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In this strategic phase of the project, the steering committee will need to weigh potential tradeoffs in a number of areas. Such discussions should result in strategic recommendations that will help to guide the work of the project management team.
Incremental change versus fundamental change. The steering committee should address whether or not the replacement of the core institutional financial system should open the door for a significant review of institutional financial practices. For example, a stated goal of being a "close follower" in technology, coupled with a goal of centralizing financial management responsibilities at your institution and a stated principle of maximizing the utilization of the campus mainframe computer, may suggest an incremental improvement strategy. A leadership decision to implement responsibility center management, on the other hand, suggests the need for significant new technical solutions.
Host-based versus client/server architecture. A presumption of this book is that your institution has articulated an information technology strategy that addresses whether administrative systems will continue to be mainframe-based. It is essential that the steering committee understand that strategy and incorporate thinking about the financial information systems into the context of the planned institution-wide technology architecture.
This is a difficult but essential activity. It is difficult because the range of technology alternatives available to colleges and universities is greater than ever and because the life cycles of these alternatives are becoming more and more difficult to plan for and manage.
At many large research universities, architectures that distribute data handling responsibilities and those that operate in graphical user environments are preferred increasingly to traditional mainframe applications. These architectures are needed to support the decentralized environments of these institutions and to facilitate organizational efforts to localize decision-making.
Two factors that should be included in any such tradeoff discussions are that (1) currently there are not as many commercial client/server solutions available as host-based products, and (2) it can be difficult to integrate client/server solutions with pre-existing mainframe systems. Client/server solutions also assume that substantial investments have already been made in the campus telecommunications infrastructure and a contemporary end-user desktop computing environment. Client/server architectures can be riskier to develop and maintain, can be costlier, and will distribute a number of support and maintenance costs to the end user. Recalling, however, that financial systems usually have long lives, the real risk may be in failing to consider such solutions.
In general, financial systems should not be the driver of infrastructure investments. As with all tradeoff decisions, each college and university will have to strike its own unique balance of risk, future orientation, user satisfaction, and cost. The marketplace is changing rapidly, with new vendors emerging on the scene with client/server products and vendors with more traditional host-based solutions beginning to develop or deploy client/server solutions. In this volatile marketplace, one strategy some institutions are employing is to take a "hedge" position by acquiring only those client/server system components that are most mature and deferring a major portion of the system replacement until the technology is more proven.
Finally, many institutions are beginning to consider using the World Wide Web as an interface to data in secured administrative databases. The Web reduces or eliminates many of the complexities associated with distributing information and analytical functionality to different hardware and software platforms and, therefore, is likely to play an important role in the emerging institution-wide information technology architecture. Some technologists are beginning to predict that emerging Web-based tools will facilitate development of applications to the extent that the future will be one of "network-centric," rather than "desktop-centric," architectures.5 The steering committee should seek to understand and convey the potential role to be played by the World Wide Web in administrative applications in the future.
Transaction processing versus decision support. Another tradeoff consideration the steering committee may deal with is in the area of creation, management, and use of financial information versus the processing of financial transactions. In many cases, the chief driver of change is the lack of timely, reliable, and/or comprehensible information for governing board members and institutional decision-makers, rather than failing transaction processing systems. While on occasion such a problem necessitates the renewal of the institutional chart of accounts and ledger, in other cases the problem can be addressed more easily and cost effectively through creating a data warehouse and deploying online analytical processing (OLAP) tools.
This steering committee recommendation has significant implications -- financial and otherwise -- for the project and can be framed as an "either-or" decision, or as a phasing decision. Many colleges and universities have met their decision-support requirements through these approaches at relatively low costs, earning valuable credibility and time for the more costly and complex replacement of the underlying transaction-processing systems. A decision to place priority effort on solving the problem of information access and presentation also allows time for marketplace solutions using newer technologies to mature and gain acceptance.
Best-of-class versus integrated solution. Another tradeoff decision is whether to seek the best solution for the financial system as a stand-alone application or to seek a solution that is part of an integrated set of systems. As mentioned earlier, while integrated systems can reduce training expenses and improve system outputs from the end users' viewpoint, the higher the degree of application integration, the lower the flexibility of any single component.
This tradeoff need not be made within the context of total application integration versus no integration. There are many stakeholders for the financial system and there may be a significant focus on business process reengineering, so some level of integration with other stakeholder systems may be inevitable. The design of the application interfaces to achieve integration, particularly of database information, may be an alternative to total application integration.
The decision about the degree of desired integration between elements of the financial system and other information systems will have a significant impact on the scope and nature of the project. For example, an institution that is seeking a high degree of integration, but has a low-to-moderate tolerance for taking risks, is likely to seek a solution of purchasing mature, off-the-shelf product suites. Such solutions may have shorter useful lives, unless the vendor is committed to migrating its products to emerging technological tools and environments.
Signature control versus post-audit accountability. The steering committee's principles and vision should strive to capture the institution's existing and emerging philosophy of internal control. Many older financial systems are built around internal control procedures that assume the existence of forms that must be signed and countersigned. These forms and signatures were designed to prevent unauthorized transactions from occurring at the source, but degrade general performance, since 100 percent of the controlled activities are regulated to prevent those few transactions that may be in error.
Many institutions are working toward eliminating forms-based/signature-based transaction controls in favor of new analytical tools for reviewing transaction quality on a statistical basis, after the fact. This approach improves the speed and user satisfaction of financial transactions, but may pose higher risks of errant transactions. Again, each institution will apply a unique set of values and priorities in weighing the tradeoffs between risk management, localization of authority, cost, and service quality.
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