Andrew Harker, Ed. D Director of Budget Management, Stanford University

1. Hyperion Higher Ed User Group—A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance Andrew Harker, Ed. D Director of Budget Management, Stanford University

2. Higher Ed Financial Management • What are the challenges we are facing? • An increasing desire to have continuous, comprehensive planning and reporting • The challenges/struggles of making (external) GAAP-based financial reporting mesh with (internal) fund accounting-based reporting • The systems we have/are putting in are not all that conducive to this type of reporting (for fund accounting, for higher education) • Board/Senior management expectations sometimes don’t align with our “reality” • Yahoo! and Cisco close their books and report in days, every month • Dashboarding/KPI is “easy” and “helpful” in Corporate America • Reports they are used to are “simple”: all money is green • Reports should be straightforward and easy to comprehend A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

3. 3 Broad Components • Actual Revenues, Transfers, Expenditures, Assets, & Liabilities • Coming from the General Ledger (legacy, Oracle, SAP, Banner, etc.) • Detailed Budget • Coming from Hyperion Planning, Hyperion Pillar, Excel, etc. • Most often only for Income Statement items (Revenue & Expense) • Long-Range Forecasting • Multiple year, “what-if scenarios”, aggregated data • Done most often in Excel • Usually not integrated into other systems • If multiple units are doing modeling, other units tend to be in the dark A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

4. What have we been working with at Stanford? • Hodge-podge of financial information systems • Controller’s Office responsible for preparing the external GAAP-basis financial statements using a third-party consolidation tool • University Budget Office coordinates preparation of detailed fund accounting basis budgets in Hyperion • Long-Range modeling done in Excel • By multiple units (Central, Med School, Business School) • Totally disaggregated and disconnected • Variance Analysis and Reporting done as a separate process, in separate systems • If tied together at all, nominally tied to detailed budgets only A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

5. University Financial Structure Stanford Consolidated Financials University “Non-formula Units” (Provost GF Allocations) Hospitals LLCs Auxiliary Enterprises Continuing Studies/ Summer Session Graduate School of Business School of Medicine A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

6. Consolidated Budget by Fund Type $ in millions A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

7. Statement of Activities to Consolidated Budget Crosswalk (in millions of dollars) A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

8. Bridging the GAAP Financial data has to be manipulated (“moved”), aggregated, or disaggregated for different purposes • Student Financial Aid—moves “geographically” from expenditure to reduction from revenue (but only for tuition grants, not other types of Aid) • Capital Asset Acquisition is a use of funds, but the Depreciation Charge is what hits the external Income Statement • Fringe Benefit Burden expenditure vs. external Benefits pool payments • Internal Revenue/Expense and interfund transfers vs. the transfer that show in GAAP reporting • Debt Service • Internal allocation of principal amortization as expenditure • Retirement of debt principal as Balance Sheet transaction • GAAP Fund Types vs. Fund Accounting Fund Types A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

9. What’s so funny about Peace, Love, & Fund Accounting? * FASB Reporting (GAAP) PR TR UR End Princ Gifts & End Inc G&C UR Fund Accounting * With apologies to Elvis Costello and the Attractions A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

10. The Frustration We have a disaggregated, discontinuous, disorganized overall process. • Different units maintain their own models separately • No common thread; no continuous feedback or updating • Manual reconciliations between different views • How many times do we reinvent the wheel? • What were we thinking? (What were we thinking!) • With our hands full with Income Statement modeling, who has time for Balance Sheet modeling? • The ERP systems we have do not facilitate this (no matter what the sales team says) A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

11. The Disconnect Unrestricted Funds Modeling Endowment Principal Growth Modeling Tuition/Fees & Enrollment Forecasting Detailed Budgets entered by Units Sponsored Activity Forecasting Financial “Actuals” Consolidations Capital Planning/Budgeting Debt Service Planning School submodels A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

12. What’s so funny about Peace, Love, & Fund Accounting? * FASB Reporting (GAAP) PR TR UR How do you plan, model, and report on both views consistently, coherently, and meaningfully? And do it without building your own system? End Princ Gifts & End Inc G&C UR Fund Accounting * With apologies to Elvis Costello and the Attractions A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

13. What is the vision? A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

14. 3 Broad Components • Actual Revenues, Transfers, Expenditures, Assets, & Liabilities • Coming from the General Ledger (legacy, Oracle, SAP, Banner, etc.) • Detailed Budget • Coming from Hyperion Planning, Hyperion Pillar, Excel, etc. • Most often only for Income Statement items (Revenue & Expense) • Long-Range Forecasting • Multiple year, “what-if scenarios”, aggregated data • Done most often in Excel • Usually not integrated into other systems • If multiple units are doing modeling, other units tend to be in the dark Consolidation: Hyperion Financial Management Budgeting: Hyperion Planning Modeling: Hyperion Strategic Finance A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

15. Using Hyperion Tools to Integrate Hyperion Planning Detailed Budgeting Different Levels of Data Detail as Relevant to the Different Needs Financial Reporting Strategic Modeling Distributed and Customizable Modeling; Real-time Access Hyperion Strategic Finance Hyperion Financial Management Automated Data Integration Between the Systems A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

16. A Continuous, Integrated Process As You Move Through the Fiscal Year, Your Comprehensive Model Gets Updated FALL WINTER Consolidated Budget External Financial Statements Each Office’s Model Gets Data From and Pushes Data To the Other Models SPRING SUMMER The “Crosswalk” A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

17. HSF in Higher Education • Scenario Comparison • Early Forecast, Late Forecast, Budget, Projection, Actuals • “What-If” Modeling • Side-by-side comparisons • Sensitivity analysis • Models within models • Endowment Principal growth modelFeeds Endowment Income Projection • Capital Asset growth modelFeeds Debt Service/Depreciation • Net Changes in AssetsFeed back to Balance Sheet • Using the same “framework”, each school/unit can set up their own models, drivers, elements A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

18. Hyperion Strategic Finance Create financial models for each school or division in Hyperion Strategic Finance and consolidate them to a total for the university. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

19. Hyperion Strategic Finance Modules can be created within each financial model to forecast financial statement items in detail. The user can choose from a menu of standard forecasting methods or create customized drivers. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

20. Hyperion Strategic Finance Reports can be created at varying levels of detail in each model. Reports can pull Actuals, Budgets, and Different Forecast data together for side-by-side comparison. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

21. Hyperion Strategic Finance Each double-click unveils an additional layer of detail. Report across multiple schools or divisions and analyze individual drivers for each. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

22. Hyperion Strategic Finance Balance Sheet items, such as Endowments, can be forecast as well. HSF will automatically generate a Cash Flow Statement based on the Income Statement and Balance Sheet forecasts. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

23. Hyperion Strategic Finance Model components flow back and forth between the Balance Sheet and Income Statement. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

24. Hyperion Strategic Finance The Scenario Manager provides the flexibility to store multiple sets of assumptions for analysis. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

25. Hyperion Strategic Finance Report the results or the financial impact of each scenario, or any combination of scenarios. A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

26. What’s In It For Us? • Higher Education strategic planning needs and demands are becoming more complex • But the tools we relied on previously don’t always adapt well • FASB and GASB reporting requirements are very different from the way institutions really are managed • “Buy vs. Build” has often times turned into “Buy and Build” • ERP system implementations like Oracle and SAP have to be customized up the wazoo, making day-to-day maintenance and upgrades a royal pain • This model involves “configuration” only for higher education, rather than code rewriting or front-end plug-ins • Hyperion’s focus is on Business Intelligence analysis, modeling, and reporting A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance

27. Questions, Discussion, Jokes A Comprehensive Planning and Reporting Model for Higher Education: Hyperion Strategic Finance