Axiom Blog Five Ways to Shorten the Annual University Budget Cycle

As college and university business officers enjoy their Thanksgiving break, most can't help but have a sense of angst about what awaits them when they return to work...the herculean task of tackling the FY18 budget process.The average higher education budget cycle consumes nearly six months out of the fiscal year. A budget process that takes that long leaves academic and administrative leadership fatigued and crowds out other critical planning processes. And in some cases, the budget assumptions are already irrelevant or outdated by the time the final draft is approved. Short of abandoning the budget altogether, what options do university business officers have?Automate your budgeting process with modern technologyExcel spreadsheets are still the primary tool utilized by many institutions to develop their annual budget. With this offline approach to budgeting, schools spend most of their time gathering historical data, managing inputs and assumptions, and routing spreadsheets through the organization. Not only is this inefficient and a poor use of time, it's also highly error prone and lacks a meaningful audit trail.In order to increase efficiency and shift the focus from organizing data to analyzing it, schools need to leverage modern technology for their budget process. Leveraging a solution that automatically consolidates data, manages planning assumptions, and provides real-time reporting will pay major dividends. Not only will it cut down on the manual effort required to produce the annual budget, it will also allow the university to more clearly evaluate its options and make better decisions more quickly.Make sure all of the relevant data is available in one placeIn order to make truly informed decisions, administrators need to review a range of supporting information. Enrollment statistics, grants data and detailed prior year actuals are just some of the key indicators required. Typically, however, this information resides in disparate systems across the institution. Users spend an inordinate amount of time hunting for critical data and inputs, if they are even able to access the information at all.A true enterprise planning solution solves many of these problems by securely aggregating data from all of the university's relevant source systems in one place. This allows users to quickly and easily leverage a range of financial and non-financial data for use in analysis, reporting and planning. An added advantage of a centralized data repository is the ability to maintain user access and roles consistently in one place. This will ensure that sensitive data is available, but only to those who truly need access.Get the right people involved, but only when they need to beDeveloping a viable financial plan in any college or university requires buy-in from a range of key stakeholders. More often than not, however, we tend to overcompensate by giving every stakeholder a chance to weigh in, whether they have a perspective or not. Ultimately, a huge amount of time is spent waiting for people to review/approve budget decisions and tracking them down when they don't.Automated workflows and web-based collaboration tools provide universities with a powerful solution for navigating the decentralized decision-making environment in higher education. These tools automatically route the budget through each department's specific organizational hierarchy, allow for conditional approvals (e.g., new FTE requests are sent to HR for special approval), and provide real-time tracking and reminders. By automating the process, colleges and universities are able to reap the benefits of distributed decision making without slowing down the budget cycle.Spend planning time and effort on strategic activitiesMany university expenses are fairly predictable from one year to the next. So why is so much time spent on open ended planning processes that require input and analysis into every line item, every year?A significant amount of time and effort can be reduced throughout the budget cycle by starting with a base budget that reflects historic actuals and an agreed upon inflationary increase. This practice shifts the analytical focus to strategic investments that go above and beyond the base budget amount. To reduce the risk of waste, zero-based budgets can be utilized for highly variable expenses (e.g., travel, consulting services) and periodic departmental reviews. On balance, the finance department will spend more time doing meaningful analytics and end users will experience a budget process that feels less bureaucratic.Use the long-range plan to set high-level budget targetsWhile utilizing a base budget will help to streamline the budget process from the bottom up, schools and units also need a clear indication of the high-level financial guideposts around their overall annual budget submission. The most logical place to find these high-level targets is the university's long-range financial plan.As long-range strategic and financial planning becomes more common in higher education, the next step for institutions is to directly integrate the annual budget with the long-range plan. Ideally, the two planning processes are completed on the same platform to allow the university to leverage consistent data, assumptions, hierarchies and planning outputs. If that is the case, the university can save significant time across both planning processes and will ultimately end up with financial plans that are more closely tethered to the organization's strategic goals.If you want to learn more about how Axiom Software is helping institutions both large and small shorten their annual budgeting process, click here.