Higher Ed: Planning for the Future in a Time of Constant Change

It has now been more than a year since the coronavirus pandemic began wreaking havoc on all segments of U.S. business and society. Some sectors and organizations have learned how to adapt to the vast changes in how we do business and go about our daily lives while we all await a return to some semblance of normalcy. Perhaps no industry has experienced the dizzying ups and downs as much as higher education. But, even in this environment, there is a way that colleges and universities can transform to become more agile, learn how to better manage the ups and downs, and prepare for what the future may hold.

Pandemic: Financial Impact

The financial impact of the pandemic has been devastating, and only now are the current and long-term losses being identified more accurately. Even some of the wealthiest institutions are feeling the effect of the declines in revenue from the declining enrollment of domestic and international students, as well as from reductions in state appropriations, auxiliary enterprises (e.g., athletics, parking, student housing, and dining), and philanthropy.

In addition to the revenue squeeze, higher education has had to deal with the exponential growth of costs associated with preparing the physical campus to provide a safe environment for students and employees returning to in-person instruction. Campus leaders had to make difficult decisions about expenditures for physical barriers in classrooms, virus testing for students and employees, and reduced capacity in classrooms and dormitories. Simultaneously, they were required to invest more resources to pivot to an online learning model that could provide continuity of instruction, even though it was a less-attractive learning option for many students and parents who questioned the value (and price) of this alternative to the traditional residential campus experience.

The combination of revenue decline and cost inflation also led many institutions to eliminate faculty and staff positions, which in turn exacerbated the problems of providing the high level of educational experience necessary to justify a high tuition “sticker price” that had been growing at rates far in excess of inflation for well more than a decade.

Creating Agility With Connected Planning

So, what can higher education institutions do to deal with the whipsaw effect of all the change and uncertainty, and transform into agile organizations that meet these challenges and thrive financially? Agility is defined as “having a quick resourceful and adaptable character, and the ready ability to move with quick easy grace.” Anaplan's Connected Planning software tools, models, and methodologies enable organizations to transform their planning and decision-making capabilities to utilize complex scenario planning from the smallest detail to the big picture, and allow financial managers to make decisions faster and with greater confidence.

McKinsey and Company, a global leader in consulting services, notes that one of the trademarks of agile organizations is “next-generation enabling technology." The Anaplan Connected Planning environment is the perfect example of a next-generation enabling technology because of its ability to work with real-time data and insights from across the institution and to allow all users to collaborate with accurate, updated information. It empowers financial managers to develop broad and varied scenarios, prepare rolling (not static) forecasts, update budgets automatically with relevant, current information, and do it all in real-time. One of the leading experts advising colleges and universities today on how to cope with the uncertainty around budgeting and resource allocation decisions calls for institutional financial managers to start by conducting scenario planning.

Anaplan provides the perfect suite of tools for the creation of multiple scenarios that use the exact same data and driver-based assumptions contained in the institution's budget and forecast models. Mitch Max, the founder of Anaplan partner BetterVu, has provided a detailed step-by-step set of instructions for this process that can be readily adopted by not only colleges and universities, but all organizations that use Anaplan to support the finance function and seek to become more agile organizations.

More About Higher Education:

• Higher Education—Managing Forecasts in Uncertain Times
• How Do You Help Your College or University Stay Ahead of the Curve?

Harnessing the Power of Anaplan

Anaplan partner firm, truED Consulting, specializes in financial planning and data analysis services for colleges and universities of all sizes and mission types (i.e., community college, private liberal arts, research university, multi-campus state system). Throughout 2020, we partnered with customers and Anaplan to offer a series of webinars to highlight how several of our customers have harnessed the power of Connected Planning to transform their finance function and take the first big step to become agile organizations that are prepared to navigate the uncertain financial waters of the future. Topics covered in the webinars included Responsibility Center Management financial modeling, integrated tuition modeling and financial planning, aligning strategy and resource allocation, transforming budgeting and planning, and “future-proofing” your university. One example was Saint Joseph’s University, which embarked on its Connected Planning journey to replace the static spreadsheets used in their distributed budgeting and planning processes with a cloud-based platform that integrates with its Banner Enterprise System and facilitates multiple real-time scenario modeling. This helped reduce administrative inefficiencies while increasing transparency and stakeholder accountability and engagement.

A New Way to Plan

A common theme amongst customers was the realization that financial planning using Excel spreadsheets had finally reached a point of diminishing returns. Although spreadsheets were one of the greatest personal productivity tools of the 20^th century, there were limitations to their capabilities that were often holding back higher educational institutions from achieving the integration and speed required to continuously evaluate their financial position and take decisive actions to change course. Anaplan software provides a far superior platform that does not suffer from common spreadsheet limitations such as multi-dimensionality, dynamic data update, collaboration, error auditing, and automation and workflow.

Colleges and universities not only need to manage revenue and expenses, but they also need to understand complex balance sheet ratios such as return on assets and employee productivity. Those institutions that have implemented the Anaplan software find it far easier to expand their analytical capabilities to include these and other key metrics of performance that help them to become agile organizations, ready to meet the challenges of the future.

Although it is desirable for any organization that implements Anaplan to create a Center of Excellence, it is only necessary to have a cadre of model builders and power users who can use the tools to build or manage a model that gathers and analyzes non-financial operating data. One example is the model developed by Anaplan partner firm Allitix and Tarleton State University to plan for and manage academic space. Armed with these analytical tools, Tarleton campus leaders can assess capacity constraints due to the incorporation of social distancing guidelines, as well as schedule classrooms to improve efficiency and reduce teaching costs.

Planning for Today and the Future

Another strategic use of Anaplan for colleges and universities is workforce planning for both the short-term (next semester) and the long-term. Salaries, wages, and benefits are usually the largest components of any higher education budget; therefore, it is imperative to have accurate projections to feed into the financial model. In the face of rapid change, campus leaders must make difficult decisions quickly but strategically. Anaplan can help ensure that CFOs and human resources departments are in complete alignment with one consistent set of shared data.

In a relatively short time, higher education has become an important and growing segment of Anaplan’s customer base. Even before the coronavirus pandemic, many educational institutions were beginning to feel the fragility of their business model in the face of demographic changes in U.S. society and ongoing questions about the value of higher education. As more colleges and universities continue to implement Connected Planning, their record of success in becoming agile organizations that thrive in uncertain times will be a beacon to others in the industry.

We'd love to hear from you about the challenges your business has faced over the last year. Leave a comment below!