Introduction
The past few years have seen several sea changes in the higher education sector, not least financial belt-tightening by state and national legislatures, the increasing need for innovative tertiary revenue streams and, of course, the coronavirus’s continuing effects, especially on international student numbers.
The resultant fallout has a significant impact on finance functions. While institutions’ central finance functions have traditionally been the hub of their relatively discrete business units, models are shifting. Today it is possible to centralise data-focused operations across campuses and even beyond, as universities consider partnering and merging to survive and thrive in a post-pandemic world.
Key to this evolution is the need to aggregate available financial information and streamline processes: not only in higher education institutions’ finance departments, but in every cost centre, organisation-wide, and to turn this into meaningful data that cements their authority as a driver of meaningful organisational change and adaptation.
But the crux of the matter is time. There’s never enough of it. Many finance professionals still find themselves engaged in manual and administrative duties that often have little to do with core financial tasks. Depending on automation levels and the maturity of the technologies deployed, these activities are squeezing out more important tasks. As a result, less time-sensitive but more meaningful activities such as strategic planning, policy oversight, impactful reporting and providing guidance and leadership often fall on to the ‘to-do’ pile, but seldom make their way to the ‘have done’ checklist.
By leading the use of advanced financial technology, central finance functions can reduce costs and improve efficiencies internally. And, by amalgamating data sources, meaningful information will flow – putting finance leaders in a position to positively shape other departments’ approaches to financial matters, as well as their conceptions of the central finance department.
Is central control essential?
Almost all enterprise-scale organisations use centralised functions for key operations to reduce duplication of tasks and, therefore, wasted resources. In a shared service model efficiencies abound, but the risk increases as departments are less able to find the information that is meaningful to them. Embracing difference and, therefore, complexity is essential.
Managing financial data begins with technological challenges, but it is not a pure IT exercise. Until the last five years, complex operational procedures have been an anathema to business software. In brief, complex procedures at a significant scale were difficult to mirror in software. This is no longer the case: finance solutions have matured, as have the typical approaches of IT systems in general. With today’s software, multiple so-called point products (specialist solutions capable of doing one thing only, yet doing it well) work in tandem with others, instead of one solution being imposed centrally.
We wondered: how are academic institutions managing this complexity and improving efficiency? And what are the implications on HE staff (academic, administrative, auxiliary) and third parties? When complexity is not fully realised and captured, are clear insights possible?
Centralised processes enable technology like machine learning to interpret POs, invoices, remittances, etc., at scale, without individual departments having to fund this capability. But without appropriate support, institutions who deploy software can still flounder. Using specialist providers who can operate independently whilst still being able to connect data in meaningful ways is essential.
For example, one of Basware’s customers, a Tertiary Education Institution in Australia, says that using a specialist provider for their e-invoicing has allowed them to synchronise activities, while feeling like they are supported every step of the way.
The Basware implementation team has been the most engaged, knowledgeable, and reliable project team of any technology vendor we’ve dealt with. While we’re using a large education-specific ERP vendor, we’re just another number to them. Basware has been with us every step of the way – and continues to add value to us. They’re more than just a software solution.
Customers using software technology to automate previously disparate and disconnected processes are also realising the comfort of improved governance and compliance, especially when the auditors investigate accounts. For example, recent research revealed that only 6% strongly agree that they have deployed automation to monitor and check compliance data across all critical areas of the business. We think this is significantly risky. But what do you think?
Actionable insights begin with accessible data
Businesses making decisions based on outdated information are taking significant risks. Real-time data [1] is a prerequisite for accuracy. In many higher education institutions, like any large business, data flows at necessary speeds. Unfortunately, interpretations of ‘necessary’ vary significantly between departments and functions.
While data collation comprises 12.5 per cent of a person’s average working week or 11 days over the period of one year, [2] information can often reach central finance in a manner timely enough to comply with policies or governance (with a significant amount of manual re-work involved), but no quicker. Operating in discrete business units, academic and administrative departments work to different cadences, determined according to business unit type and internal processes.
We wondered: are universities helping their employees do bigger, higher things than simply moving numbers around? Data siloes may be preventing finance departments from seeing the bigger picture – not to mention delaying decision-making and increasing admin busy-work. The fact is good data provides a foundation for informed decision-making. But it can’t be used if it can’t be obtained. Disconnected systems and processes are a roadmap to stagnation.
Finance is the central hub of a university. In technology terms, data silos are not necessarily problematic, but those silos do need to be filled. Relying on manual processes to achieve this is not ideal.
It’s clear that automation helps central finance get access to (near) real-time data proactively, rather than waiting for the manual receipt of needed information. However, methods of data collation may vary hugely across campus/es. This may include everything from Excel to Google Sheets, .csv, open-source and proprietary software, to isolated and networked applications in local data centres or in cloud repositories.
Leading institutions deploy technology platforms that allow different business units to gain access to financial software that is easy to use. But does it all need to be in one platform? Not necessarily.
It’s worth noting that centralised financial technologies no longer need to rely on a single entity from a single supplier: for instance, spend and cash flow capabilities might be handled by dedicated software but be fully integrated with existing enterprise resource planning (ERP) systems. Similarly, central finance might operate using an e-invoicing platform, a procurement management solution, and a governance and data security management element. These can form part of the institution’s ERP or integrate with them using APIs. But to end-users the interface with which they interact need not be apparent, with seamless data flows from platform to platform the only visual clue.
Does this make finance and procurement teams’ lives easier? Yes. In an ideal world, finance teams should deploy a solution once and let it do its thing, so they can focus on adding more value back to their institutions. For example, another APAC-based Tertiary Education Provider says, of using Basware:
We’re very happy with our e-invoicing software choice. It’s good. It does its thing. It ticks over. We don’t have to look at it. We’re happy.
Those using automated tools to manage financial processes such as e-invoicing – and even procurement – are reaping the rewards: including improved visibility, time-savings, and cost-reductions. This adds up to improving the lives and reducing workloads on finance teams. It seems like a logical choice to many. But what do you think?
Making the case for financial leadership
It’s well-established that non-financial professionals will interpret and engage with financial information quite differently from their finance-trained colleagues. The de facto tools deployed by many finance departments are not optimised for general use, and therefore any content will have less impact than desired. For example, common tools like PowerPoint and Excel are used in most finance presentations, despite these often not presenting information in ways assimilable by non-finance personnel. These tools are also non-interactive and not collaborative.
As a result, a significant percentage of non-financial personnel feel that the ways they are shown relevant information is not appropriate, with academic studies suggesting that best engagement methods may be found outside the institution altogether, such as freely available “Web 2.0” channels. [3]
As in the case with cross-departmental finances being managed by a central location, the same logic applies to being able to present key findings from connected information in a way that genuinely adds value to institutions and academics. This requires standardisation and clear outputs, based on best-practice processes, so that finance teams and leaders can win hearts and minds.
We wondered: is it clear to those financial professionals who are keen to put forward agendas for the greater good, that activities like ring-fencing and defensive attitudes are natural reactions to difficult circumstances? With this realisation comes the knowledge that, in order to change attitudes to financial matters in areas where such concerns are not of primary concern (in academic or research-led areas of the organisation, for example), care needs to be given to how messages are shared, how the mandate for digitisation can be ‘sold in’ and how an attitudinal shift to the necessity of automation is put across.
The answer may lie in a combination of factors such as improved efficiency, visibility, faster payment times and improved supplier relationships. With the right systems in place, it’s possible to get 100% of visibility of supplier data, a deeper sense of cashflow, and knowledge of committed spend 3-6 months further than is currently possible. The right systems also enable institutions to tick the compliance box, reduce auditing pain, and eliminate fraud. Risk reduction is also possible through multi-level approval layers that are quick and easy to approve and audit trails come as standard.
For example, recent research revealed that one of the top three compliance and supplier risk drivers for better data visibility is increased reporting requirements to governments / regulators. In Australia, universities are increasingly concerned about reporting requirements to address regulations such as the Modern Slavery Act and the ABS Survey on Foreign Entities.
One way in which finance can ensure these benefits – including compliance – are realized is by making it easy to implement a solution, as this quote from another Australian-based Basware customer in this sector illustrates:
We love your standardised project delivery and approach. All your systems and processes are standardised, clear, and well documented. It has made it easy to implement your solution and makes us confident that our users will engage with it more easily, so we can get better, more consistent results.
In short, by better synchronising the financial functions in the different parts of the institution – an activity that should be led by central finance – the finance department can show other business units where “quick-win” savings can be made, financial problems alleviated, and difficult decisions made. The decentralised approach to higher education funding is now largely accepted as a cornerstone of financial strategy in the sector. [4] But what do you think?
Polling the professionals
While the questions raised in this article and the solutions suggested (and often observed) to resolve these issues go some way towards addressing the pressures faced by CFOs and senior finance leaders of higher education institutions, we know that because of the rapid changes in financial environments in the last two years, a great deal of information about these issues is now outdated.
That’s why Basware is commissioning independent research in partnership with Tech Wire Asia to ask finance leaders at higher education institutions how they are choosing, using and re-imagining technology tools to achieve their goals: to improve services, streamline processes at data and operational levels, re-position central finance, and change approaches and attitudes to financial matters across the campus.
Participants in the survey from Tech Wire Asia will receive an advanced and exclusive copy of the ensuing research in a condensed report that will enable them to benchmark their own department’s performance against those of their peers.
Register to participate in this research by voicing your opinions and telling us about your experiences.