Over the past few years, shrinking budgets have been an unfortunate reality for numerous higher education institutions all over the world. The financial directors of these universities are faced with a demanding and complex question: what costs can be cut to accommodate these “funding freezes”? This problem can be especially tricky when you do not have the right tools to help you solve the issue; even worse, when the tools you do have are costing you more than helping you.
Administrative costs are an area most businesses can benefit from focusing on in terms of savings. It is important to first discover how your finance system prevents you from reducing administrative costs – and proceed to equip yourself with knowledge about technology that can aid you in doing so.
Do any of the following statements resonate with you and your organisation? If so, it may be time to consider integrating the right financial technology into your business.
- IT is becoming a limiting cost factor.
The purpose of finance systems is to help you be fully aware of all the monetary transactions that occur within your organisation; this includes financial visibility, where you should allocate money and where you can cut expenses. These systems, however, often end up costing more than helping your organisation due to necessary maintenance and adjustment to changes such as new reporting regulations, new accounting standards, merging with other institutions and/or decreases in funding.
- There are incompatible financial systems in place.
In the past, a piecemeal approach to financial systems may have been the only option, but the problem now needs to be solved at a higher, more overarching level. In many systems, there is an alarming lack of unified data architecture that negatively affects overall operability throughout the organisation. These legacy systems may hold dozens of types of financial analysis software, including spreadsheets and reporting tools, which introduce the risk of factual errors and technical delays.
- Departments cannot move forward with a “single version of the truth”.
One of the most common sources of delay and conflict within institutions is faculties not being able to move forward with one agreed upon version of the truth. Organisations often collect data in accordance with local practices and management, leading to different assumptions about the data itself.
- The organisation lacks perspective about how each part affects the whole.
The most successful organisations ensure all their moving parts are heading towards the same goals by laying out a holistic perspective that all departments can refer to regularly; otherwise, financial directors are unable to fully maximise the impact of their strategic planning.
- There is a lack of financial visibility.
You cannot cut admin costs without financial visibility into where money is going, where it is best to allocate it and other key metrics. The lack of these metrics leads to an inability to make informed decisions, because you are left with lackluster assumptions and inaccurate estimates.
- You spend more time on repetitive manual tasks (i.e. collecting data) than analysing the data.
Institutional financial systems require many tasks (i.e. expenses, timesheets and approvals) to be done manually – and repetitively. People are the most important asset of any organisation and it is crucial that they spend their time adding value with their professional expertise rather than performing these time-consuming administrative tasks.
The higher education industry is constantly evolving; budget woes are an unfortunate, but long-standing reality that financial directors must deal with on a consistent basis. Adopting new technology can be a lofty undertaking but may be the only way to cut costs while also allowing you to adapt to future regulatory changes and internal challenges in a faster, easier way.