Leaders from two Huron Education clients – Georgia Tech and Northern Kentucky University – described to large audiences at the annual meeting of the National Association of College and University Business Officers (NACUBO) initiatives they have undertaken that are resulting in greater efficiency and administrative cost reductions.

1. A Progression of Cost Savings Initiatives
Sue Hodges Moore, Northern Kentucky University
Ken Ramey, Northern Kentucky University
Ken Kline, Northern Kentucky University
Shandy Husmann, Huron Consulting Group
Greg Bedell, Huron Consulting Group

2. SECTION I – CONTEXT OF COST
SAVINGS INITIATIVES AND THE
IMPORTANCE FOR UNIVERSITIES
2

3. Fiscal Challenges have Prompted Industry-Wide
Higher Education Cost Savings Initiatives
 Maximizing institutional effectiveness is a common
challenge for higher education institutions in today’s
environment.
 Recent fiscal challenges have required universities of
all sizes to undertake cost savings initiatives in order
to navigate the challenging financial times and
effectively position the institution for the future.
 Common goals for these initiatives include:
 Improving organizational effectiveness.
 Enhancing service delivery across the institution.
 Increasing operational efficiency.
 Identifying opportunities for cost reduction and/or
revenue enhancement.
3

4. Organizational Efficiency and Cost Reduction
Efforts are an Evolutionary Process
 In the face of unprecedented fiscal challenges,
universities across the country have undertaken
various initiatives charged with streamlining,
optimizing, and leveraging resources:
Immediate Incremental Transformational
 Across the board budget  More aggressive budget  Comprehensive, system-
cuts cuts wide operational and
 Capital project  Procurement strategies programmatic reviews
delay/cancellation  Programmatic  Organizational
 Postponed deferred changes/eliminations rationalization
maintenance  Review of individual  Shared services
 Service reductions functional areas  Process standardization
 HR management  Business process
redesign
Short-Term / Temporary Longer-Term / Structural
Easier to Implement More Complex
4

5. Benefits of Transformational Approaches
 Transformational approaches, such as horizontal
business process redesigns or vertical organizational
rationalizations, while more difficult to implement,
have the potential for securing long-term gains in both
efficiency and performance.
 The optimal operating model for each primary university
function depends on its strategic objectives and the
environment, but should:
 Take advantage of scale.
 Reduce duplication and inefficiency.
 Meet customer needs.
 Provide flexibility to meet changing demands and context.
 Increase transparency of operational performance.
5

6. Critical Success Factors for Effective Efficiency and
Cost Reduction Reviews
 The approach to assessing the landscape must produce
specific, actionable recommendations that can result in
substantive changes/improvements for the institution.
Critical success factors include:
 Articulate objectives/desired end-goals at the start.
 Understand the university’s appetite for change.
 Engage key campus stakeholders in solution development.
 Utilize data-driven business cases and objective measures.
 Pursue opportunities for enterprise-wide resource
stewardship.
 Prioritize resulting opportunities for implementation.
 Ensure implementation is driven/supported by leadership.
 Establish methods to measure savings and track progress.
6

7. Northern Kentucky University
A Major Metropolitan Comprehensive University
1997 Today Change
Enrollment 11,785 15,738 34%
Degrees/Credentials Conferred 1,640 2,838 73%
Unrestricted General Fund Budget $71M $223M $152M
Endowment $12.3M $68M 453%
Grants/Contracts $3.4M $7.5M 121%
Faculty/Staff 1,550 2,030 31%
Average Class Size 23 24 +1
Student Faculty Ratio 16:1 17:1 +1
Bachelors Programs 51 69 +18
Masters Programs/Certificates 7 30 +23
Professional Doctorates 0 2 +2
Juris Doctorate 1 1 -
7

8. Northern Kentucky University
Current Planning Context
 System-level Strategic Agenda: Stronger by Degrees
 College Readiness
 Student Success
 Research, Economic, and Community Development
 Efficiency and Innovation
 NKU Points of Focus, 2012-14
 Student Success
 Teaching and Learning
 Scholarship and Public Engagement
 Enrollment Management
 Funding and Resource Development
 Organizational Effectiveness
8

9. Northern Kentucky University
Financial Context
 FY12-13 unrestricted operating budget of $223M.
 Total state appropriation reduction of $8.3$ (15%).
 5 state budget cuts in 6 years.
 Lowest state funding per FTE in KY.
 SA is 21% of budget; tuition is 62% of budget.
 State mandated tuition rate caps since 09-10.
 Three new state-funded buildings opened since 2008, with no
M&O funding from the state ($4.4M).
 Mandated/unfunded state retirement system rate increases
totaling $4.4M since FY08.
 Implementation of SAP ERP system since 2005.
 11% enrollment growth over last six years.
9

10. SECTION II – COST SAVINGS
THROUGH REALLOCATION
PROCESSES AND OTHER INTERNAL
COST SAVING APPROACHES
10

11. NKU REALLOCATION APPROACH 1:
HIGH BUDGET CUT TARGETS WITH
REINVESTMENT PLANS
11

12. High Budget Cut Targets with Reinvestment Plans:
Budget Environment
 2008-09 Budget Planning Environment
 Great uncertainty with the budget.
 State appropriation – 15% reduction proposed.
 Tuition rate increases unknown (single digits assumed).
 Significant budget pressures.
 ERP system cost escalation.
 Two new buildings opening.
 Other non-discretionary expenses.
 Leadership
 Sense of urgency.
 Belief that we had to plan for the worst.
 Desire to continue to move the institution forward.
12

13. High Budget Cut Targets with Reinvestment Plans:
Step 1: Establish Budget Principles
 Preserve our core strengths.
 Protect student access and affordability.
 Invest in competitiveness, particularly around people.
 Continue to improve institutional effectiveness,
including increased efficiencies and cost containment.
 Make incremental progress on our business plan in
line with regional needs.
 Continue to support Vision 2015 (northern Kentucky
region’s strategic plan) in more focused and targeted
ways.
13

14. High Budget Cut Targets with Reinvestment Plans:
Step 2: Reductions
 8% Budget Reduction Targets for each VP Area (high
targets)
 Base on total budget less fixed costs and revenue
supported expenditures
 Reductions not prioritized (assume they will happen)
 Required information:
 Description of each cut with examples of cost containment and
efficiencies to absorb the cut
 Impact statement required addressing the impact to:
 Student learning / student success
 Service levels (to internal and external)
 Workload of existing employees (all divisions)
 Overall campus environment
14
 Specific activities in other divisions

15. High Budget Cut Targets with Reinvestment Plans:
Step 2: Reductions - Assistance Provided
 Budget Office and each VP reviewed every fund center
in their budget.
 Is what we’re funding now more important than other things
we should be funding?
 Can the objective be achieved in a more cost effective manner?
 Solicited ideas from campus and the community.
 Formed the President’s Advisory Committee for
Efficiencies and Savings (PACES).
15

16. High Budget Cut Targets with Reinvestment Plans:
Step 3: Reinvestment Plans
 4% Reinvestment plan targets for each VP area.
 Due ~ three weeks after their proposed budget cuts.
 Prioritized.
 Required information:
 Narrative description.
 Strategic linkage.
 Restoration of budget cuts required a linkage to the
university’s strategic priorities.
16

17. High Budget Cut Targets with Reinvestment Plans:
Results and Conclusions
 Results:
 42% of the cuts were reallocated to higher priorities.
 33% of the cuts were kept centrally for state budget cuts.
 25% of the cuts were reinstated
 Conclusions:
 Setting high budget reduction targets allows for more flexibility
in how reductions are taken.
 The process helped vice presidents take a more strategic
approach to budget reductions and reallocations.
 Cuts are often based on fairness while investments are based on
priorities.
 Confidentiality is critical with high budget cut targets.
 The process required a lot of time and effort on the part of each
vice president.
17

18. NKU REALLOCATION APPROACH 2:
BALANCED BUDGET CUT TARGETS
WITH DIVISIONAL RESPONSIBILITY
FOR REALLOCATIONS
18

19. Balanced Budget Cut Targets with Divisional
Responsibility for Reallocations: Budget
Environment
 2009-10 Budget Planning Environment
 State Appropriation: 5% reduction.
 Tuition rate increases: 4% - 6%.
 Budget Pressures
 Increases in fixed costs.
 Retirement system contribution increases.
 Leadership
 Fatigue from the previous year’s process.
 Realistic targets rather than scenario planning.
 Committed to advancing strategic initiatives utilizing their
current resource base.
19

20. Balanced Budget Cut Targets with Divisional
Responsibility for Reallocations: Budget
Environment
 Central budget cut targets set to balance to non-
discretionary expenditures.
 Targets assumed no centrally funded investments.
 Each VP submitted proposed central budget cuts for their
area.
 VPs tasked with submitting a reallocation plan moving
funds within their area to advance strategic priorities.
 Information required similar to previous process.
20

21. Balanced Budget Cut Targets with Divisional
Reallocation for Investment: Results and
Conclusions
 Results:
 Very limited central investments.
 Very limited divisional reallocation to fund strategic initiatives.
 Conclusion:
 A mechanism is needed to encourage vice presidents to
reallocate to fund strategic initiatives or they must be funded
centrally through higher budget cut targets.
21

22. NKU REALLOCATION APPROACH 3:
UNBALANCED BUDGET WITH
BRIDGE FUNDING AND TARGETED
REDUCTIONS
22

23. Unbalanced Budget with Bridge Funding and
Targeted Reductions: Budget Environment
 2010-11 Budget Planning Environment
 State Appropriation – flat.
 Tuition rate increases – 4% - 6%.
 Budget Pressures
 Increases in fixed costs.
 Retirement system contribution increases.
 New building opening and pressure to fund merit increases.
 Leadership
 Desire to fund strategic initiatives to advance the institution.
 Wanted a different approach that targeted specific cuts without
consideration for which division the function was in.
 Set a target of $5 million for 2011-12.
 Used $1 million in bridge funding to balance the 2010-11
budget.
23

24. Unbalanced Budget with Bridge Funding for
Targeted Reductions: Step 1: Identity targets
 Gathered ideas submitted in previous years.
 Campus community
 PACES
 Gathered ideas from publications and articles.
 Met with each VP to gather ideas.
 Filtered list to a manageable number.
 Tracked each idea.
 Decided
 Decision needed, some additional analysis may be required
 Additional analysis required
 Defer
 No longer under consideration
24

25. Unbalanced Budget with Bridge Funding for
Targeted Reductions: Results and Conclusions
 Results:
 Exceeded goal of $5 million.
 Conclusion:
 Using bridge funds allowed for sufficient time to explore ideas
on the table.
 Having an unbalanced budget created a sense of urgency.
 Some decisions were made centrally that would have been
difficult for vice presidents to make on their own.
 Decisions were made solely based on the merit of the proposal
exclusive of division.
 We did not report how much was being cut by division.
 Final decisions: see central budget decisions at
http://ppb.nku.edu/budget/annualbgt/fiscalyearinfo/fiscalye
ar20112012.php.
25

26. Changes in Budget Process – Reallocation Planning
 Vice presidents prepare divisional reallocation plans
near the beginning of the budget process.
 Central funds are provided for university-approved fixed costs.
 Central funds are provided for “essential expenditures”.
 Protect the university from significant legal and financial
liability.
 Maintain the safety and security of our students, faculty,
and staff.
 Required to comply with new federal or state regulations.
 VPs take care of all other needs through reallocation plans.
 Central investments are provided if funds are available for
strategic priorities at the end of the budget process.
 New process promotes a change in mindset away from tell
me how much money I will get, and then I will cover the
26 rest of what I want to do.

27. COMMITTEE APPROACH:
PRESIDENTS ADVISORY
COMMITTEE ON EFFICIENCIES
AND SAVINGS (PACES)
27

28. Committee Approach: PACES
 Advisory Committee of 25 members consisting of
mostly mid-level administrators across campus
(Directors, AVPs, etc.)
 Met quarterly for ~ 2 years.
 Vetted all ideas submitted by the campus committee
and engaged in brainstorming activities to develop “big
ideas”.
 Formed working groups to explore specific topic areas.
 Employee Incentive Plan
 Capturing and Documenting Cost Savings & Efficiencies
 Communications Workgroup
 SAVES workgroup
28

29. Committee Approach: PACES Results and
Conclusions
 Results:
 Working groups made progress in their areas.
 Ideas considered low hanging fruit were addressed by the
group.
 No big ideas came out of the group.
 Conclusions:
 Composition of each group is critical.
 SAVES group consisted almost entirely of VP assistants.
 A process is needed for examining ideas beyond asking the
manager in charge of the impacted area to make a
recommendation.
 Lack of accountability will prevent success.
29

30. SECTION III: EXTERNAL ASSISTANCE
30

31. Rationale for External Assistance
 Lack of internal capacity to conduct analysis.
 Need for neutral third party.
 Desire for in-depth experience and knowledge of best
practices in areas targeted for analysis and
improvement.
31

32. Huron Consulting Group Engagement Overview
(1 of 2)
 NKU engaged Huron in 2010-11 to identify
opportunities to improve organizational effectiveness,
enhance service delivery, and increase operational
efficiency.
 The goal of the organizational effectiveness
assessment was to support NKU’s pursuit of four
strategic priorities.
 Developing talent in the region and across the Commonwealth.
 Increasing student engagement in learning.
 Ensuring academic quality.
 Engaging in effective regional stewardship.
32

33. Huron Consulting Group Engagement Overview
(2 of 2)
 The engagement focused on five work scope areas:
 Improving service to the NKU student.
 Maximizing the effectiveness of the procurement function.
 Advancing the overall information technology (IT) function.
 Optimizing critical administrative IT systems.
 Identifying additional opportunities to manage NKU in the
most efficient and effective manner.
33

34. Huron’s Guiding Methodology
 Huron utilized a common five-step guiding
methodology across all work scopes in order to
provide consistency and enable comparison of
recommendations and project outcomes:
Activity Description
1. Project  Ensure shared project vision/goals and develop project plan
Organization  Collect data
2. Situational  Conduct interviews
Analysis  Review data and develop analysis of current state
3. Gap Analysis and  Compare with desired future state and best practices
Alternatives  Determine organizational and operational gaps
4. Recommendations  Develop and prioritize recommendations
and Metrics  Identify/develop key performance metrics
5. Implementation  Assess implementation considerations
Planning  Develop implementation roadmap
34

35. Huron Approach: Elements of a Business System
 We believe that institutions maximize their
effectiveness when the following five elements of a
holistic business system are aligned:
 Organizational Structure
 People
 Performance Measurement
 Technology
 Business Process
 Utilizing this framework, Huron explored the context
of the situation for each, identified relevant gaps and
alternatives, and provided recommendations to better
align these elements within each functional area.
35

36. Assessment Process: Interview and Data Collection
 The project lasted for ~10 weeks and included
extensive interviews, data collection, and analysis.
 Interviews:
 During the course of the study, Huron met with over 190
NKU stakeholders representing a broad cross-section of
the institution, including: the president and various vice
presidents, academic deans, department chairs, and
representatives from 20+ divisions. Two student focus
groups were also conducted with ~45 participants.
 Data collection:
 Approximately 50 distinct data items were requested
across the work scopes, including: organizational charts,
detailed revenue and expenditure data, compensation /
fringe benefit data, administrative policies, process maps,
enrollment management data, data surveys, etc.
36

37. Summary of Primary Recommendations
 Several opportunities to improve operational efficiency
and address organizational gaps were identified across
the five work scopes.
 Huron identified over 130 total recommendations
which highlighted opportunities to improve:
 Institutional and inter-departmental communication.
 Customer service (to both students and staff.
 Metric/strategic measure utilization.
 Processes and duplicative efforts.
 System integration and data integrity.
37

38. Summary of Primary Recommendations:
Student Administrative Services
 Huron reviewed the enrollment management, student
services, and bursar operations functional areas in
order to identify process-driven opportunities that
could be improved to provide for a more streamlined
and pleasant student experience.
 Primary, high-priority recommendations included:
 Implement a one-stop-shop for student services to
encompass: Admissions, Registrar, Bursar, and Student
Financial Assistance.
 Streamline and automate selected processes within reviewed
functional areas for improved efficiency.
 Evaluate opportunities for improving financial aid
verifications.
38

39. Summary of Primary Recommendations:
Procurement and Strategic Sourcing
 The primary objective of the procurement review was
to identify ways to enhance the efficiency and
effectiveness of NKU’s procurement operations, as well
as to improve sourcing of goods and services.
 Primary, high-priority recommendations included:
 Develop and establish a procure-to-pay vision, strategy, and
methodology.
 Transition the organization to new roles and provide training
to close skill gaps.
 Execute wave 1 of identified strategic sourcing commodity
areas and prompt pay discount negotiations for ACH
payments.
39

40. Summary of Primary Recommendations:
IT – Strategic Resource Allocation
 NKU made significant investments in IT and wanted to
identify opportunities to maximize organizational
efficiency and performance. The objectives of this
review included evaluating the current IT investment
approach and identifying ways to evaluate investment
requests in the context of other campus needs.
 Primary, high-priority recommendations included:
 Create a data cleanup task force led by functional users to
identify and correct known issues with SAP.
 Develop an IT cost strategy to support University goals and
institutional expectations for IT.
 Expand classroom support staff to offset technology risks from
disrupting class sessions.
40

41. Summary of Primary Recommendations:
IT – Post ERP Optimization
 NKU made a significant investment in SAP with the
ultimate objective of improving service to students,
faculty, and staff by advancing overall organizational
efficiency and use of data to inform strategic decision
making. The focus of this work scope was to evaluate
how the system was currently used and identify
opportunities to maximize this investment.
 Primary, high-priority recommendations included:
 Commit additional resources to resolve SAP issues in 12
months.
 Initiate a project to catalog/correct all data errors.
 Mandate SAP training for user positions that require its use.
41

42. SECTION IV: RESULTS FROM
EXTERNAL ASSISTANCE
42

43. Approach to Implementation
 Hired a full-time consultant (in President’s Office) with
background in postsecondary education and health
care, business process improvement, training and
development, and conflict resolution to provide
support to the divisions.
 Created a responsibility matrix to track progress and
implementation.
 Asked VPs to provide bi-monthly updates; discussed
updates and priorities in Executive Team meetings.
 Assigned special projects to consultant, e.g., post-
award grants administration, policy audit.
43

44. Selected Accomplishments/Projects Underway
 Data Quality
 Policy Audit
 Cohesive Strategic and Financial Planning
 Student Administrative Services
 Procurement
44

45. Student Financial Aid
 Process:
 Team formed with IT and financial aid staff.
 Process mapped and inconsistencies or complicated paths
identified.
 Improved interface between financial aid system, SAP and
student portal.
 Added front line staff to assist with student interactions.
 Results:
 Sped up notification process and significantly reduced student
wait.
45

46. Northern Kentucky University
Student Success Center
46

47. University Center Square Footage
 1st Floor – 6,100 SF
 2nd Floor – 14,300 SF
47

48. Student Focus Groups
 43 students in Focus Groups
 35 intercept interviews
 Good mix of students
48

49. Student Focus Groups
Student Experience
 Career Development Center not well known around
campus.
 Frustration with One-Stop Call Center.
 Quality and availability of advisors.
 “IT is everywhere and nowhere at the same time.”
 Connection & access.
 Limited group study spaces.
 “The ones in the library are always being used.”
49

50. Student Focus Groups
Department / Component Synergies
 Bursar / Financial Aid / Registrar / All Card
 Central Advising / Career Development Center
 Interview sessions
 Professional development
 IT Space / Group Study Space
 Presentation
 Software access
 Hardware access
50

51. Student Focus Groups
Counter vs. Cubicle vs. Office?
 Counter
 General questions.
 Cubicle
 Comfortable talking about nearly all issues with professional
staff.
 Office
 Scheduled meeting.
51

52. Major Occupants
Components
 Central Advising Center
 Career Development
 One Stop Center
 Student Financial
Assistance
 Bursar Operations
 Registrar
 Call Center
 IT Engagement Space
52

53. Vision
 Advising and Career Development co-located.
 One Stop Center.
 Technology space scattered throughout.
 Open, welcoming, light – filled space.
 Office cubicles and conferring rooms.
53

54. ARCHITECTURAL RENDERINGS
54

55. ARCHITECTURAL RENDERINGS
55

56. ARCHITECTURAL RENDERINGS
56

57. ARCHITECTURAL RENDERINGS
57

58. PROCUREMENT
RECOMMENDATIONS
58

59. Procurement Recommendations
 Develop and establish procure-to-pay vision, strategy,
and methodology.
 Transition organization to new roles and provide
training to close skill gaps.
 Execute strategic sourcing wave 1 and prompt pay
discount negotiations for ACH payments.
59

60. Procurement Recommendations
 A reorganization to more closely align Procurement &
AP/Travel would allow us to enhance the strategic
planning process and procure-to-pay strategies and to
streamline operations in general.
 Will allow better communications with departments
and give us an opportunity to improve strategic
sourcing and payment options and comprehensive
training.
60

61. Procurement Recommendations
Campus Wide
 Office Related Products.
 Maintenance and Repair Supplies (MRO).
 Procurement Card Program.
61

62. Procurement Recommendations
Campus Wide – Office Products
 Communicate and market the new KEPC OfficeMax
contract to campus users and drive down maverick
spend with non-contract suppliers.
 “Off contract office supplies spend with Staples is over a third
of the spend with NKU’s contract vendor Cardinal Office
Supplies.”
 “NKU spent approximately $3,820 on 121 different SKUs of
black pens alone paying prices that range from the best value
option of $0.10 per pen to the most expensive $3.36 per pen.”
62

63. Plan
Campus Wide – Office Products
 Implemented automatic substitutions for similar
products to drive spend to less expensive items with
the same specifications.
 We also began automatically substituting
remanufactured toner for OEM supplies with similar
yield at a significant discount.
63

64. Progress
Campus Wide – Office Products
 Saved over $61K on office supplies.
 Received first partial year rebate for more than $25K.
 Redirected nearly $50K from off-contract spend to
spend with our contracted vendor to gain assurance of
contract pricing and increase the rebate.
64

65. WRAP-UP AND QUESTIONS
65