Using Anaplan to Prepare College and University Budgets

RKnight1
Contributor

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In the last 15 months, colleges and universities (perhaps more than any other sector of business and society) have faced enormous challenges when it comes to preparing annual budgets and long-range financial plans. There was great uncertainty about the major drivers of revenue such as enrollments, government support, and philanthropy, as well as uncertainty about major elements of cost such as staffing levels, safety modifications for classrooms and dormitories, and investments in new technology to support distance learning when campuses were shut down.

However, well before March 2020, higher education was already facing several long-term trends that were going to have an enormous impact on their ability to thrive and survive financially, and that cause significant problems for financial managers trying to create realistic and predictable annual budgets.

Total enrollment at public colleges and universities declined for the ninth consecutive year,  and the pandemic exacerbated this trend.

The average net tuition and fee revenue received by public and private schools has been steadily declining for over a decade. By providing generous discounts (grants, fellowships, and scholarships), these institutions forgo about half the revenue they otherwise would collect if they charged all students the tuition and fee sticker price.

Despite eight years of increases in state support, public colleges entered the 2020 recession with historically low funding. After unprecedented cuts during the last two economic recessions, education appropriations per FTE today remain 6.0 percent and 14.6 percent below the 2008 and 2001 levels, respectively.

Perhaps most troubling of all, because of the trend of a declining US birthrate (which leads to smaller numbers of high school graduates,) the higher education sector is facing an existential threat to the traditional market of 18-21 year old’s that are the key demographic for the majority of institutions. The number of college students has declined by an unprecedented 2.6 million in the last decade, with a further drop of from 11-to-15 percent projected starting in the mid-2020s.

Experienced financial managers in the higher education sector could clearly see that legacy financial systems and spreadsheets are now inadequate to keep up with the complexity, uncertainty, and rapid changes facing the sector now and in the future. They began seeking solutions for new enabling software and technology that is 1) comprehensive, 2) robust enough for “power users” but easy to learn and use with an intuitive interface for any level of staff, 3) easily integrated with existing systems for operations such as HR and GL, and 4) especially that facilitates greater cohesion among teams and data. As it turns out, Anaplan's Connected Planning software and models meet all of these criteria and more!

Anaplan’s core strength lies in its capability to provide a unified cloud platform to create Connected Planning processes across an organization. The Anaplan platform collects and analyzes data from across an organization in a single location, enabling both high-level and granular analyses and facilitating data-sharing with all stakeholders. Anaplan's Connected Planning software tools, models, and methodologies enable organizations to transform their budgeting and planning capabilities and allow financial managers to make decisions faster and with greater confidence.

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The Anaplan platform is constantly being updated with new features and functionality that enable higher education financial managers to model complexity, communicate effectively, and easily prepare multiple scenarios to support and optimize resource allocation in a dynamic environment.

Anaplan partner firm, truED Consulting, specializes in financial planning and data analysis services to colleges and universities of all sizes and mission (i.e., community college, private liberal arts, research university, multi-campus state system) types. As an Anaplan Partner with a sole focus on the higher education industry, truED Consulting provides institutions with the ability to build a unified planning, budgeting, and forecasting platform across the institution.

In the past two years, truED Consulting has helped a variety of colleges and universities implement Anaplan and achieve significant improvements in the way annual budgets and long-range plans are created, and especially compared to cumbersome, error-prone, and inflexible legacy financial systems.

For example: The largest private research university in the US has a network of campuses around the globe. At one campus in Asia, the goal was to implement new technology to enable a more insightful planning process, with a focus on budgeting, long-range planning, scenario analysis, and enhanced user experience. The guiding principles of the project were: 1) Allow users to maintain their unique driver-based models while still effectively consolidating into the Budget Office format Produce pro forma financial statements and key metrics from multi-year financial plans; 2) Enable live and fully-integrated what-if scenario planning and stress testing; 3) Replace decentralized collection of Excel planning models and processes with more comprehensive and fully-integrated systems; 4) Increase efficiency by reducing the amount of time and resources it takes to enter, reconcile, consolidate, and present operating budgets and financial plans; 5) Partner effectively with department heads and leadership to transform their strategic goals into operating budgets; 6) Provide planners with the necessary reference tools in one application.

With the adoption of Anaplan, the campus was able to achieve its goal and succeed beyond expectation. In particular, they cited the main differences between the Anaplan implementation and the legacy financial systems as summarized in the chart below.

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A multi-campus university system in the western U.S. faced a vastly different set of challenges based on the economic and demographic shifts in their state. At the flagship campus of the system, the financial managers sought to replace the existing legacy system with an application that utilizes newer technology and provides greater value to the campus community. They chose to implement a cloud-based platform for developing, maintaining and reporting on budgets and forecasts. And the solution eventually had to be easily adopted by the other campuses in the system.

After the implementation of Anaplan, the flagship campus achieved the desired process improvements, time savings, and user satisfaction as summarized in the chart below.

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These are just two of many examples of universities and colleges that were helped by truED. As more higher education organizations discover the substantial benefits of implementing Anaplan to handle their financial planning needs, there is a growing awareness within the sector of the advantages of moving to an integrated cloud-based platform, and resistance (or inertia) to moving away from spreadsheets and legacy financial systems is growing rapidly.

In this blog post, we have taken a deeper dive into the “before and after” of legacy financial planning systems and processes versus the superior performance of Anaplan's Connected Planning software for cloud-based planning, budgeting, and forecasting (PB&F) solutions, especially the ability to seamlessly connect people, data, and plans. As one experienced university financial manager has astutely noted, the Enterprise Resource Planning “super-power” of the institution is not merely the software platform, but rather “our people who work together on end-to-end processes, our people who identify the opportunities to improve both the technical and physical flows around supporting our organization, our people who mobilize those ideas into delivered solutions.”