Scrutiny on the cost, necessity and viability of higher education is at an all-time high. Many institutions strive to reduce costs and demonstrate their unique value, but most are in the dark looking for effective ways to do so.
Data can be a powerful tool for illuminating opportunities to improve financial performance, but 76% of higher ed finance leaders say they lag other industries in adopting modern tools and processes, which makes it difficult to follow the money trail and use data to guide decisions, according to a new report from Kaufman Hall.
Financial leaders say they struggle to perform basic reporting tasks, including aggregating data from multiple sources (74%), creating financial dashboards (63%) and accessing reliable data (55%).
Reacting to this, a panel six of higher ed leaders agreed they need a better picture of where money is going.
This challenge affects all areas of higher ed, as difficulty following the money makes it nearly impossible to deliver valuable financial insights. But there’s hope: By integrating systems, expanding access to key information and using data to guide strategy, higher ed leaders can first understand how money is spent, and then transform financial processes to support the mission.
Read: Leveraging analytics to boost enrollment
Integrate systems to support transparency
Most institutions are data poor, not because they don’t collect data, but because they don’t have it in a format that can be readily analyzed and used in decision-making.
Replacing spreadsheets with budgeting and financial planning systems that standardize data, calculations and reporting dramatically improves transparency and collaboration, especially when the tools integrate with existing systems.
By integrating systems, expanding access to key information and using data to guide strategy, higher ed leaders can first understand how money is spent, and then transform financial processes to support the mission.
Integrating financial software with core higher ed systems such as enterprise resource planning, student information systems, human resources information systems and general ledger systems eliminates silos, so data aggregates seamlessly and securely into a single source of truth.
This improves access to accurate real-time data, reduces manual work, and helps solve common challenges such as long budget cycles, understanding the costs of academic programs, reducing expenses, reporting, and tracking how money is spent.
Read: 3 points to consider before taking on data analytics
Expand access to key financial information
Higher ed leaders across campus need the right information in the right way to perform well.
For example, deans need access to high-level financial standings to manage their departments; this information can often be delivered through reporting dashboards available in most modern budgeting solutions. Budget officers, however, need transactional-level details to deliver root-cause analysis; this requires a more powerful budgeting tool with robust reporting.
Unfortunately, most higher ed professionals struggle to access the financial data they need: After financial resources, data and technology are the biggest challenges in higher ed, and only 49% of surveyed colleges and universities measure financial key performance indicators.
Read: Money management accounts for more of academic leaders’ time
Financial systems may provide useful reporting insights, allowing institutional administrators to improve confidence in their data and lay the foundation for smarter spending, planning and decision-making.
Use data to guide strategy
Access to history and trend data empowers finance teams to deliver insights that empower better forecasting, strategic planning, scenario modeling and decision-making.
To understand how, consider this example of connected, actionable data at work at the University of Kentucky during their initiative to improve four-year graduation rates. UK has a unified tuition planning tool and a collaborative process for planning, so leaders understood the full impact of the initiative. They anticipated that a higher four-year graduation rate would mean fewer enrollees in future years and lower tuition revenue. By integrating data from their scenario modeling tool with their long-range planning tool, leaders are estimating how this affects their budget and implementing proactive changes.
This is one example of how institutions can use existing data to empower various critical activities, including tuition, labor and long-range planning and more.
Implementing new financial technology is a sizeable task, but with the right technology, you can follow the money and lead your institution to success.
Kermit S. Randa is CEO of Kaufman Hall’s software division.
