Higher Education

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Risk Advisory

Human Capital

Performance Optimization

Data Analytics Solution for Higher Education (DASH)

Public-Private Partnerships 

Identifying bottlenecks in business processes while maintaining good internal controls is an ongoing issue in every utility  What do internal controls have to do with efficiencies you ask? Internal controls are nothing more than business processes. The definition of internal controls, i.e. “effectively allocating resources and protecting against fraud” is the definition of business processes. In other words, how do we get things done effectively in our organization while protecting our assets? Identifying inefficient business processes Inefficient business processes can sap resources in your utility. However, identifying bottlenecks and inefficiencies does not always have a clear path. Your organization may have decades of embedded processes in place and a culture resistant to change. The staff members, who regularly implement these processes, may know there are more efficient ways to do certain processes and can often provide the details on what needs changing. The act of change may be another matter due to institutional thought processes or obstacles.  Identifying inefficient processes and changing them are two separately activities. This article focuses on identification of inefficient processes. A subsequent article will discuss implementing change to increase process efficiencies. Tools for changing business processes There are two main approaches to changing business processes – Detailing the processes through a narrative or business process mapping. Each approach can be effective and both follow the same systematic work approach: Interview process owners for the process under review Document the detailed steps in the process through narrative or process mapping Test the process from beginning to end to determine process owners do what they said they do in the interview Analyze the process for inefficiencies or improvements Make recommendations for change Train process owners the new process Perform follow-up testing to determine the process works as designed Train process owners and repeat, as necessary, until the new process operates as desired  Although often the method used is a personal preference, some consider the narrative approach to be more cumbersome. Here is an example: Case study – Analyzing the process for accumulating construction costs A utility has observed its cost accumulation process slows the recording of fixed assets for completed projects in its general ledger and financial reporting. In a utility, fixed assets are not convertible into customer revenues until they are recorded in the financial records as completed and in service. Two approaches can identify bottlenecks in this process. Approach A – Narrative  Analyst A likes to use the narrative approach to identify process inefficiencies. Analyst A interviews all process owners and develops a comprehensive multi-page narrative of the cost accumulation process. The narrative approach identifies all current process inefficiencies, and it is used to develop recommendations for efficiency improvements.   Due to the narrative’s level of detail, Analyst A must develop separate PowerPoint materials for presentations to process owners and other stakeholders on the current processes and how changes will lead to a more efficient process. There is also a steep learning curve for the participants as they must hear and process the words used to describe each area.  Approach B – Business process mapping  Analyst B prefers to use the business process mapping approach to identifying process inefficiencies. Analyst B interviews all process owners and develops a one-page business process map of the cost accumulation process as follows:  The process map identifies all current process inefficiencies and is used to develop recommendations for efficiency improvements. Analyst B uses this map for presentations to process owners and other stakeholders on the current processes. The discussion centers on how changes will lead to a more efficient process. The participants make real-time changes to the process map, as it is easy to move around the diagrams to determine how potential future changes in the process steps would impact the overall process.  While the sample case study favors the business process mapping approach, it supports the adage that a picture is worth a thousand words.  Documenting processes for future RPA application  Organizations are evaluating the use of robotic process automation (RPA) for application to financial and operational processes. RPA is dependent on detailed business process maps  — the “bots” that run RPA applications use those maps step by step to analyze and execute a particular business process. Therefore, although Analyst A in the case study example prefers the narrative approach, the movement towards RPA will dictate that process analysts need to know how to map processes. Making and using business process maps Process mapping tools used to detail business processes range from a yellow legal pad to readily available software tools and apps. Business process improvement specialists with utility experience can offer insight into business process mapping as well as lend an independent, objective voice to your project. Process mapping can also be used by your utility’s internal audit function or other employees tasked with analyzing a process and making it more efficient. For more information on this topic, or to learn how Baker Tilly power and utilities specialists can help, contact our team.

Business process mapping is an effective approach utilities can use to document and identify inefficient processes.

Energy

Power & Utilities

Digital Strategy

Designing operational efficiencies through process mapping

Common industry risks Leadership nearing retirement, load shifts from traditional generation to renewable energy sources and financial staff turnover. These are just a few of the top concerns for utilities that may be invading your sleep – and with good reason: 75 percent of utility leadership is close to 60 years old as are 45 percent of department heads — the next generation of leaders have not been identified. 10 percent of the utility’s load has been replaced by customer solar generation which is increasing by two percent per year Employee turnover in core finance functions ( i.e. accounts payable, payroll, customer service) is moving at a clip of 20 percent annually as employees leave for better paying jobs Although there are no magic solutions, there’s a proven methodology known as enterprise risk management (ERM) your utility can infuse into its business practices to evaluate risks and develop mitigation plans.  Enterprise risk management approach A continuous process, ERM identifies, mitigates and monitors potential future events that create uncertainty, in a manner that reduces potential loss and increases potential gain. ERM helps a utility proactively prioritize limited resources, make decisions, protect assets and take advantage of new opportunities to increase the organization’s overall value. The simple approach to ERM should consist of these steps: Discuss potential financial and operational risks with management, department heads, line workers and board members Use this discussion to make a current state assessment of the magnitude and likelihood key risks will occur and the utility’s readiness to address those risks Introduce risk management tools to this group to develop a more robust approach to developing mitigation plans to address key risks and enhancing risk monitoring processes and reporting tools Develop ongoing employee roles and a formal process to regularly report key risks and mitigation plans to management and oversight bodies Incorporate risk assessment into ongoing business process and strategy Transforming the organization Simple, right? If it were simple, every utility would have a program in place. Best practice organizations are good at developing processes to address the harder aspects of doing business and taking a long-term view of risk and risk mitigation strategies. So, if you’re not practicing ERM, how do you transform your utility into one where this is a part of process and strategy? Step 1 – Obtain management and board oversight buy-in Building awareness through education of management and board oversight bodies is key to a successful launch and implementation. You will need their buy-in to obtain funding, staff time and ongoing support for the ERM program’s sustainability.  Step 2 – Obtain department head buy-in While upper management and board buy-in is important, department head buy-in is the most crucial. This level is where the work will get done and where the ERM program could be scuttled due to inaction or withholding of staff time for participation in discussions regarding organizational risk. Some key activities at this stage should include: Develop a core team. Try to develop “true believers,” if not those willing to try the program for benefits it will provide to their departments. Determine the team’s capabilities. Is more education needed or more resources? Give the program the resources it needs or the effort will be futile. Align initial expectations. Agree upon what will be accomplished by performing the risk assessment. Obtain a commitment. from the core-team of the time needed to perform their program roles.    Step 3 – Introduce ERM at the business segment level Another crucial step to ERM program success is to debut the program at the business segment level which provides a foundation for: Engagement. This allows the program to be involved in specific risk issues and showcases the viability of the methodology. Value. Starting off “small,” such as at the business segment level, demonstrates value from a disciplined risk management process. Operationalize. Participants can learn the ERM methodology on their home turf where they best understand the issues.  Step 4 – Introduce ERM at the organization enterprise level Once success has been demonstrated through the ERM program at the business segment level — or at least the bugs have been worked out, the next step and ultimate goal is to introduce ERM at the company-wide or enterprise level. This developmental phase focuses on: Collaboration. ERM is enhanced through collaboration across other departments to consider cross-department teams and interdependencies. Coordination. Enhancing ERM coordination with other areas within the departments that focus on specific exposure areas. Integration. ERM is fully integrated with business planning, performance management, quality and other key management processes. Step 5 – Report and monitor Don’t hide your ERM success stories – let their light shine! Success stories will lead to support throughout the utility and from top management and oversight bodies. Also, as risk is not static, regular monitoring of risks facing the utility, reporting on those risks and maintaining contact with department heads to develop risk mitigation plans is important. Your utility’s ERM function must never rest although you can banish utility risks from your sweet dreams. For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

Enterprise risk management is the key to proactively managing risks throughout your utility operations such as leadership retirements, staff turnover and energy generation shifts.

Enterprise Risk Management

Internal Audit

Board & Audit Committee Governance

Managing utility risks through ERM 

With an expanding list of priorities and expectations, fewer resources and an increased demand for immediate response and transparency, organizations today seek new ways to optimize their operational footprint now, and as they plan for tomorrow. The challenge lies in striking a balance between the organization you want to create, and the funds available to support the organization’s vision.

Compliance requirements, increased competition for talent and resources, and operational demands can quickly derail that vision.

It starts with an integrated approach across the enterprise that incorporates strategy alignment and fiscal position assessment.  By clearly understanding strategic drivers and aligning talent and funding to them, we help clients to gain clarity on priorities and required outcomes – with the ultimate goal of strategy achievement within an enhanced fiscal position.  

We equip our clients with the strategic insights, workforce alignment and operational strategies to optimize performance by collaboration in:

Resource optimization reviews – ensure a return for every dollar invested in programs, services and administrative functions

Benchmarking studies – better understand best practices and common pitfalls through custom studies

Effective use of technology – in support of operational decision-making, efficient processes and responsive service delivery

Financial modeling, ratios and decision support – leverage our functional modeling experience combined with our industry specializations to make better strategic, financial and operational decisions using  quantitative analysis based on market insights that help contextualize critical data

Outsourced Accounting Services – achieve support executing shared services models or turn to Baker Tilly to offer key infrastructure support staffing related to accounting, technology management and internal audit.

District Administrator for a large school district

At a time when meeting fiscal obligations is challenging, Baker Tilly assisted us by learning about us, listening and asking questions and then offering us several suggestions.

Higher education institutions face increasing demands to change their business models. Top of mind for government officials, administrators, parents, and students is the need to reduce the cost of a degree and the amount of student debt. At the same time, students are coming to college with higher expectations and greater needs.

Transforming for affordability and student success

Read about the lifecycle of benchmarking and how it can prove to be a high-value tool for your organization.

Benchmarking for results: how to design a program that works

Chief Information Officer of a large university system

I am very thankful for Baker Tilly's assistance with this transformation project. We'd have never gotten close to what you've done, especially in such a short time. 

Baker Tilly's research findings help provide insight for patient engagement, process improvement, and community partnerships to advance concurrent population health strategies.

Using your community health needs assessment to identify service delivery gaps and  process improvements

Baker Tilly’s performance optimization professionals help clients ensure that resources are aligned with strategic priorities and positioned for cost effectiveness.

Baker Tilly’s performance optimization professionals help clients make the most of their data financial and capital resources across a variety of complex operational environments.

Balance competing priorities. Effectively align limited resources. Advance student and institutional success. 

Higher education leaders are challenging the status quo, transforming their business models and addressing strategic and tactical concerns with the help of Baker Tilly.

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Christine Smith is a managing director in Baker Tilly’s higher education practice.

Ensure resources support student success and are strategically expended toward the highest and best value in program, service and support delivery.

Baker Tilly’s resource optimization professionals help clients optimize their resources strategically in highly competitive and heavily scrutinized environments. 

Leverage industry-specialized internal audit for organizational success.

Baker Tilly’s internal audit professionals use a forward-looking, industry-fluent approach to help clients address emerging risks, streamline business processes and strengthen internal controls.

Proactively protect and address your cybersecurity and information technology (IT) risks.

We provide cybersecurity services to maximize the confidentiality, integrity and availability of your critical information assets.

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Baker Tilly Municipal Advisors is one of the nation's largest independent municipal advisory practices and provides objective analysis, planning and creative solutions for many types of projects.

Performance Optimization

Designing operational efficiencies through process mapping

Managing utility risks through ERM

Higher Education

Resource Optimization

Internal Audit

Cybersecurity

Municipal Advisory

Christine M. Smith

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Featured insights

Transforming for affordability and student success

Benchmarking for results: how to design a program that works

Featured case studies

Using your community health needs assessment to identify service delivery gaps and process improvements