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Digital Transformation for Educational Institutions
Education’s value to society is priceless, yet issues with funding and infrastructure mean educational institutions often lag behind when it comes to adopting new technology. While some private schools may have sufficient resources to accommodate technology, many public schools have extremely limited funding.
To support something like a digital transformation (DT) in education, schools and other educational institutions need to refocus their attention on adopting new technology and intertwining it with student success.
What Is Digital Transformation in Education?
Digital transformation refers to a total technological restructuring of an institution. Digital transformation in the education sector plays out in K-12 schools, colleges and universities, trade schools and even nonprofits that assist with educational initiatives, such as after-school tutoring services and enrichment activities. While all these different types of organizations can implement DTs in different ways, their goals will be similar.
The goal of all initiatives in the education sector is to promote student success. To implement a digital transformation, the leadership and staff would need to be sure that the changes would have a positive impact on student outcomes and achievement. Fortunately, research on technology in the classroom supports the drive for DT.
Many educators believe schools should dedicate more resources to technology innovations and that technology should form a core part of learning. However, budgetary restrictions in educational institutions often mean divisions between available resources and what students truly need to succeed.
Technology in the education sector extends outside the classroom. Administrative practices and operations will also change with the adoption of new technology, making record-keeping, account management and budgeting easier and more efficient.
Technology adoption is key for student success, so a digital transformation will help your school or organization meet student needs. By introducing innovative technology into classrooms and integrating it into school operations, you can increase efficiency and accuracy and improve student outcomes. While digital transformations require significant investments in time and money, your organization will certainly see a return in student outcomes and staff performance.
Transform Your Financial Management With MIP®
Part of a school’s or educational nonprofit’s digital transformation should include a transformation of the accounting system. With finite resources and an ever-changing pool of funding, tracking and managing finances are especially important. To provide students with the best education, schools need to handle their finances with precision and care. Using accounting software as part of a larger DT can ensure accuracy and efficiency throughout the accounting process.
MIP® provides fund accounting services that are in line with the most up-to-date digital transformation trends. With accounting software, schools can focus their attention on the essential aspects of administration and leave tedious and time-consuming tasks to the instant calculations of a computer. Furthermore, with budgeting modules that allow organizations to assess current and future budgeting scenarios, your education organization can prepare for a wide range of funding options.
As a system fully customized to the needs of nonprofits and schools, MIP Fund Accounting® software is fully prepared to meet your organization’s challenges. Choose between on-premise or cloud-based software to get the optimum operating system for your school’s unique needs.
Chapter 1: Important Accounting Features for the Education Industry
Accounting is an essential part of any organization’s operations. Though they don’t make a profit and often use volunteer support, even charities need accounting data. This is especially true for the education industry, which requires important accounting features and functions to meet special needs and goals. However, business accounting doesn’t always translate over well, so schools and universities need accounting software built for them.
The Many Functions of Accounting
Every organization should use accounting to track, report, predict and execute financial transactions. Organizations of all kinds use accounting to ensure payments in and out of the organization and to prepare financial statements for employees, investors and leaders. The following are some of the many functions of accounting used in the education industry:
- Costs and revenue: Accounting tracks spending and income. Essentially, accounting monitors the money in and money out and the financial situation of the entire institution. The function is to keep an up-to-date record of an organization’s funds.
- Financial reporting: These reports generate information about the financial situation of an organization. For public organizations, this is especially important as many shareholders want to know about the status of the business they’ve invested in. For nonprofits, reports let donors know where their money is going. Generally, reports come from are digital systems that track accounts receivable and accounts payable.
- Accounts receivable: The meaning of accounts receivable is a record of all the money an organization is owed in return for their product or services. Tracking accounts receivable is essential as many organizations don’t operate by requiring payment in full up-front. Most of the time, an organization provides services, and the client receives a bill they need to pay back within an agreed-upon amount of time.
- Accounts payable: On the opposite side of accounts receivable, accounts payable tracks what money the organization owes to sources like distributors, manufacturers, creditors and other vendors. This function ensures that businesses pay their debts and only pay what they owe. Accounts payable helps organizations set due dates for what they’re owed and distribute funds as they come in.
- Financial analysis: Financial analysis takes the information generated in financial reporting and analyzes it to understand how well the organization is doing. With this analysis, accountants can see whether the money coming in is more than what’s going out or vice versa.
- Payroll: Accounting manages the amount of money owed to employees via their paychecks and tracks employee benefits if they are included in an employee’s compensation. Payroll also includes any wage deductions and required tax deductions. Most employees who use W4s can decide how much to take out of their paychecks, and the accounting department needs to track that information for each employee.
- Taxes and compliance: Most organizations pay taxes, and if they don’t, they often still have to register with the Internal Revenue Service (IRS) and maintain their tax exemption status and prepare for audits. Having accurate accounting makes recording information for taxes much easier. In addition to national regulations, organizations often have to abide by local tax laws too. Some organizations choose their headquarters in a state specifically because the tax laws there are more favorable for them than in other locations.
- Fraud: Tracking accounting information intensely is a way to monitor for internal and external fraud. Often, accountants go over financial information another employee is in charge of to serve as a final check and ensure no money is being mismanaged or disappearing.
- Budgeting: It does no good to track financials and then realize at the end of the month that you’ve spent more than you’ve made. Accounting also considers the budgeting requirements for an institution and can track and allocate money accordingly. Budgeting takes into account former expenditures as well as projections for future costs and revenue.
Features of Accounting Software
Accounting software is a program that automates many of the tasks of a full-time accountant. The computing power is much more efficient and more accurate than a human. It tracks money flowing in and out of an organization and the various ways revenue is earned and distributed throughout the organization and to its creditors. Accounting software makes tasks like invoicing, tracking accounts receivable and payable and reporting almost as simple as clicking a button.
This software automates tasks that schools and other educational institutions would otherwise have to outsource or spend significant amounts of time doing, such as data transfers, reconciliation and invoices. Half of all accounting activities can currently be automated, and that number will continue to grow.
Core elements of accounting software include accounts receivable, invoice processing and automatic invoicing. Many programs offer extra features such as:
- Payment processing
- Inventory management
- Project management
- Accounts payable
- Time tracking and payroll
- Job tracking
- Shipping label printing
- Inventory tracking
- Shipment tracking
- Shipping cost estimation
When making your software selection, ensure you choose an option that offers the features your educational institution needs.
Accounting Software Features and Benefits for Education
To determine which features and benefits your institution requires from accounting software, you should consider the accounting needs of educational institutions:
- Track revenue and assets: For public institutions, tracking revenue and assets might mean determining how much money comes from tuition and how much comes from state and federal taxes. For private schools, tracking the tuition dollars and other sources of funding — sometimes also from the state and federal government — is essential.
- Expenditures: Most of the expenditure for your institution is devoted to paying salaries, as the education industry is labor-intensive. Each organization is responsible for attracting and paying qualified teachers to teach students. Other expenditure items include scholarships, grants, supplies, contractual services, travel and utilities. For some grants and funding sources, the money has to be spent a specific way, unlike for businesses.
With these needs in mind, you will want to find an accounting software option that offers the following features and benefits:
- Save time and reduce human error: Using accounting software in the education industry can save your staff time and prevent mistakes.
- Track in real-time: Everything is in one place, so you can track it all in real-time. If your accounting software uses the cloud, you can also access your information around the clock. This means you can check sales, run reports and accept payments no matter where you are as long as you have an internet connection.
- Analyze revenue and expenses: Software can help you analyze revenue and expenses from a larger, year-over-year view.
- Automate tasks: It also automates repetitive and tedious tasks so employees can refocus their attention on big picture tasks.
- Ensure tax compliance: Most importantly, accounting software can track all the financial information needed for tax time. Schools must comply with all state and federal laws governing tax exemption status, and they demonstrate that through tax filings, audits and public reports.
Since the unique needs of educational institutions require a deviation from standard accounting practices, MIP Fund Accounting® is the best choice for specialized fund accounting that suits the needs of educational institutions.
Chapter 2: Impact of Digital Transformation on Education
Digital transformation (DT) is a huge trend in almost all industries. Educational institutions are often slow to adapt to new technologies in general, but schools are beginning to adopt more technology. As such, approaching DT with a plan is the most important aspect of adopting new technology in education.
What Is Digital Transformation?
Digital transformation refers to a full-scale integration of digital technology throughout every sector of an organization. A successful digital transformation requires a physical change and a cultural change in practices and attitudes. Organizations can only continue to thrive when they keep up with demand. In an increasingly digital world, organizations can keep up by implementing a digital transformation, which often results in increases in profits and revenue.
However, nonprofit organizations like educational institutions often have less imperative to implement digital transformations. Since there’s no direct increase in profits or revenue, many boards see DT as an inconvenient process that will disrupt and cost more than it is worth. DTs can also be challenging. According to McKinsey, less than 30% of digital transformations succeed. Furthermore, smaller organizations are more likely to report better DT results than larger organizations.
While digital transformation is a broad term, it targets several specific elements, such as:
- Customer experience
- Operational agility
- Culture and leadership
- Workforce enablement
- Digital technology integration
While IT plays a huge role in implementing digital transformation, the general adoption and practice of digital transformation on a large scale are up to people, which is why so many resources on digital transformation document it as a people issue.
Even though DT has a low success rate, certain key factors contribute to a successful transformation. These include cooperative and supportive leadership, digital tools that make the whole organization more cohesive, improve communication and focus on user-friendliness and employee adoption of technology.
Why Is Digital Transformation Important in Education?
Educational institutions can benefit from technology in many ways. Implementing DT in your educational institution can lead to a new approach in how educators and administrators work toward institutional goals. DT might even alter or adjust institutional goals, as it involves a total transformation.
Digital transformation creates a learning environment where everything connects and grows together. It can also increase student success and lead to a more seamless student experience. Many aspects of DT in educational institutions help students have a better experience while also simplifying administrative processes.
Digital transformation is important in education for several reasons, such as:
- Connection: A digital transformation can connect people and processes across the institution and help the separate entities within a large organization feel more cohesive and unified.
- Performance: With DT, systems perform better, so you can focus on higher-level processes and ideas.
- Efficiency: Digital transformations make processes more efficient so staff and students can focus more of their attention on what matters.
- Simplicity: While there’s always a learning curve with digital transformations, often it leads to simpler procedures and processes for getting the information you need. For example, students can submit a request online for unofficial transcripts and get them sent to their email without filling out too much paperwork.
Digital transformation can significantly affect the student experience, which is why schools should implement a DT plan. Higher education institutions especially see greater impacts when organizational processes are more cohesive and communication is easier.
Digital Transformation Plan for Educational Institutions
If you want to incorporate digital transformation in your educational institution, you should know how to prepare and implement a digital transformation plan.
Culture shifts have to happen for your institution to prepare for digital transformation. These culture shifts include preparing leadership and staff for the transition. Agility and flexibility to adjust and reimagine what the school could look like are essential. Roles will change as procedures and processes change too. Transformation might incorporate more flexible schedules and work locations, and both teachers and students will see their roles shift as technology becomes integrated into the classroom.
Planning is the most critical part of DT. Having preparations in place before implementation will make the transition much more straightforward. To ensure you are adequately prepared, recognize what areas will see interruptions and try to anticipate complications before implementation. Organizations are 3.1 times more likely to succeed when their management team has a clear “change story” or focused plan and commitment for DT, so ensure your whole team is on the same page.
Decide how you want to implement digital transformation in your educational institution. You can choose to introduce new technology all at once, one technology at a time or one department at a time. Deciding which plan is best depends on your organization’s needs. Doing one department at a time might be more expensive, but it could mean a smaller-scale introduction to the technology before large-scale implementation. This gives room to fix any issues before other departments implement the DT.
Since schools have different goals than businesses, their DT implementation will look different. The focus will be less on revenue and profit generation and more on tracking and furthering student success and incorporating user-friendly processes.
Impacts of Digital Transformation in Education
Digital transformation of higher education institutions or K-12 schools can affect educational organizations in several significant ways. Tracking student development with DT means parents and teachers can get a better picture of students’ progress. Additionally, schools can analyze data to inform their decision-making and choose how to implement programs most effectively. DT also makes collaboration easier within educational institutions and can allow institutions to utilize technology to dive deeper into subject areas. Additionally, students can easily work with each other, even outside of the classroom.
Schools can save time on repetitive, simple processes that can be automated, freeing up resources and personnel can make the school run more efficiently and lead to better student outcomes. When you implement a digital transformation, your school can become more future-focused. With an eye toward an increasingly digital world, digital transformation in education can prepare students and administration for a new future.
Digital Transformation Trends in Education
As the education sector increasingly implements digital transformation in schools and institutions, a few trends have emerged.
- The Internet of Things (IoT): Improvements in connected devices in the classroom have led to better student outcomes and increased campus safety. Teachers can utilize technology for instruction, and students can research and develop computer literacy in class while learning their materials.
- Augmented reality (AR): Augmented reality allows students to experience things “in real life” without those things being present. Dissections can take place through AR, which is more cost-effective and much less messy, or classes can perform experiments without needing a ton of equipment.
- Cybersecurity: This element of DT is critical, yet it represents one of the largest hurdles for the education industry as a whole. Sensitive information stored in schools is increasingly vulnerable to outside attackers, yet the necessary precautions often aren’t in place.
- Personalized learning: DT also makes personalized learning available to many, so students can learn at their own pace and explore the subjects that interest them. Also, DT allows for more adaptive learning that accommodates many different learning styles and abilities.
- Artificial intelligence (AI) and big data: AI and data are newer avenues schools can use to target student learning and improve services. Data and analysis may be able to help catch students who are falling behind, and AI might relieve the burden on teachers.
- Online learning platforms and software: Moving educational tools to the cloud means teachers and students can access coursework from anywhere with an internet connection. Online platforms also allow remote learning and technology-based lessons.
- Fund accounting services: More nonprofits are adopting DT into their operational processes. MIP Fund Accounting® has the solutions to provide financial oversight and management.
Chapter 3: Accounting Software for Nonprofits in Education
Nonprofits have unique accounting needs. Their mission and funding sources are completely different from for-profit businesses. For nonprofits, fund management and budgeting are the most important aspects of accounting. As such, the best accounting software for nonprofits is flexible and scalable to the organization’s specific needs.
Nonprofit Accounting Software Needs
Cloud accounting and digitizing business processes will be the key differentiator among organizations in the future.
How Are Nonprofits Different From Businesses?
The primary mission of for-profit institutions is to generate profit, whereas a nonprofit might have a myriad of goals relating to the organization’s core mission. Unlike a for-profit organization, generating funding as a nonprofit doesn’t rely on loans and sales — instead, donations, grants and corporate sponsorships occupy many nonprofit funding efforts.
While for-profits typically have targeted audiences, nonprofits have a wider range of audiences to cater to, including people who need their services and people to fund or help with delivering their services. Nonprofits target various people from different socioeconomic positions, whereas for-profits generally target those who will invest or purchase their products. Instead of one director, nonprofits often have boards that set agendas and track the organization’s successes and challenges.
Additionally, nonprofits often want to integrate themselves into the community. Increasingly, for-profit businesses are attempting this, but their motivations are entirely different. Corporations also pay taxes while nonprofits file for exemption status. Since there are so many differences between nonprofits and businesses, nonprofits also have different accounting needs.
What Are the Accounting Needs of Nonprofits?
For accounting services, nonprofits primarily need fund management and budgeting. Nonprofits deal with donations and revenue generated from various disparate sources. Often, large donors want to know where their money is going and how it makes an impact.
Fraud is sometimes an issue at nonprofits as well, so proper accounting methods can help curb this practice. Additionally, while nonprofits benefit from volunteer work, they still need payroll services for their employees. Nonprofits operate with limited funds, so tracking and forecasting their budget is essential. The right accounting software should be able to meet a nonprofit organization’s needs.
What Is Accounting Software for Nonprofits?
Accounting software is a computer program that assists bookkeepers and accountants with many of the elements of accounting. This software can save your organization money in several areas:
- Fewer employees are needed to monitor and track finances.
- Less space is required to keep print data for financial records.
- Storing data to make reporting and taxes is easier.
For nonprofits, budgeting concerns often make implementing new software difficult. However, the software can actually help nonprofits save money since they will have a computer program that can handle much of the tedious work and time-consuming calculations.
Challenges to Nonprofit Software Integration
Getting leadership on board is the most important aspect of implementing accounting software. To do so, your nonprofit organization will need a plan for overcoming some of the common challenges of accounting software integration and digital transformation (DT), such as:
- Connection speeds: The integration of software can negatively impact connection speeds, so you need to ensure that systems like Wi-Fi and electrical circuits can keep up with the increased demand from digital transformation.
- Adoption: Many organizations within the educational sector have set operating models and lesson plans that DT may disrupt significantly. Preparing the individuals in your organization for the transition may require them to adopt new teaching methods and perhaps even alter pedagogical goals.
- IT support: Schools need to ensure they have the proper support teams in place when adopting new technologies, which might mean investing in more IT support.
- Distraction: With more technology and access to the internet, there’s a greater likelihood that students and employees may have to deal with distractions. You may need to develop a plan to reduce distractions to get leadership on board with the software integration.
Best Accounting Software for Nonprofits
Rather than using business accounting software and adapting it to the needs of nonprofits, the best method is to choose accounting software made specifically for nonprofits. Software created specifically for nonprofits targets what they need most with fund accounting and budgeting models that are flexible and user-friendly.
MIP Fund Accounting® has accounting software that perfectly suits education nonprofits, like schools and other organizations. Plus, MIP® provides the support needed to integrate and train users of the software.
Chapter 4: Implementation of New Accounting Systems
Once you have decided to implement a new accounting system, you must examine your organization’s finances and operations to ensure a smooth implementation. Consider what features you are looking for and what you are hoping to accomplish with a new system.
Why Use Accounting Software?
Accounting software is growing more popular with organizations in all sectors, as this software can streamline your finances and allow you to return to the essential tasks of running and growing your organization. However, it’s still important to investigate why your educational institution would need accounting software and how your institution would benefit from it.
Accounting software is a computer program that does essential accounting work through software automation. You still need accountants after implementing accounting software into your organization, but the software does free up a lot of space and time. With the right software, your staff can return to the more crucial tasks that cannot be automated and keep your educational institution functioning smoothly.