Anticipation is in the air, and perhaps, even a hint of cooler weather that signifies fall is coming. Recent high school graduates are eager to begin their higher education journey, and many continuing students are excited to see their classmates and professors in person after more than a year of online study and to take in a game of soccer, football, or basketball in a raucous stadium or arena.
But hold on, not so fast. Once again, colleges and universities are faced with the agonizing dilemma of whether classes will be in-person, online, or hybrid. Will stadiums, parking lots, dormitories, and dining halls be open to full capacity? What are the potential costs of implementing a regimen of testing and vaccination for students and employees? How will financial managers be able to prepare realistic budgets and forecasts when they are so uncertain about how events will unfold next week, let alone next semester or next year?
Dealing with Decreased Enrollment
Some colleges and universities may be particularly affected by the precipitous decline in the number of international students attending their institution. Colleges and universities in the United States attract more than a million international students a year. Higher education is one of America’s top service exports, generating $42 billion in revenue. The pandemic, visa restrictions, rising tuition, and a perception of poor safety in America have driven new international student enrollment down by 72 percent. Many schools had turned to this source of revenue some years ago as a way to address the financial struggles that had been confronting them for nearly a decade due to falling domestic enrollment, reduced levels of state subsidy, and the decline of private philanthropic support.
So, what can higher education leaders and financial managers do to react quickly and decisively to the rapid and constant changes they are facing, and allocate resources wisely while preserving financial solvency and even making changes to position their institution for future growth and prosperity?
Adopting New Budget Models
A leading national advisory firm to the higher education sector advocates that institutions adopt new budget models to prepare for a stronger financial future. Universities with budget models that enable broad participation in resource allocation from departmental leaders all across campus will have a big head start in reaching collaborative, data-informed judgments to stabilize revenues and costs. In order to support more integrated and informed financial planning, access to reliable data is critical for establishing common assumptions and facilitating dialogue amongst stakeholders on any potential change. But first, they must establish new reporting capabilities that provide visibility into credit hours taught, student headcounts, space utilization, and other insights that illustrate their current status.
Experienced financial managers in the higher education sector understood all too well that legacy financial systems and spreadsheets were inadequate to build and maintain such a budget model. But as it turns out, Anaplan's Connected Planning software and models provide exactly the right platform to build these models, as well as keep up with the complexity, uncertainty, and rapid changes facing the sector now and in the future.
Connected Planning with Anaplan
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 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. Those institutions that have implemented the Anaplan software find it far easier to expand their analytical capabilities to revenue and expense forecasts, balance sheet ratios, cash flow, and other key metrics of financial and operational performance that help them to become agile organizations, ready to deal with rapid and constant change, and meet the challenges of the future.
In addition, 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 constantly and rapidly changing environment. For example, Anaplan is a pioneer in Extended Planning and Analysis (xP&A), which recognizes that disruption is now “the new normal,” and therefore pivoting, course correcting, and transforming are now an ongoing part of everyday business.
Planning for Colleges and Universities
Anaplan partner firm, truED Consulting, specializes in financial planning and data analysis services to colleges and universities of all sizes and mission types (i.e., community college, private liberal arts, research university, multi-campus state system). As an Anaplan partner with a sole focus on the higher education industry, truED Consulting provides institutions with the ability to build unified planning, budgeting, and forecasting platform across the institution.
In the past two years, truED Consulting has helped a variety of colleges and universities to implement Anaplan and achieve significant improvements in the way annual budgets and long-range plans are created, especially compared to cumbersome, error-prone, and inflexible legacy financial systems.
Usecase Examples
- A private Catholic research institution in the midwest was challenged to do more with less. To meet this challenge while fulfilling their mission, institutional leaders recognized the need to optimize resource allocation, which meant prioritizing strategic institutional objectives and maximizing the return on available funds. After reviewing multiple products from several vendors, they selected Anaplan to help leverage a new integrated financial modeling framework that supports data‐informed decision-making for senior leadership. Through proforma financial modeling and scenario analysis, they now have the capability to evaluate changing business variables, assess financial risk, and analyze strategic options to guide long-term fiscal sustainability. This new budget model features driver-based financial forecasting and scenario analysis that simplifies and speeds up the process and allows more stakeholders to be involved in decision making.
- A multi-campus community college in the eastern US sought to better leverage data and tools to support decision-making in the face of great uncertainty. By developing a long-range planning tool, with the help of Anaplan software, they built the capability to plan proactively and strategically—beyond the annual budget—to help senior leadership execute its strategic plan and guide long-term fiscal sustainability. College leadership needed a five-year strategic outlook of the college, projecting out their proforma financial statements and key metrics, to enable the college to evaluate strategic options. Key features of the new budget model included:
- The ability to perform driver-based, proforma financial modeling across the statement of activities, balance sheet, and cash flow statement.
- The ability to perform what-if scenario modeling to assess impacts to financial plans and key metrics, including the Moody’s debt rating metric and the Composite Financial Index.
These are just two of many examples of universities and colleges that were helped by truED to start on the Anaplan Connected Planning journey. As higher education organizations discover the substantial benefits of implementing Anaplan to handle their rapidly evolving financial planning needs, there is a growing awareness within the sector of the advantages of moving to an integrated cloud-based platform, especially in this environment of rapid and constant change.