5 reasons higher ed is rethinking planning and budgeting
This blog is based on the findings of a recent research report published by Higher Ed Dive in collaboration with Unit4. We surveyed 139 higher education representatives about their financial planning and analysis (FP&A) challenges, strategies, and approaches. Their responses form the basis of these 5 reasons for making the transition to a more modern approach to planning and budgeting. You can download the full report for yourself here to see some of the questions and issues explored in more detail.
Higher Education institutions take pride in their visions and in decades – if not centuries – of longstanding tradition.
But this mindset has led to strong change aversion in an area crucial to every institution’s financial success. Namely, the way in which it handles planning and budgeting.
Many are still hampered by distinctly low-tech, antiquated planning and budgeting tools. Think spreadsheet version control nightmares shared via email, csv data uploads between systems, and even tools only usable because of manual workarounds and thousands of hours of people’s time each year.
This way of getting things done may even seem normal. But this system of workarounds and manual admin is a severe limitation to an institution’s agility, and to your people’s potential. Leaving leaders ill-equipped to respond to the seismic changes occurring in our increasingly unpredictable world – and to the evolving nature of the industry and its students’ expectations. In fact, many institutions experienced a stressful delay in their COVID-19 financial re-planning strategies – chiefly as a result of slow, outdated processes for budgeting and planning.
We believe COVID has laid bare the need to be able to access accurate financial data on a rolling basis to allow quick responses to events as they occur. The ability to efficiently see, analyze, forecast, and act on financial data will underpin the success of institutions going forward.
With this in mind, here’s a look at five ways better financial data, and an integrated approach to institution-wide planning allows a more confident approach to the future.
1. Building stakeholder trust
Traditionally, departments have collected data to meet their own requirements. Often using different systems and protocols. This creates bottlenecks and huge amounts of work when the time comes to collate data for coordinated analysis.
In an industry where siloed data is the norm, bringing context to the information each department gathers presents an opportunity to create a single foundation of truth. A foundation on which the whole institution can share assumptions and expectations about missions and goals.
Advanced FP&A tools streamline the process of collating data and compiling reports, providing all stakeholders with relevant, role-based access to the same dataset with a shared context. This not only boosts trust in data, but delivers it in a manner that allows enough time to review and take decisions proactively with the confidence that they’re supported by reliable information.
2. Understand the interdepartmental effects of financial decisions
Modern FP&A tools allow leaders to take both a whole-institution and a more granular program-by-program view of strategic planning. This effectively eliminates the old tendency of each department to operate quasi-independently, and lets us take into account the impacts across the institution of changes to any area.
An ability to spot the downstream effects of individual changes also provides a greater ability to forecast the impacts of different scenarios. Instead of point-in-time and retroactive reporting based on historical data, stakeholders can perform bottom-up and top-down planning based on any number of conditions. This gives the whole institution a better understanding of program profitability, staffing and resource constraints, and the ability to better plan spending.
3. Create realistic “what-if” scenarios to plan more effectively
Addressing new challenges like COVID and old challenges like the erosion of trust, declining enrolment, and evolving expectations from students, the public, and governments requires effective decision making. Based not only on what’s happened in the past, but also on what might happen in the future.
Modern FP&A tools allow for the creation of an infinite number of realistic “what-if” scenarios. These allow institutions to better anticipate possible future financial landscapes, and plan, prepare, and mitigate risks appropriately. Forecasting the impacts and opportunities presented by multiple scenarios built directly on your institution’s single source of truth empowers those engaged in planning to quickly adapt to emerging realities and implement the most appropriate plan.
4. Build a stronger and more accurate body of knowledge
For most institutions – and most organizations – IT resources and processes have grown over time in response to discrete needs. This can lead to a great deal of confusion and wasted effort. Different departments, functions, and workflows can easily end up with very different ways and standards of collecting data – or even different understanding of specific terms and tags in datasets. Making collation difficult or impossible.
Organizing financial data into a single, modern system creates a budgeting and planning backbone for the institution. A single source of truth that centralizes definitions, data policies, and operational silos. This not only enhances decision quality and velocity, it increases the value of data by providing much needed context across the entire organization. Which means more meaningful reports, more robust analytics, and a firmer foundation for innovations.
5. Stay true to your mission, no matter what
Colleges and universities are already hard at work to innovate their delivery models, fee structures, and measures of success. This means we’re in a critical period – taking control of planning and budgeting now will be vital in ensuring you’re capable of implementing the innovations that keep you moving in the right direction, and demonstrating progress.
The ability to make the right decisions in uncertain times – decisions that align with your long-term vision for the institution, and its goals for student success – will be vital in shaping your direction over the next several years. Up-to-date data and the ability to use it effectively to plan for the next new normal (or “never normal”) will be critical to successful decision-making – and that requires a shift to a new way of planning, and a new set of planning tools.