Some simple numbers for IT directors from an FD

First session this morning was Derek Watson, Finance Director at St Andrews, but with a much more exciting title of Quaestor and Factor. This session's theme was Knowing your Numbers, and Derek introduced us to one or two interesting ones.

A quick look back at history shows that in 2006 we had industrial action around pay and pensions and the dawn of new funding era.

In 2008 costs and inflation were going up. Lehman brothers collapsed. The world and the economic situation were fundamentally changed. All because we didn't manage risk.
Risk not just a word on a risk register. It's real, and if it goes wrong, it costs us. First interesting number was 2.8 trillion. Thats how many dollars the world economy lost during crash.

Now in 2011oil prices are going up, there's industrial action on pay and pensions, and we're moving into an era of austerity.

2012
Impact of fees kicks in. Are all of us going to survive? Are Universities going to be able to afford to charge 9k. Will students becoming customers cause instability between universities, What about subject mix, how we going to cross subsidy? What about forced mergers or closures. No funding to fund them

2015
Vast majority of HE will be funded by students. What will the role of funding council be? Just monitoring quality, and do we really want that? What will sector and shape look like. How are going we going to ensure that we have the disciplines we need to grow economically?

So, some simple numbers to illustrate some points:

1
We talk of a single sector, implying we're all the same. We're not. We need to understand the individual financial characteristics of our own institution and the killer risks

60
The percentage of our expenditure on pay. Need to ensure that we are productive in our use of people and get value for money. Might be our biggest cost but also biggest asset. Look at total cost of services, and cost staff time.
Need to use knowledge we have to drive the efficiencies that will fund the sector. Need to make substantial bottom up savings.

4
The number of years a business case needs to show cash recovered in.

10
The percentage of our spend on buildings, not including power. Space needs to be productive or it is a silent cost. Does everyone need an office?

25
The percentage of expenditure at St Andrews spent on IT including power. Have to reduce power. Reduce no of servers, switch off old ones, reduce cooling. Understand what additional burden IT is placing on the institution. IT is critical, but its also a cost.

15
Cost growth at the moment, including many things especially power and pay. electricity. We need to understand the cost drivers that we're facing, understand their impact and plan our business accordingly.

1
Sector has generated a surplus of about 1% per annum. Not enough. Have to generate much more. We all have a huge problem with things like backlog maintenance. The surplus needs to be between 5 and 7. Capital funding has gone and we Need to generate it. So, to be sustainable, we need to make much higher surpluses.

An excellent session on the perspectives from a Finance Director. He did get thrown a potentially difficult question about how much money had been spent on finance systems, but countered it well by pointing out that shiny new systems can be good, but changing people and processes is what is important and will drive efficiency.


- Posted using BlogPress from my iPad