Artificial intelligence (AI) is here to stay, and higher education leaders have an enormous opportunity to use the technology to enhance the operational and financial performance of post-secondary institutions in our country.

The debate at universities about the pros and cons of AI on society has been going on for decades, and technology has been the focus of countless experiments and research projects in computer labs. Little work has been done, however, to prove business use cases of AI.

Members of our team, for example, recently attended several higher education industry professional conferences for chief financial officers and business administrators. There was not a single session devoted to AI as a business tool.

The mood is starting to shift, however, largely due to the popularity of ChatGPT, the natural language model chatbot developed by OpenAI that has captured the world’s interest. Every day there are news stories or research published about how ChatGPT and similar services are becoming part of our everyday lives. Unsurprisingly, C-suite executives have taken notice. A recent survey by Gartner found that 45% of executives said the publicity surrounding ChatGPT “prompted them to increase AI investments.”

The drive to improve operational efficiency is gaining momentum in higher education. Why? For starters, universities across the country are facing significant financial pressure. The surging cost of a college education limits the ability to raise tuition fees. That challenge is compounded by the fact that post-secondary education institutions are facing an enrollment cliff. College enrollment is estimated to decline by 15% or more in about half of the country’s states by 2029, according to research by Nathan Grawe, an economics professor at Carleton College.

At AArete, our higher education consulting team believes AI will become an indispensable tool to accelerate business automation and process improvement. It will also provide leaders with a more powerful, analysis/decision-making tool to review large, complex data sets to help universities become more efficient.

The powerful combination of AI and automation technology can improve business performance by reducing time and resources spent on a wide range of operations processes, including facilities management, accounts payable/accounts receivable management, budgeting and forecasting, and student advising. Here are six areas where we see AI having the greatest impact in the shortest amount of time:

3. Business Function: Budget Forecasting and Planning

Current State: Budgeting is a meticulous, collaborative process involving multiple stages and departments, and is often performed manually using decentralized spreadsheets. Most employees involved in the process do not have formal training in using business intelligence tools to automate data collection and reporting.

Practical Application: AI can automate the process of compiling and analyzing data by creating budgets that factor in student enrollment projections, faculty and staff salary expenditures, plant/property/equipment outlays, research funding investments, and other operational expenses. The technology can create dashboards to visualize the data for decision-makers to ensure spending is allocated correctly.

4. Business Function: AR/AP Management

Current State: Managing accounts receivable and accounts payable is generally a time-consuming process involving many suppliers who do not have electronic data interchange capability. AR/AP accountants often must manually match and approve invoices and purchase orders.

Practical Application: For simple transactions (bills to be paid, invoices to be issued for university services), AI can automate the process by matching, paying, and recording payments. For more complex projects, AI can review contract terms and the scope of services, identify areas that are incomplete within the billing/invoice documents, trigger approvals, and initiate payments when services are fulfilled.

5. Business Function: Purchase Card Compliance

Current State: Experienced employees are typically assigned to review purchase card (p-card) transactions to identify potential fraud or compliance breaches. It is a manual process that is labor intensive and prone to missing unauthorized or fraudulent transactions.

Practical Application: AI can be programmed to identify in real-time any duplicate, fraudulent, or non-compliant P-card transactions and look for patterns of potential misuse or abuse. As a result, oversight employees will spend less time verifying transactions and more time investigating potential compliance risks.

6. Business Function:  Student Advising and Risk Planning

Current State: Advisors play an important role in counseling students on which major to choose, recommending classes, and helping them stay on track to graduate. It is a labor-intensive, personalized process and at most universities, little is done to predict the likelihood of student success for newly and currently enrolled students.

Practical Application: AI can materially enhance the process by analyzing vast amounts of data (class attendance, grades, historical graduation rates) to create a customized plan that will identify potential roadblocks to graduation, helping students stay on track.