At the NACUBO Annual Meeting and other recent events, we noted a renewed interest among higher education finance professionals both in improved financial planning, budgeting, and reporting, and in updating their core Enterprise Resource Planning or “ERP” systems.
What’s the Interest?
The financial challenges facing higher education institutions today are sparking conversations about how to put available resources to the best use now, and into the future. Revenue growth is difficult to achieve, so optimizing resources including existing people, physical assets, technology, and capital, is paramount. Improved access to financial data and analytics is needed to support enhanced decision making.
ERP vendors are marketing their cloud offerings and generating interest in new or updated ERP systems. ERP implementations and replacements are massive capital projects, requiring extensive staff time and assistance from consultants. Business processes may need to be re-engineered around the new software, thereby further disrupting existing operations.
Designed to automate transaction processing for business functions related to the general ledger, human resources, and student management, ERP systems excel at these data-intensive and real-time processes. But importantly, they are not good for financial planning, budgeting, or forecasting in a manner that incorporates risk related to current and future trends. Finance leaders must understand their institution’s planning and reporting needs and which needs ERP systems can and cannot fill.
Characteristics of a Best-of-Class System
A robust planning, budgeting, and reporting system offers institutions a strategic-financial decision making framework that supports key planning processes in higher education, including:
- Long-range financial planning
- Operational budgeting and forecasting
- Tuition and financial aid planning
- Post-award grant planning
The key to improved decision making is the presentation of information in the proper context that includes not only historic data but also includes assumptions that drive projections about the future. A best-in-class system brings together operational and financial data with ease, and, used independently or with new or upgraded ERP systems boosts high-quality financial decision making. Pairing financial, enrollment, operational data together gives decision makers better insight into the drivers of financial outcomes and lays the foundation for better projections about the future. Given the number and magnitude of internal and external pressures in higher education, the system must offer scenario development and “what-if analysis” capabilities that incorporate the possible impact of specific and overall risks.
Sustainable financial health for colleges and universities requires improved financial decision making that is enabled through a best-in-class planning, budgeting, and reporting system. The sidebar provides benefits of such a system.
If your institution would benefit from improved financial planning and reporting, contact us at firstname.lastname@example.org.