Advice and Information for Finance Professionals

Doing the Right Things: How Higher Education Institutions are Living Smarter on a Tight Budget

Guest Author

by David Ebert, Director of Higher Education, Oracle

Attracting new students often depends on how well colleges and universities can innovate. Should you invest more in cutting-edge programs that address the latest environmental or technological challenges? How about investments in non-academic programs, such as athletics? In some cases, you may want to consider expanding certain courses or delivering them differently—via online or hybrid classrooms, for example. Or, it might be time to merge certain departments or campuses.

The possibilities are seemingly endless, but your funds are finite. As such, deciding how to allocate your resources appropriately can be challenging. Leaders at academic institutions understand the hurdles in front of them; according to a University Business survey, 66% of university leaders say they’re not confident or only somewhat confident that they have access to all the data they need to make the most informed decisions for their institutions.

So where do you begin?

In a previous post, I discussed the need for universities and colleges to establish more efficient processes by “doing things right.” Now, it’s time to consider whether you’re “doing the right things” to ensure success.

You must first have visibility into your financial performance at every level. This will allow you to model different scenarios and understand the overall impact each scenario has on your overall performance. Transparency will also help you answer critical questions, such as:

  • Where and how do we allocate and consume resources?
  • What projects/initiatives will yield the best return on investment (ROI)?
  • What factors have the greatest impact on student retention and graduation rates?
  • Where should we allocate resources to maximize student success, retention and graduation?
  • What impact do funding cuts or significant enrollment changes have on our current capabilities?

If you’re evaluating an academic program, for example, you’ll want to calculate the total cost, which may include facility expenses, utilities, lab materials or computers. You also need to examine student enrollment and retention. In some cases, a course may not appear to be profitable because it’s expensive to run, but it may attract a wider range of students to the overall program.

The Need for Finance Solutions that Present the Whole Picture

Evaluating program expenses and profitability typically involves poring over complex spreadsheets, but fortunately, tools exist to make the process more efficient and effective. A combination of enterprise performance management (EPM), ERP and human capital management (HCM) in the cloud can help you gain the transparency you need to strategically allocate resources across campus. For example, Oracle offers a purpose-built solution that displays pre-built planning modules, including workforce, capital, projects and financials dashboards.

A financials dashboard might display color-coded graphs that detail key performance indicators, such as return on assets, return on investment, total expenses and net income for a given program. You can also model how various factors impact financial performance, such as grants, enrollment numbers, tuition policies, scholarships—or how expansion, reduction or refinancing will impact budgets.

You can gain similarly detailed insight into procurement spend, research funding success, workforce performance and succession planning.

Purchasing and Hiring: Know Your True Costs

Given the amount of purchasing that occurs at universities, procurement is an area of particular concern for many university administrators. Although funding has decreased, per-student education-related spending continues to increase.

Oftentimes, program cost increases are the result of wasteful spending. But monitoring spending is challenging because institutions typically have many different buyers stretched across several departments. This lack of insight into purchasing activities often means procurement teams miss opportunities to take advantage of bulk-buying discounts.

Two tools are key to managing procurement cost-effectively:

  1. Real-time transactional data, which allows you to easily monitor spending and make informed decisions about vendor prices
  2. Collaboration, such as social-networking capabilities that allow you to partner across departments so you can define requirements, negotiate contract terms and achieve faster execution

Workforce management is another function that requires careful consideration. Colleges and universities expanded their payrolls by 28% between 2000 and 2012. Is your staff investment aligned to your overall strategy or mission? Much like procurement, you must consider many variables that can impact workforce expenses. For instance, you have both academic and administrative staff to consider as well as full-time and part-time positions, different job grades and varying benefits.

All of this must be carefully planned to ensure you have the right skills for each department, enough people to meet your needs and that you’re not overspending on certain positions. A unified ERP and HCM solution can help you track workforce expenses with a detailed view of critical expense categories, including team compensation, benefits plans and talent evaluations and reviews.

Manual review processes can be so labor intensive that HR departments may lack accountability on action items. Modern HCM solutions provide interactive dashboards that allow HR to rank talent based on potential and performance. They include visual reviews that help managers identify top performers and potential leaders in various departments. They also allow HR managers to review predictive analytics to help them identify at-risk performers. The tools help HR plan the right skills in each department at the appropriate salary, while ensuring they’re aligned with the overall organizational goals. In other words, they know they’re “doing the right things.”

Understanding how your organization is performing at all levels will help you prioritize so you can focus on programs, projects and initiatives that deliver maximum ROI. For a more detailed look at how to better allocate resources in higher education, I encourage you to visit our resource center.

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