Smoother financial systems means learning from experience

Your finance system is something that ties your provider together, and replacing or updating it can reap benefits if you can learn from what others have done. David Kernohan reads a new guide from BUFDG and KPMG

David Kernohan is Deputy Editor of Wonkhe

If somebody tells you the time has come to improve your finance systems functionality, your first thought might be to pass the job on to someone in IT.

Universities have been propping up creaking legacy systems for some time now, to the detriment of their day-to-day business needs. There are new enterprise resource systems (ERP) out there, but you need to be sure the expense and disruption of updating or moving is going to get you the improvements you need.

In a university there’s a number of big, enterprise-level systems that need to work reliably and consistently. Your IT team is responsible for keeping these working and ensuring the data flows in and out in a straightforward way. So surely improving one of these pieces of infrastructure isn’t a strategic issue?

Not small change

You’d be forgiven for thinking that way, but you’d be wrong. A new ERP implementation guide from the British Universities Finance Directors Group (BUFDG), supported by KPMG and drawing on the experience of numerous providers, sets out just what you are getting into if a new finance system is in your immediate future. And it is, absolutely, a strategic issue.

Matt Sisson from BUFDG explains:

The new guide allows you to learn from the experiences of those who have gone before. The road to a new finance system is a familiar one – we know that system implementations are difficult, expensive, and take a long time.

Specifically, if institutions avoid the common mistakes detailed in the guide it will save you time, money, and effort. If you are a senior manager, a governor, or a head of institution it is well worth engaging with.

There’s a temptation to think a shift to the cloud will solve all your problems. Certainly, vendors and consultants are happy to sell this dream to you, but the messy reality has far more to do with people and processes than procurement.

As KPMG’s Sam Sanders puts it:

Treating the implementation of a new ERP system as a simple software upgrade is a huge mistake. The real benefits come when you really consider the way in which you want to deliver finance services to your end users, how people and data will need to interact, and how you’re going to embed the technology into business-as-usual operations.

As universities are regularly spending north of ten million pounds on this stuff, it’s worth putting the work in to get the maximum benefit with the minimum pain. And the BUFDG/KPMG guide is a clear, concise, and comprehensive guide to doing that.

Adapting and adopting

New, cloud-based, tools might work in a very different way to what your university will have used in the past. There’s a way in which you would expect new software (at these kind of prices) to exactly meet the needs of the organisation that bought it – in reality your organisation’s finance data needs have likely grown around the capabilities and idiosyncrasies of whatever you are currently using.

Doing this also allows you to take advantage of the best in class business solutions cloud represents, and reduces the time and expense that is associated with trying to adapt cloud to your old ways of working in a manner it is not designed to work.

What this means is that we can’t just look at what our current system does and ask for a nicer version. It is absolutely worth taking the time to fully understand and articulate the business benefits you’re looking to achieve, taking the opportunity to think more clearly about what you need as opposed to what you currently get.

Another input here should be the capabilities of the system you are considering moving to. Adopting something in as close to the out-of-the-box configuration as you possibly can and using built in customisation where needed rather than writing your own, radically reduces the risk profile. Adaptations are possible but can add complexity and points of failure: as one provider learned: “adopt, not adapt, config only, not coding”.

People and process

People use finance systems – and it’s all too easy to bombard them with changes and new tools rather than bringing them along with you. From the departmental administrator submitting expense claims to the professor spending a research grant, to the strategy team using finance data to make projections, just about everyone working in a university will have some interaction with your ERP.

The job is to improve their experience – all the improvements to data quality and workloads flow from that endpoint. The outgoing system is the baseline, and there will be numerous well-understood workarounds to areas where the experience is intolerable. For a successful transition there needs to be a wide understanding of current practice, and a careful judgement made on how desirable it is to keep.

As BUFDG’s Matt Sisson puts it:

A key outcome of moving to a new system should be a fundamental improvement in the way the finance function works and is experienced. Just implementing a new system without bringing users along with you just migrates all your existing problems and workarounds.

Your key users are your experts in and around the finance team. They – rather than your hardworking IT team, or an external organisation – should be in the driving seat for a change of this nature. Programme governance should respect that – transparency and dialogue need to be key. Some providers have used secondments and project-specific working groups to represent the user voice.

External expertise

Your staff don’t spend their days migrating between finance systems – they spend their days running universities. Migration, not least in terms of data history and data integration, is a very specialised skillset and the chances are you will need to buy this in. Likewise, maintaining and supporting a cloud-based tool as it beds in is also something you may want to bring in expertise on.

You can mitigate against this a bit if you make sure, as above, your internal experts are along for the ride. But even so, systems integration and ongoing support are things you might want to put out to tender – if you do, it makes sense to take the time to work out what it would feel like to work with people on a day-to-day basis. Soft market testing (think of it as a little bit of informal due diligence, along with taking up references and soundings via the BUFDG network) is really important – this could give you the chance to get to know the individuals you are working with, and give a contractor a chance to understand what support you actually will need.

Again, the watchwords are realism and understanding – putting the effort in to make sure your university is ready to work with an external expert is as important as making sure you are bringing the right people in with the skills you need. You need to provide as much information as you can about what you are doing, why, and which part of the capacity and capability jigsaw you are missing – even before you sign a contract.

Uniquely you

Of course, every university is unique – but perhaps not as unique as you may think. Higher education as a whole is starting to standardise on finance processes and concepts that are common in the wilder world of business, and well-managed software procurement can be greatly simplified by a move towards the mainstream.

This can make for a long-avoided argument about corporate standards and “this department has always done things this way” holdouts. There are aspects that will be unique to universities in general: funder and regulator reporting requirements are clearly one, integrations with other key bits of infrastructure are another.

The new guide from BUFDG and KPMG is written from the perspective of replacing or upgrading an ERP, and is based on know-how and experience from as far back as the first iteration in 2002. Everything in it is practical, and most of it is equally applicable to any other system upgrade you may be experiencing.

Fundamentally, if you take one thing away it should be focusing on managing cultural change rather than software procurement and implementation. The latter may solve a few problems (and create more too), the former is what you need to maximise the value you get from your financial systems.

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