where are we now? strategic sourcing and universities
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Where are we now? Strategic Sourcing in UK HEIs
Dr Wendy PhillipsDr Dharm Kapletia
Outsourcing/Insourcing versus Strategic Sourcing
“A fact-based and analytical process for optimising the supply base, to ensure the achievement of the Higher Education Institute's (HEIs) strategic objectives. This involves the appraisal of a full spectrum of internal and external business models, and strategic choices as to how HEIs can best realise economic, efficiency and effectiveness benefits.”
Where are we now?
Guidance and Recommendations to the HE sector• Final report designed to support senior managers involved in Strategic Sourcing
– Includes the results of our 2013 survey (participation 44% of UK HEIs)– Insights from 31 interviews with experts from HE, public and private sectors – Findings from workshops– Exemplars of good practice
• Strategic Sourcing toolkit on the www.EfficiencyExchange.ac.ukFreely available online, and contains:– A life-cycle process model tailored for use in HEIs and tools that can be applied
at key stages– An Intelligent Customer Function (ICF) Capability Audit to assess an
institution’s maturity and gaps
Survey Highlights• 44% response rate to survey (target population 131 HEIs)
HEI participation by mission group– 67% Russell Group– 36% 1994 Group– 38% UKADIA– 11% Million +– 46% University Alliance– 48% Identified Non-Aligned
• Total HE sector findings– 75% stated they already outsource to some form of service provider, with sector average of 4 services
contracted out– Identified 53 types of outsourced services, almost entirely ‘support services’ based activities– 73% service provider, 14% shared service, 13% under market testing– Services identified, 61% fully outsource to private sector, 29% within public/not for profit, 10% co-
source with private sector– Just over two thirds involved ‘fully outsourcing to private sector’, just under a third within the
public/not for profit, and very few co-sourcing with private sector– In terms of strategic benefits sought, requirements appear to focus fairly evenly across efficiency
(38%), effectiveness (33%) and economic (29%) type benefits. – Benefits expectations focused on: improved productivity (33%), risk reduction (28%), student
satisfaction (25%), academic delivery (8%) and revenue generation (6%)
Respondents by profession- 41% in Finance- 30% in Procurement- 17% in the Executive function (Vice
Chancellors, their Deputies, PVCs, etc)- 12% in other senior roles
Support Services Academic Delivery
LEADERSHIP & PLANNING (5%)
PROFESSIONAL SERVICES (34%)
OPERATIONAL SUPPORT SERVICES (58%)
KNOWLEDGE CREATION
KNOWLEDGE SHARING (3%)
KNOWLEDGE UTILISATION
Inputs
PEOPLE (36%)
International student recruitment
UK Undergrad applicationsCareers services
CounsellingData Analysis
Pension administrationMarketing - photography
Parts of HR
CleaningHospitality Catering &
Platters Catering
Student supportFire Risk Mgt
Payroll Health and safety
Pathway centre for overseas students
International teaching delivery
Some teaching
INFRASTRUCTURE(26%)
Project mgt of major builds
Shared campus FM and academic services
Maintenance managementFacilities Management
Estates / Building Maintenance2 PFI buildings
Halls / Student Accommodation
Grounds maintenance or landscaping
Library servicesHeating and Cooling
ContractLift maintenance
Sports facility
EQUIPMENT(13%) Website Development
Data CentresDesktop provision
IT and AV
Print managementInvoice receipt and
scanningStudent email/ calendarOut of hours IT helpdesk
ENABLERS(25%)
Internal Audit
Finance - Tax Advice Electrical ContractorsEnergy procurementReal estate advisory
Rating servicesLegal Services
UCASInsurance
Nursery servicesStudent transport
SecurityRecycling
OC / Health ServiceRetail
UK HEI Sourcing Maturity Framework
Modified from DIS (2005) UK Government White Paper
Interview data – HEIs and the Outsourcing Learning Curve
Time/Value
Clie
nt B
ehav
iour
Phase one:Hype and Fear
Phase two:Early Adopters, Best & Worst Practices Emerge
Phase three:Market matures,Richer Practices Emerge
Phase four:InstitutionalizedFocus on Value-added
Modified from Willcocks, LP; Cullen, S; and Craig, A. (2011) The Outsourcing Enterprise. New York: Pallgrave Macmillan
Survey Questions on Policies & Processes (1/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
30
My institution has benefitted in the past from outsourcing or shared services, working with external or partner organisations
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
7%
10%
42%
37%
5%
Survey Questions - Policies & Processes (2/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
My institution is not under pressure to reform ‘academic delivery’ (teaching, research, knowledge transfer, etc)
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
37%
30%
20%
10%
3%
Survey Questions - Policies & Processes (3/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
My institution is not under pressure to reform ‘support services’ (HR, Finance, ICT, FM, etc)
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
35%
38%
10%
12%
5%
Survey Questions - Policies & Processes (4/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
30
35
My institution is actively assessing the potential of different sourcing models to realise economic, efficiency and effectiveness benefits
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
8% 7%
12%
50%
23%
Survey Questions - Policies & Processes (5/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
My institution prioritises internal improvement and transformation above external outsourcing and shared services
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
3% 5%
28%
34%
30%
Survey Questions - Policies & Processes (6/7)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
2
4
6
8
10
12
14
16
18
20
My institution has the skills, tools and resources in place to make end-to-end sector-leading sourcing decisions
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
8%
32%
17%
25%
18%
Survey Questions - Policies & Processes (7/7)
Russell Group HEI comments:“I am unsure the true meaning of "strategic sourcing" happens anywhere across the sector”
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
2
4
6
8
10
12
14
16
18
20
Strategic sourcing is fully considered and appropriately represented at the highest level in my institution
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
5%
23%
15%
32%
25%
Survey Questions – Strategy & Environment (1/8)
Russell Group HEI – “Social Responsibility is 3rd core goal” Non-aligned – (HEI 1) “Support to local enterprise and community issues” and (HEI 2, comment on survey question) “We have a commercialisation strategy, under which we actively seek out opportunities for generating revenues and value from our skills, expertise, facilities and resources”
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
10
20
30
40
50
60
The core business of my institution is research and teaching
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
87%
7%2%
5%
Survey Questions – Strategy & Environment (2/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
30
Internally provided services deliver best value for money at this time
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
3%
13%
42%
32%
10%
Survey Questions – Strategy & Environment (3/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
2
4
6
8
10
12
14
16
18
The market is not mature enough to offer competitive sourcing op-tions for our internally run services
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
17%
27%
20%
28%
8%
Survey Questions – Strategy & Environment (4/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
The VAT consideration is the most significant barrier in outsourcing to the private sector
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
17%15%
25%
37%
7%
Survey Questions – Strategy & Environment (5/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
2
4
6
8
10
12
14
16
18
Pressure from trade unions prevents my institution from exploring the full range of sourcing options
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
20%
28%
27% 25%
Survey Questions – Strategy & Environment (6/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
2
4
6
8
10
12
14
16
18
20
My institution’s sourcing decisions are centralised and have visibility over all major procurement life cycle activities, across Departments
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
7%
22%
17%
30%
25%
Survey Questions – Strategy & Environment (7/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
30
Shared services with other Universities presents a superior sourcing op-tion when compared to outsourcing to the private sector
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
8%
17%
47%
22%
7%
Survey Questions – Strategy & Environment (8/8)
Disagree completely Disagree slightly Neither agree or disagree
Agree slightly Agree completely0
5
10
15
20
25
30
Outsourcing aspects of teaching provision is likely to take place in the short to medium term for my institution
NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP
Num
ber o
f res
pond
ents
40%
22%25%
8%
5%
5%
34%
58%
3%
Leadership & Planning
Professional Services
Operational Support Services
Knowledge Sharing
In terms of academic service delivery, what are the top 1-3 challenges your institution will face in the next 10 years?
HE Sector Response1. Improving teaching delivery, 2. Improving student engagement and satisfaction, 3. Enhancing ICT (includes innovation in teaching and learning)
These priorities are common priorities across Mission Groups, although University Alliance managers also gave importance to issues around 'General operational performance and quality', and Non-Aligned were also concerned about ‘national and international competition’
Impact on future direction of Strategic Sourcing?
Academic Service DeliveryKnowledge creation (Research) 0%Knowledge sharing (Teaching) 3%Knowledge utilisation (Tech Transfer) 0%
Support ServicesLeadership & Planning 5%Professional Services 34%Operational Support Services 58%
Summary of findings• Some HEIs are now recruiting experienced procurement professionals from the private
sector, however the sector needs to invest in skills, training and capability to develop robust business cases and strengthen contract management
• Despite the need to establish sound governance arrangements, many HEIs fail to integrate such arrangements into their contracts, undermining the ability to maintain the level of relationship required to leverage benefits.
• Strong programme management is needed from the centre to ensure procurement is aligned to strategic objectives and expected benefits are realised
• Academic delivery and revenue generation not commonly identified as areas benefiting from strategic sourcing - HEIs could prioritise these benefits to offset the reduction in central government funding, improving their ability to differentiate themselves both nationally and internationally.
• Where there is potential for growth, collaborative sourcing models such as joint ventures may present new strategic options and help improve HEI competitiveness.
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