Campus Financial Systems for the Future

Understanding the Context

In addition to the major changes that are occurring in the technology environment, college and university leaders charged with planning and implementing financial management systems for the future must also contend with a number of changes affecting higher education administration in the '90s.

At least five issues are altering dramatically the context for financial systems planning: (1) calls for increased accountability in higher education; (2) a changing environment that will demand flexible new systems; (3) increasing pressures for efficiency and productivity in colleges and universities; (4) the mandate for improved service quality in higher education; and (5) the importance of involving the broad campus community in the planning process.

Accountability

Increasing public skepticism of higher education has manifested itself, in part, in calls for increased accountability and academic effectiveness. These calls have, in turn, found expression in the creation of myriad new financial accounting and reporting requirements. In general, these new requirements call for more information, more frequent reporting, more conformance with generally accepted accounting practices (GAAP), and more disclosure of budgetary as well as expenditure information. The demands that these requirements are placing on most of higher education's installed base of financial information systems were not anticipated by the designers of those systems.

Flexibility

Flexible financial systems should also be capable of providing an appropriate level of integration with associated systems. For example, as institutions look forward to the redesign of the accounts receivable processes, they will likely want integration between the financial system and components of their student system -- such as financial aid, housing, and registration. There also will be a desire to provide the necessary flexibility to integrate the financial system with ancillary or feeder systems such as the storehouse, bookstore, or telecommunications billing systems. Such integration will improve the timeliness of information being fed into the financial system.

At an early stage in the project, the institution should determine how this integration will take place, e.g., whether it is cost effective to develop or acquire new student and human resources systems concurrently with, or as a part of, a new financial system project. This decision should depend not only on the desirability of such integration, but on the institution's ability to manage effectively the increased project scope and complexity that such a decision would bring about.

While every college or university should be prepared to address the question of how broad the scope of the system project should be, this book focuses on the issues surrounding financial systems. The process outlined, however, can also be used by institutions that wish to plan for and implement a set of integrated systems.

Integration comes at a price. Integrated systems tend to be much more complex than modular systems and, therefore, demand more resources to design, develop, and support. This added complexity may also make it more difficult to migrate highly integrated and customized systems to evolving technology architectures in the future.

Efficiency and productivity

Calls for increased efficiency have found expression in a variety of changes in many college and university business and finance programs and practices. Such changes include organizational restructurings, early retirement programs, quality improvement programs, program curtailments, and reengineering efforts. These changes have also added urgency to higher education's look at its underlying financial information systems. On many campuses, early retirements and other staff reductions have depleted the staff talent pool. In cases where senior employees have not been replaced -- while campus financial activity has remained constant or increased -- many college and university business officers face higher risks of transaction error or internal control failures.

In other cases, efforts to redesign business and financial processes have been constrained by existing financial systems that have automated old vertical functions, such as purchasing and disbursements, and that cannot deliver the desired institutional efficiencies without wholesale redesign or replacement. In all cases, the pressures for increased efficiency are fueling institutional needs for more and better information, both to monitor and control budgets and expenditures and to plan and forecast financial activity. The satisfaction of these needs, too, is being constrained and limited by existing financial systems.

Service quality

Calls for increased client service have found expression not only in a wide variety of plans, strategies, and programs to enhance the quality of teaching and research, but also in a similarly rich variety of business and finance activities designed to enhance the service quality of higher education administration. The programs include the implementation of integrated voice response (IVR) systems for registration or benefit enrollments; electronic deposit for employee paychecks and vendor payments; the implementation of all-in-one cards to support student and faculty access to campus services; the deployment of Internet "home page" directories of campus services; and many others. These pressures, too, fuel increasing expectations of the institution's financial services and the systems that support these services.

Inclusiveness

Given the collegial aspects of higher education governance, success in any major college or university project depends on multilateral participation with faculty, students, and other key stakeholders. In many ways, the unique impulse in higher education to consult broadly, to engage in critical exchange, and to respect diverse opinions is the wellspring of our industry's ability to renew itself continually.

This same impulse is also a potential source of contention, project delays, fragmented decision-making, and project overhead which can put such projects at risk, as well as serve as a continual source of consternation to our industrial business partners. While achieving an effective balance between broad-based, institution-wide consultation, collaboration, and communication and tight project control is more art than science, the need to do so is discussed explicitly and is a current that runs throughout this book.

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