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Business Officer Magazine

Revamping Business Processes

Cutting red tape is a key component of the University of Missouri–Kansas City’s process of achieving financial excellence.

By Nancy L. Zielke

Today, our response to a drop in permanent state funding of $13.3 million and $16.1 million in one-time funding has been to reevaluate all budget processes and decisions and to allocate resources according to mission-driven programs and university goals and objectives. This has entailed nurturing a collaborative decision-making environment in which all units join together to determine how to fund priorities and commitments. For instance, at the outset of UMKC’s reengineering efforts, we identified nearly $14.6 million in off-budget items, including promises to fund commencements and pay for new summer student orientation programs, which had never been funded on an annual basis. Department deans made decisions about how to fund these and other previously off-budget items. Units must now submit program-based budget requests that show alignment with university mission and goals. Programs are evaluated on efficiency, and rewards are built in for performance.

For its part, UMKC’s administration and finance division is evolving into an essential campuswide partner by providing exemplary institutional support services, systems, and infrastructure. Our new framework for financial excellence is customer driven and results oriented and is based on stakeholder input and open decision making (see sidebar, “Creating a Roadmap for Redesign”). Core business processes are being scrutinized and revamped one at a time to achieve superior fiscal management and to renew customer confidence. Two cases demonstrate the impact of our efforts: accounts payable and short-term student loans.

Assessing Accounts Payable

This past year, with support from campus leadership, the university formed a 14-member, cross-divisional team consisting of employees from administration and finance, student affairs, academic affairs, and university advancement to focus on functional areas of the accounts payable process. Processes included non-purchase-order vouchers, requisitions, procurement cards, travel reimbursements, and petty cash reimbursement. The team proposed 20 recommendations for system improvement related to training updates, technology advances, and policy changes. The team also concluded that the interrelatedness of these functions warranted a procurement decision flowchart to capture the process of executing purchasing decisions (see chart).

In addition, our assessment of current processes included focus-group sessions and surveys of various stakeholder groups as well as research of best practices in accounts payable functions at other institutions. Our analysis also focused on value-added versus non-value-added activities as we looked to streamline transactions by eliminating duplication.

Click to enlarge the Procurement Decision Flowchart

Click to enlarge

One example of a recommendation that has since been implemented is the streamlining of our vendor creation and payment processes. Through customer feedback and business process analysis, we learned that every time a department wanted to pay a new vendor, it had to manually submit a form to accounting to create a new vendor account. The process could take up to three days, thus slowing the department’s ability to process payments. Simply by reviewing how we could better exploit the functionality of our existing business applications system, we determined how to automate the process, streamlining the creation of new accounts by reducing the wait time to next-day or even same-day turnaround.

In another example, focus group feedback made it clear that our processing of requisitions was far too cumbersome. Because a significant number of campus requisitions—approximately 1,100 out of 1,500 total—related to annual maintenance agreements, the project team recommended reviewing how to reduce the requisition volume by consolidating maintenance agreements wherever possible. For instance, instead of each department issuing its own copier service agreement, the entire campus could leverage a campuswide agreement. Since we calculated that our average cost per requisition transaction was $75, consolidating annual maintenance agreements could save the university about $42,000 per year. And this figure did not factor in the likely savings from vendors for providing them increased business volume.

In a third example, review of our petty cash process centered on determining the actual cost to provide this service. Our initial review revealed an extremely convoluted 12-step process involving six separate departments for receiving reimbursement. While our flowchart analysis showed how we could reduce the process to four steps involving only two departments, the larger question that surfaced was whether we even needed a traditional petty cash system. Because of improved technology for tracking and processing cash-flow transactions, the project team recommended eliminating our petty cash system altogether, which we are now in the process of doing. Our calculations show that elimination of steps from our previous approach will save the university more than $21,000 annually.

In total, with changes implemented in these and other accounts payable transactions, we estimate that more than $150,000 in future savings will result from eliminating steps that are nonessential and non-value-added for the customer.

Creating a Roadmap for Redesign

At the outset of launching into a critical assessment of University of Missouri–Kansas City (UMKC) business processes, a team of campus stakeholders created a roadmap for our reengineering efforts. Key components of our approach include using industry-proven analytical tools for assessing how we provide services and incorporating basics of gap analysis by investigating how work is done—the actual costs and steps employed to complete processes.

For instance, the UMKC model follows many elements of the NACUBO guide for Business Process Redesign for Higher Education (visit for ordering information). These include:

Project design—identifying project scope and expectations and developing an architecture for change.

Baseline creation—focusing on the role of people, process, and technology in activities essential to good customer service; identifying and quantifying the time costs associated with non-value-added activities; identifying opportunities to reduce complex process steps by reducing activities; and estimating savings from cutting activities.

Industry best practices—reviewing best practices from similar service providers and organizations, including new technologies that may contribute to process improvement.

Reengineering—creating a vision for the future based on the baseline review and common industry benchmarks for efficiencies gained, reductions in error rates, increases or decreases in staff resource requirements, cost of added services and technology, and training costs.

Technology—assessing current and future technology and how new tools could be deployed to improve processes.

Implementation—outlining project milestones and determining who is accountable for tasks as well as monitoring performance measures and customer satisfaction.

UMKC’s strategy also incorporates many of the recommended business practices of the National Advisory Council on State and Local Budgeting. Two key elements are communication and customer input. As such, attributes of our new model are open (transparent and allowing for input), value driven (linking resource allocation to vision), documented (backed by established policies and procedures), accountable (holding individual units responsible), responsive (adaptable), and strategic (incorporating a multiyear plan).

Our project plan and methodology, while initially overwhelming, became manageable once we divided the process into segments for review and discussion. Each project uses internal sponsors and team leaders to ensure ownership and senior-level commitment to the project. Likewise, each project leader maintains a project calendar and schedule, tracks and reports progress to the sponsors, resolves problems, empowers team members, interprets policy issues raised by team members, and creates an overall communication plan to ensure that customers are aware of process changes and rationale.

Sizing Up Short-Term Student Loans

Each semester, short-term or “bridge financing” loans are awarded to students to give them access to funds before their federal loan payments come through. Over the years, with UMKC’s cashier’s office and financial aid office reporting to two different divisions, the short-term loan process had become cumbersome. In fact, students were caught in a paper shuffle among four different offices across campus.

Our project goal was to streamline the transaction, so that students could receive funds in the most expedient manner, and to make the process of applying for and receiving funds transparent. Again, by assessing how we could better employ our current technology, we were able to eliminate involvement by one whole department as a result of providing electronic dissemination versus physical printing and distribution of the promissory note. An additional benefit to the student is that the short-term loan is now placed directly on the student’s bill for repayment, rather than coming as a separate payment.

In reality, these short-term student loans represent a very small portion of loan-related transactions. Our estimates conclude that the elimination of steps associated with these transactions will save us only about $6,000 per year. However, what isn’t as easily calculated in terms of cost benefit is how the streamlined process is contributing to improved customer satisfaction. Likewise, as a result of scrutinizing our emergency loans to see how we could streamline processes, we are now launching a second phase of our student loan project evaluating how all types of student loans (Perkins, Health Professional, Institutional, etc.) are administered. On this larger scale, the savings in student legwork, keystrokes, and paper shuffle with the elimination of even a single step should reap significant savings over time.

In addition to reviewing best practices at other higher education institutions to ensure that our loan administration process is friendly and transparent for students, we will also assess aspects of our loan collection process. Initial research of best practices indicates increased use of service providers by other institutions. In addition to reviewing possible efficiencies that an outsourcing arrangement might provide, we will analyze whether outsourcing our collection would align with UMKC’s core mission of service to students.

Seeking Continuous Improvement

UMKC is now deploying its reengineering methodology to other internal business applications. Our accounts payable project is in a phased implementation with new policies and procedures to augment the new recommended management strategies. Several of the recommendations have resulted in changes in policy and expanded technology needs that are now under review by senior administration. Deployment plans call for the majority of the internal system improvements to be in place by this fall.

While it may seem obvious, a central focus on fulfilling customer expectations requires attention to what customers say they want, whether those customers are students, faculty, or staff. For a second year, the administration and finance division is implementing a campuswide customer service survey probing how well we provide key internal support functions.

One direct outcome of our initial survey was critical assessment and revamping of our travel reimbursement practices. Customers expressed deep dissatisfaction with having to manually complete two separate, though similar, reimbursement forms. Here was a prime example of where duplication of work had crept in at some point and had never been seriously questioned. As a result of customer feedback, we streamlined the process so that those with a single-purpose travel reimbursement request—such as for a meal or mileage—can fill out one simple form and receive payment through our vendor payment process. More complex travel itineraries with itemized expenses require a more detailed form.

Our hope is that with our follow-up survey—as well as through ongoing forums and focus groups—we will uncover additional recommendations for improving internal processes. Our goal is to develop a three-year plan with established benchmarks for superior service and efficiency. We are extending our review to accounts receivable, revenue management and fee collection, and tuition billing practices.

Open communication with campus stakeholders is now routine for our administration and finance division and occurs throughout the university in the form of regular forums, internal newsletter updates, and online access to budgets and budgeting information. A 19-member, cross-divisional budget advisory committee provides advice and helps spread the word about new initiatives and processes.

Evaluating and Employing Technology

In each case, our best practices review has focused on new technologies that may contribute to process improvement and enhancements. While one of the key assumptions emerging from UMKC’s process review is that our current financial application service provider will remain the host provider of all business applications, our review has likewise ascertained how new technology tools might be deployed to improve processes as continued system conversion occurs.

For instance, one recommendation resulting from conversations with other institutions is to look at implementing document imaging to improve records retention and expedite payment transactions by electronically attaching documents directly to files. We are also currently reviewing travel management software as a result of excessive time spent reconciling travel reimbursements for faculty and staff. In addition to reviewing how such software might be integrated with current business application software, we are considering outside providers to do this reconciliation.

Thanks to other reengineering successes, our administration management council has recommended that we consider moving to a one-card system for individuals who have purchasing responsibilities and who travel on behalf of the university. Currently these individuals must conduct business transactions using two separate cards. Based on our wage and salary calculations, moving to a one-card system for travel reimbursements could also cut processing expenses by 50 percent as a result of automation (see travel voucher chart).

Taking Stock of Successes

Rethinking the way an organization provides services to its customers is not easy. We began our efforts facing some serious roadblocks: resistance from middle management, complacency among units, and failure of previous productivity efforts. The most difficult part of our efforts has been honing options for new processes. We continually have to ask, “Does this design make sense, and are we meeting the project objectives and customer needs?”

Throughout this endeavor, our divisional strategy has been to build five-star excellence into our business processes by making them user friendly, value added, efficient, timely, and cost effective. We are doing so by identifying and quantifying the time and costs associated with non-value-added activities, identifying opportunities to simplify complex process steps by reducing activities, and estimating savings from eliminating steps. We believe that the key to the success of UMKC’s ongoing initiatives will be a continued focus on customer expectations and results-oriented goals.

While change management is an evolving process that requires continuous improvement, we can take stock in our accomplishments to this point. Keys to our success have included:

  • using cross-functional teams to assess how we should provide services to our customers;
  • identifying values to live by, which for UMKC includes open, honest communication with stakeholders;
  • soliciting senior leadership support to increase the viability of cross-functional, customer-focused initiatives;
  • establishing strong project leadership to ensure results and follow-through; and
  • providing numerous opportunities and avenues for stakeholder input.

Prior to this collaborative initiative, evaluation of program services and input from campus stakeholders were absent from management review and resource allocation decisions. UMKC’s Budgeting for Excellence initiative to promote financial excellence entails sound budgeting decision making and links resource allocations to unit performance measurements. In addition to gaining internal efficiencies, this type of accountability for resource management during tight fiscal times can be a proactive approach to nurturing public trust as well.

Travel Voucher Costs

Defining the cost benefit of an ongoing management process is difficult because of the many indirect benefits and desired outcomes from such a review. In our case, among the side benefits resulting from a reengineering of core business processes are the partnerships that are taking shape among various campus constituencies. In the case of student loans, the employees who work for two vice chancellors but who are located in adjacent spaces have begun to openly communicate about new possibilities related to short-term loans. Within the administration and finance division, employees are taking it upon themselves to review internal processes and submit recommendations for improved efficiencies. As a result of concerted efforts by administration to change the culture of the university to one that is candid and results oriented, students are likewise taking note of an environment of increased trust and ownership. A year ago, students voted to impose a fee on themselves to renovate the campus center.

Across-the-board reform inspires trust, cooperation, and collaboration. These outcomes are priceless to any organization.

Author Bio Nancy L. Zielke is assistant vice chancellor for fiscal operations at the University of Missouri–Kansas City.