Professional Documents
Culture Documents
This special ECAR research bulletin series highlights findings from the EDUCAUSE Core Data Service,
focusing on a small but meaningful slice of data collected in the CDS. These selected highlights are
intended to provide context and meaning for CDS benchmarks that may be of especially broad interest,
be especially timely, or draw connections between research from ECAR and CDS. The series is featured
along with other CDS publications on the CDS website and is now available to eligible ECAR subscribers
as part of their subscription.
This spotlight focuses on data from the 2013 CDS to better understand how higher education institutions
approach financial management systems. Information provided for this spotlight was derived from Module
8 of CDS, which asked several questions regarding information systems and applications. Responses
from 525 institutions were analyzed. Only U.S. institutions with a designated Carnegie Classification
(AA, BA, MA, or DR) were analyzed for this report. In addition, we interviewed four subject-matter experts
to gain insights about the current and future state of financial management systems in higher education.
Change is hard, but our research uncovered several factors to consider in deciding whether an
institutions financial management system can meet todays new demands:
From paper to online: Examples of the predicted true paperless office have yet to emerge, and
institutional operations may still rely on paper-driven processes and transactions, which can be slow
to administer, cumbersome to manage, and hard to track. For example, one interview participants
institution found it difficult to track requisitions, sometimes learning about purchases after the fact,
when vendors submitted invoices for payment. Another interviewee described the journey of a paper
travel-approval form, which circulated about 30 miles between multiple campuses to collect 13
signatures, 10 of which were unnecessary. Paper forms are increasingly out of sync with todays
evolving online environment, where business is conducted via a few clicks on a website from a
laptop, tablet, or smartphone.
From out of date to current: A financial management system plays such a key role in an institutions
regulatory and financial compliance that failing to keep the system up to date may result in audit risks,
or worse. Significant customization may hinder system upgrades, or an older system could face
vendor obsolescence; both of these problems impede the financial management systems ability to
meet ongoing institutional demands in an accurate, trusted, and timely manner.
From legacy to robust: Institutions with an older, homegrown financial management system may
confront long-term maintenance issues. It may become harder to program required or desired new
features into the system. As developers and system administrators retire, it can be problematic to find
replacements proficient in older programming languages or expensive to train new ones. Over time,
investing in a new solution may become a more viable option.
Current Snapshot
According to CDS 2013 data, nearly all U.S. institutions (99%) have a financial management system. At
an average age of 13 years old and with 81% of institutions maintaining at least some customization,
these systems rank among the oldest and most customized of institutional enterprise systems. Older
financial management systems and those at large institutions are more likely to be substantially
customized (see figure 2). On average, each additional year of age is associated with a 3.4% increase in
the likelihood of substantial customization of these systems. Institutions may be moving away from
customization for financial management systems, however. Of the 8% of institutions that plan to replace
their financial management system in the next three years, 57% plan minimal customization and only
12% plan substantial customization.
In terms of market share, the financial management system space is relatively homogeneous (see figure
3). Almost 9 in 10 institutions (85%) use solutions from one of the top 5 financial management system
vendors. Interestingly, over two-thirds of institutions (69%) are using the same vendor for both their
financial management system and their student information system. This factor may contribute to the slow
rate of change for both systems. Replacing multiple enterprise systems at once is a large undertaking that
requires serious consideration.
Future Trends
A financial management system impacts an institutions ability to navigate todays complicated financial
environment. Consequently, the trends identified by research, CDS data, and interview participants
pertain to maximizing the performance and value of such a system to the institution.
categorization and audit trails enable better tracking and information analysis. For example, the
aforementioned travel approval form can now be processed electronically in minutes, saving time, gas,
and money.
wide resources and to conduct enterprise transactions from the mobile device. Potential solutions include
mobile and tablet access with intuitive interfaces that incorporate icons and clicking/dragging functionality,
as well as better information display on smaller screens. For example, a manager can approve a staff
members electronic travel authorization form on her smartphone while waiting for a flight at the airport. In
the past, a paper version may have languished days or weeks on her desk awaiting her signature until
her return to the office. Scanned or photographed travel receipts on a smartphone enable accurate and
fast processing of expense reports instead of maintaining an unwieldy collection of paper receipts for
processing after a trip.
project status indicators. Financial management systems will have to enhance ways for users to
personally select and pull top-level summary information, as well as drill down to actual transactions.
Robust transaction categorization and integration with other systems (e.g., the student information
system) adds analytical capability. The result is more powerful tools at an administrators fingertips. For
example, a manager may identify opportunities for vendor discount or incentive programs more easily,
allowing the institution to save money or analyze the financial implications of changing student
demographics, which might prompt an institutional review of student recruitment strategies.
process served as a disincentive for the institution from returning to the inefficiencies of its previous,
highly customized financial management system.
Tailor-Made Systems
Rather than relying on one monolithic system, institutions may decide to integrate specific best-of-breed
solutions modularly into an extensible core system via standard interfaces. Financial management system
providers can promote this trend by developing a third-party partner network, creating truly plug-and-play
solution integration with the base system. The result is a financial management system that is designed to
meet an institutions specific needs.
Replacement Assessment
Given higher educations ongoing financial pressures, administrators need to continually assess whether
the institutions financial management system meets its needs.
Create an institutional needs consensus from the technology and functional areas, as well as from the
perspectives of administrators and actual users (e.g., an office clerk). Then delineate how the
financial management system fulfills these needs. One measure is the prevalence of shadow systems
to meet individual staff or organizational needsthe more shadow systems, the less likely the
financial management system meets institutional needs.
Understand the current financial management systems true ownership costs. This includes the toplevel budget items as well as underlying day-to-day costs (e.g., daily backup, offsite mirror data
storage, and on-site server backups). Better understanding of total costs helps determine the benefits
of keeping or replacing the current system.
but having common institutional business processes eliminates or minimizes the need for system
customization, an imperative consideration for SaaS solutions.
necessary in determining the total cost of IT. The result is data consistency that helps present an
institution-wide picture of revenue, expenses, and budgets, which in turn creates a more accurate picture
of an institutions current financial situation and facilitates longer-term planning.
Administrative and Enterprise IT Systems. EDUCAUSE research snapshot. Louisville, CO: ECAR,
July 14, 2014.
Dodds, Thomas, Steve Fleagle, Laura Patterson, and Eric L. Denna. We Built, We Bought, We
Shared: The Costs of Administrative Systems vs. the Academic Mission. EDUCAUSE Review 49,
no. 4 (July/August 2014).
The Future of Administrative IT: Expert Panel and Findings and Recommendations. Executive
briefing. Louisville, CO: EDUCAUSE, December 2013.
Lang, Leah. 2013 CDS Executive Summary Report. Research report. Louisville, CO: ECAR, February
2014.
The NACUBO/EDUCAUSE Working Group on Administrative Services and Systems: Final Report.
White paper. Louisville, CO: EDUCAUSE, February 2014.
Trevvett, David. Enterprise Application Projects in Higher Education. Research report. Louisville, CO:
ECAR, August 2013.
Acknowledgments
The authors thank Patrick T. Burns, Dean of Libraries and Vice President for IT, Colorado State
University; Julie Curtis, Vice President for Strategy and Communications, Lumen Learning; Thomas Olliff,
Senior Vice President for Administration, Broward College; and Pim Thukral, Vice President, Financial
Accounting and Systems and Interim Controller, Georgetown University, for sharing their professional
experiences and insights about financial management systems in higher education.
Notes
1. Susan Grajek, Higher Educations Top-Ten Strategic Technologies for 2014, research report (Louisville, CO: ECAR, February
2014), available from http://www.educause.edu/ecar.
2. Ibid.
3. Leah Lang, 2013 CDS Executive Summary Report, research report (Louisville, CO: ECAR, February 2014).