth.

A stakeholder in higher education is any individual, group, or organization that has an interest in the success or outcomes of the university. The following graphic shows the main stakeholder groups.

In the center, you see the internal stakeholders. The university must fulfill their needs and expectations as their satisfaction and success is most relevant for the reputation of the organization.

• Students and parents: The students are interested to get easy access and complete their studies in the expected time and quality. Besides the curriculum, the learning culture, the learning methods and tools, student support beyond the course enrollment also plays an important role to increase their satisfaction. At the end, they want to successfully pass the certification. They have an interest that their own costs do not increase their available budget.

• Workforce: A large part of the workforce is the academic staff with permanent or temporary positions and different academic ranks. Universities in the U.S. typically provide the tenure track as a structured career pathway for academics, starting from an assistant professor, progressing to a full professor position. Adjunct faculty members are part-time professors outside of the path to a tenured position. The workforce also includes the administration, facilities, and all other parties that work at the university. To attract, gain, and keep talents, universities must provide good working conditions, fair salary, and good development opportunities.

Beyond the internal stakeholders, there are external agencies with an interest that the universities work efficiently providing sustainable teaching and research results with a significant impact on the society and/or the local, regional, or global economy. They can have a strong influence on the way universities operate and can set certain policies for their administration.

• University Government: The governing body of colleges and universities, often called "Board of Governors" or "Board of Trustees" has various governance duties and responsibilities. They are, for example, responsible for the strategic planning and the oversight of the president. The president is responsible for carrying out the plans of the board of trustees.

• Advancement: This stakeholder group includes parties that provide financial or strategic support, for example, donors such as alumni with a global fund-raising for the university, or grantors who are soliciting proposals for charitable grants and research grants. In some cases, these funds are called restricted funds.

• Government: Especially for public universities, the local or national government is an important stakeholder as they rely on government subsidies. Within a government system, there is usually a government unit called the "Department of Education" or the "Ministry of Education". It oversees the development in education and provides the legislative framework, policies, strategies, plans, and resources to enable institutions, agencies, and other bodies to achieve their purpose of educating the public.

• Accreditation Agencies monitor, assess, and evaluate the standards and quality of education either at the university level or at the program level. It gives consumers the security that the university or program meets specific quality standards. Accreditation can influence enrollment and are often a prerequisite to receive government aid. They differ from country/region to country/region.

Finally, there are the stakeholders that can be clustered under the category External Beneficiary. This category includes the following stakeholder groups that may indirectly or directly receive a benefit from the higher education industry:

• Communities: Often forgotten, universities are among the largest employers in local communities. In the United States, the California public university system includes about 198,000 employees. The consumer needs, leisure time activities, and purchasing power of students and graduates stimulate many local economies such as the public transport, the gastronomy, the book trade, the real estate market, or the tourism.​

• Suppliers: Beyond teaching, universities need suppliers for capital projects, maintenance of real estate, dining services, and much more. ​

• Partners: Public private partnerships provide technical expertise and financial support in creative ventures. Partners are also secondary (K-12) schools. High school college partnerships develop concurrent enrollment models where secondary students can earn college credits while in school.

• Future employers: Employers are interested in universities providing talents for their future workforce. During periods of recession, there has been an increase in enrollment to upskill.

• Classification of Education

  UNESCO's ISCED classifies education into primary, secondary, and tertiary stages, with a focus on tertiary education in this course. HolonIQ uses the Global Education Market Taxonomy, segmenting the market into Early Childhood, K-12, Post-Secondary, and Workforce Training sectors.

• University Types

  The terms colleges and universities can be used interchangeably. University types are the Community or Junior Colleges / Technical Schools​, the 4-Year Colleges / Universities, and the Post Graduate Colleges / Universities.​

• Global Demand and Funding

  In 2025, global education is a growing trillion-dollar market. K-12 and Post-Secondary Education represent a combined market share of 80%. The funding of education and research is public (government), private, or for profit. Total education spending is globally about 60–70% public.

• Higher Education Stakeholders

  Higher education stakeholders can be distinguished into internal stakeholders (students, parents, workforce), external agencies (public government, university government, accreditation agencies, advancement (grantors, donors), and external beneficiary (communities, partners, suppliers, future employers).