university finance: moving into the future

7/29/2019 University Finance: Moving into the Future

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University Finance: Moving into the Future

EACUBO Annual Workshop

March 2012

Steven Graubart

March 2012 University Finance: Moving into the Future 1


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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



7/32March 2012 University Finance: Moving into the Future 7

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


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


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


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

20


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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


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


university finance: moving into the future

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