Higher education institutions are confronting a host of external pressures, including changing demographics, heightening competition, and increasing affordability and value concerns. These pressures are compelling finance teams to perform more—and more complex—financial activities. University finance functions need strategic teams to conduct these expanded financial activities, but most finance units were not built for strategic financial planning.
This report helps finance leaders develop the strategic capabilities of their units. Specifically, it identifies the five characteristics—or hallmarks—of effective strategic finance functions, and trends that institutions are pursuing to achieve these hallmarks. These hallmarks describe finance units with optimal strategic data infrastructures, staff profiles, and organizational structures to support institutional strategy across the next decade.
Business leaders should use this information in two ways: First, they should evaluate their own adoption of the trends to identify areas of underinvestment in financial planning. Second, they should use the practitioner application profiles included in the report to inform strategic staffing, organizational structure, and process redesign decisions in their units.
Trend 1: Executive Level Data Governance Oversight
Committees of select senior leaders and campus stakeholders create and enforce policies and processes that drive consistent, complete, and accurate data use across campus. Senior leaders own data governance vision setting and hold unit directors accountable for executing data priorities.
- EAB Guide to Selecting Data Governance Committee Members
- University of Wisconsin Chief Data Officer Position Description
- University of Rochester Chief Data Officer Position Description
Trend 2: Data Refinement for Academic Program Analysis
Financial data systems are configured to generate academic cost data at a sufficiently granular level to understand program-level costs. Academic and finance leaders then use academic cost data to analyze program margins—either direct margins or fully-loaded margins with agreed-upon indirect cost allocations.
Trend 3: Business Intelligence Teams
Senior leaders dedicate central staff to business intelligence (i.e., collecting, reporting, and analyzing data to make business decisions). Business intelligence staff may report through the CBO, CIO, or provost. Business intelligence staff generate reports and analyses to support strategy conversations, and leaders deploy them to support high priority unit-level decisions.
Trend 4: Academic Financial Dashboards
Central finance teams generate regular reports for academic unit leaders to monitor and analyze key unit financial performance indicators, such as faculty salaries by type (e.g., full-time, contract, fees, summer pay). Central finance may create reports manually (e.g., in PowerPoint or PDF) or work with business intelligence teams to develop self-service reporting capabilities.
Trend 5: Technology-Driven Planning Process Redesign
Budget and planning teams use Enterprise Performance Management (EPM) solutions to automate data consolidation and workflows, enhance reporting, and expedite planning processes.
Trend 6: Scaled Budget and Planning Services
Finance leaders reorganize staff and/or reallocate transactional process responsibilities to achieve scale in transactional work. By minimizing analytical staff’s routine transactional responsibilities, leaders maximize their capacity for financial analysis and planning.
Trend 7: Long-Range Financial Modeling and Scenario Planning
Central finance teams build financial models to demonstrate the financial impact of both planned strategic investments and potential future revenue risks. Models use research-backed assumptions—not straight-line forecasts—to project multiple potential future states. Finance leaders use scenario models and planning exercises to generate consensus around response plans for future operating risks.
Trend 8: Functional Redesign to Expand Budget and Planning Scope
Finance leaders revamp budget and planning functions to optimize strategic resource planning. Depending on institutional context, leaders reorganize teams to better integrate short- and long-term planning, add or elevate planning staff profiles to increase capacity for modeling and analysis, and elevate functional leadership to signal importance of planning in long-term strategy and financial sustainability.
Trend 9: Embedded Analytical Support in Academic Units
Dedicated professional finance staff analyze academic budgets and help academic leaders use financial data in resource planning. Financial analysts may sit centrally or in the academic units, depending on degree of centrality of resource planning.
Trend 10: Financial Upskilling Programs for Academic Stakeholders
Finance leaders create formal training programs for academic stakeholders to improve financial acumen and drive better resource allocation decisions. Leaders create one or more training programs to address the skills needs of different audiences—in particular, academic budget staff and academic leaders (i.e., deans and department chairs).
Trend 11: Metric-Driven Intervention in Unit Performance Issues
Finance and academic leaders define thresholds for satisfactory financial performance for each major operating unit. Leaders use dashboards or other reports to regularly monitor unit performance metrics. When unit performance falls below pre-defined thresholds, leaders promptly intervene to help unit leaders strategize cost-cutting or revenue growth opportunities.
Trend 12: Internal Financial Consulting Teams
Central finance leaders oversee internal teams that provide technical financial and project management support for unit initiatives. Leaders may hire new teams of dedicated full-time staff to support initiatives or may convene on-demand project teams of existing staff as initiatives arise.