Higher education financial planning: Knowing your unknown unknowns
Let’s think beyond the obvious and immediate logistical concerns facing the world in the current crisis, and ask a more important question about what's next.
How do you plan confidently for a stable future when we've just experienced the very real unknowableness of the future?
Financial planning is, of course, nothing new. In fact, our current situation is basically why organizations do financial planning. But it's always had limitations due to external factors, the uncertainty of the future, and rapid changes in environment and policy.
However, new technologies make it possible to expand the concept and thinking beyond your finance department to create truly unified, institution-wide, collaborative strategic plans – and backup plans – informed by real data.
But how do you link real-world possibilities (for example, enrollment fluctuations) with financial projections and flow that analysis through all areas of the institution? All while preparing multiple scenario-based plans to be adjusted and executed as needed.
The magic is not in the financial planning or even the analysis of that data – it's in being able to connect the data from all areas and key systems to analyze possible impacts in an aligned way, reduce blind spots, and reveal opportunities and questions you never knew to ask before. Plus, enabling scenario planning to account for multiple likely situations that can easily be deployed as circumstances change.
What could connected institution-wide data analysis and planning reveal?
According to a study by Inside Higher Ed, 89% of institutional leaders they spoke to have deep concerns about their institutions' financial stability. Which has been compounded by the COVID crisis. But how could more analysis help?
Connected institution-wide planning won't eliminate this concern, but it would give you the tools to focus on finding solutions. Helping you look for and find ways to refocus finances to build a broader and more stable foundation for whatever the future might bring.
Connected institutions in action
An example of how institutions can use this analysis to proactively look for and solve problems before they happen could be a challenge like the international enrollment gap. As overseas student numbers decline, institutions need to look for innovative ways to make up this income.
With the right data, you can explore what longer-term demographic and expectation shifts might mean for your institution. Gaining insights into how your institution is changing, where the opportunities are, and how you might respond. It could be possible scenarios like:
- Building on the growing demand from non-traditional students to make up for the expected dip in traditional-aged students by 2030.
- Finding new international recruitment opportunities in-line with your institutional goals.
- Understanding the impacts of new business models such as online and distance learning on income and expenses such as facilities, renovations, and on-campus devices.
- Evaluating the possible benefits – or not – of a merger or partnership with another institution and the impact of increased program offerings and audience reach, with the opportunity for consolidated operations.
You will also be able to use data to understand what you can do to action these insights. Working collaboratively across your entire institution to bring these initiatives to life without the spreadsheet version-control nightmare of manual or clunky data entry and manipulation.
Why financial plans matter for the future?
After so much disruption, institutions are hoping for a return to 'normal' in 2021. But the big question for institutions around the world is, what is 'normal' now?
The smart money is on a different kind of 'normal', which institutions need to start planning for. To survive and stand out, they will need to understand (and possibly pivot) their own missions and students better than ever. Decisions will need to be made faster because the future won't wait for you to get ready.
Technology will be vital in making this happen. Letting institutions connect everything and bring together the wealth of knowledge and experience they have across their campuses. Only then can financial and institutional planning for the future deliver real impact. And as institutions move forward and their financial planning solutions mature, institutions will get smarter and faster.
You can't plan for everything, but connecting and using all the data you have is the only way to prepare for anything. Giving you the tools and insights you need to understand your institution's strengths, flexibility, and opportunities, no matter the challenges you face.
How mature are your institution's financial planning and budgeting processes right now?
Uncertainty isn’t going anywhere. A flexible, integrated financial and operational approach to planning is essential. So you can connect considerations from across your entire campus. For example, the impact of fluctuating international student revenue or faculty salaries on facility needs and potential rental income or course delivery models. Why does this matter?
Right now, 47% of presidents say financial health and operational planning is what they most need support with – more than anything else. Is your institution using modern planning tools to stay one step ahead of the challenges facing you now? How about challenges that haven’t yet popped up?