university finance: moving into the future
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University Finance: Moving into the Future
EACUBO Annual Workshop
March 2012
Steven Graubart
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Key Questions
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What does the future hold for higher education?
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Financial Climate: Declining external funds
Public sector funding
State revenues are declining
Endowments
Volatile
Limited role in public sector
Increasing competition for research funding
Growing gap between expenses and tuition
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Financial Climate: Cost Pressures Leads to Cost Containment
Efforts
Expense management and efficiency exercises
Energy alternatives
Strategic procurement
Re-engineering of processes
Labor
Benchmarking
Administrative costs
Outsourcing options
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Financial Climate: Need to Demonstrate Results in Era of Increasing
Accountability
Increasing public questioning about both value and values
Public scrutiny to stop raising the price of education
Pressure from students, parents and the government to demonstrate
value
Public asking whether college education is affordable and worthwhile Relevancy and Performance
Relevancy to job market vs. creating critical thinkers for societal
engagement
Graduation rates, retention rates, etc.
Federal government raising accountability issues
E.G., Program Integrity Final Rules
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Pew Survey
reported in Time
May 2011
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Intensified Market and Competitive Pressure
New competition and approaches
MOOCS: Coursera,Udemi, Udacity, MITx
Badges and certification
Blended courses
Decline of geographic borders
Online technology
Geographic expansion of schools
Globalization of markets, students, employees
Segmented market Nontraditional vs. traditional students
Public sector: Non-local students
Course offerings: Broaden or narrow?
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Technology and Information: Proliferation of technology and data
Increasing complexity and disparate systems (e.g., ERP integration with
reporting and budgeting tools, Learning Management Systems)
Increased amount of data
Data driven decisions are being demanded Data is available, but skills are required to access and assess
Increasing knowledge of what schools offer (tools to match students,
transparency of information)
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Technology and Information: Technology Integration
Integrated at the University in a variety of ways
Learning
CMS, predictive behavior of students
Operations
Books
Student services
Communications/social media
Where to begin and end/timing, resource absorption Cloud vs. in-house
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Technology and Information: Communication Challenges
Need to communicate with a wide range of audiences
Board, colleagues, parents, students, funders, press
Social media
Age of fragmented attention
Overwhelmed by data, emails, etc.
Consider how decisions are made
Integrating new brain research
What motivates people
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What is the role of finance leadership to meet this future?
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Role of Finance: Move from processor to solution provider
Gain credibility through successful management of operational basics:
Financial systems
Services
Reporting
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Finance Balanced Scorecard Description
Goals Description
Reporting & Analytics Deliver accurate, timely, clear, and value-added reports,
information, and analysis
Budget Planning &
Implementation
Provide clear, proactive budget planning and implementation
Departmental
Restructuring
Create a world-class finance department
Customer Service Provide first-rate customer service with value added to the
University Community and other stakeholders
Banner Successful and timely implementation of Banner
Operational Efficiency Create an efficient department providing timely, accurate, and
knowledgeable information and services
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March 2012 University Finance: Moving into the Future
Actionable
Intelligence
Knowledge
Information
Data
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Role of Finance: ProvideClarity into Financial and Business Situation
Seeing things as they are
Correctly interpreting the past and present
Modeling/assessing the future
Estimating future revenues and expenses
Strategic models aligned with the budget
Linking institutional strategies with required resources for success
Setting priorities in area of budget cuts
Technology implementations and other new projects Importance of saying no
Address labor issues
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Various actors have different perceptions
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Source:
Attain
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Keys to Labor Efficiency
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Role of Finance: Key Business Partner and Leader
Board
Senior Management
Executive Team
Deans
Line Management
Technical and nontechnical
Relationship with data and systems providers
IT and IR
External parties Funders/Foundation/Press/Business Community
Students
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CFO at the Center, Oracle
http://www.oracle.com/us/solutions/corporate-governance/oceg-cri-con-cfo-at-the-cntr-whtpr-066200.pdfhttp://www.oracle.com/us/solutions/corporate-governance/oceg-cri-con-cfo-at-the-cntr-whtpr-066200.pdf -
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The Role of the CFO : Views from the Private Sector
March 2012 University Finance: Moving into the Future
The CFO has to participate at astrategic level and yet be able to
operate at the lowest level of detail
across the whole organisation. The
job demands the ability to look
backwards to report, be alert to
what is happening now and seeinto the future to plan. Financestrategy:
delivering the partnering role, IBM
When other groups are explicitly
accountable for results, the ideal
CFO serves as a counselor andadviser to those who bear
responsibility for the outcome.The Superstar CFO: Optimizing an increasingly
complex role, SAP
The ideal CFO is both navigator
and co-pilot. This person must be ready
and willing to provide an opinion when
and where necessary, fight for its
implementation, and be humble enough to
back off and support alternative ideas, as
appropriate. Above all, the CFO must instill
confidence with all of the stakeholders. TheSuperstar CFO: Optimizing an increasingly complex role, SAP
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What tools and techniques are to be used?
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Key Tools and Techniques: Organizational
Allocation of time of CFO and leadership team
Move away from operations to strategic and business thinking
Build capable internal team and rely on systems
Continuing improvement in people, technology and processes Prioritizing change and getting buy-in is critical
When to say yes and when to say no
Empowering human capital
Building financial skills and knowledge throughout the
organization, including the Board through training
Budget analysts as mini-CFOs providing solution support
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The Shifting Role of the CFO
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Key Tools and Techniques: Organizational
Convener and integrator
Breaking down silos
E.g., Integration of procurement, finance and legal
Efficiency Initiative Bring together thought leaders in a safe environment
Generate initial wins of implementable cost savings
Tailor to culture
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Efficiency Initiative: Phase I
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Department Efficiency Initiative Type
Academic Affairs
Improve the efficient use of adjuncts and student workers by zero-basing the
budgets every year, and develop criteria and a policy that requires a justification
and approval process for all expenditures
Process
Improvement
Academic Affairs Eliminate all non-essential travel
Process
Improvement
Academic Affairs Reduce the printing and distribution of the UDC Course Guide
Process
Improvement
Procurement
To control spending on office supplies and mandate that the University purchase
office supplies from contractors that have negotiated contracts with the University.
Process
Improvement
Student Affairs
Develop more sustainable and efficient print practices with student-related
publications
Process
Improvement
Student Affairs
To offer summer housing to UDC summer school students and interns from across
the nation to create a financially sustainable residence life program
Revenue
Generation
Human Resources Reduce HR Transactional Processing time to an average of 3 working days.
Process
Improvement
Human Resources
Increase compliance with timely preparation and submission of employee
performance evaluations
Process
Improvement
Facilities
To practice energy conservation methods in University facilities to more effectively
utilize existing resources and to bring down energy costs Energy Savings
Communnity College
Reduce reliance on external consultants for marketing and communication needs.
Handle everything in-house. Reduce/eliminate need for hard copy communications. In-sourcing
Information Technology Implement network wide power saving policy Energy Savings
Communications
Hiring an experienced, in-house Graphic Design Manager instead of out-sourcing
graphic design work In-sourcing
Athletics Increase revenue generated by athletics with revenue goal of $300K for FY2012
Revenue
Generation
Review and IdentifyBest Practices ofUniversities
Develop Database of Efficiency
Intiatives
Establish Efficiency
Work Group
Identify Intiatives foreach Department
Propose and Evaluate PotentialInitiatives
Implement Inititiatives
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Key Tools and Techniques: Analytics
Modeling the future
Developing ongoing projections
As opposed to simply reporting of YTD results vs. actual
Issue: How to integrate with the ERP system E.g., Visibility Projection Model
Strategic budgeting
Linking to the University strategic goals
Developing longer term projections
Alternative approaches to budgeting
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Development of Financial Analytics
Basic Budget Reports
Developed Revenue Projection Models
FIS Analytical Models
Developed Detailed BudgetAnalysis
Cost Allocation Analysis (College Level)
Developed The Book
Approach BudgetDevelopment
New VPM Real Time ProjectionModeling
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Sample report: Visibility Projection Model (VPM)
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Aligning Strategic Planning and Budgeting
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Key Tools and Techniques: Analytics
University initiatives
E.g., Projects, programs, facilities, major contracts
Fiscal Impact Statements
Model revenue and costs: Focus on key drivers
Work closely with programs: Force analytical discipline Identify risks and mitigation strategies
Metric drivers and benchmarking
Data limits on available higher education data
Need to compare department/function level with:
Peer group
Carnegie class and other Universities
Other organizations in private and nonprofit sectors
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Key Tools and Techniques: Decision Framing and Communication
Develop clear reports and analysis
Framing and presentation of data and information is critical
Bring the finance and risk perspective to all discussions
Address what are the real decisions that have to be made.
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Summary
Environment Changing
Resource constraints
Increasing accountability
Changing business modelsfrom technology and dataintensity
Role of Finance must change accordingly
Move from processor tosolution provider
Provide clarity into financialand business situation
Key business partner andleader
Apply new tools and techniques
Organizational
Analytical
Communicative
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