Shared Services

in Higher

Education Joanne Austin

2015

What’s in a name?

Shared Services Definition

‘the concentration of resources

performing like activities spread across the

organisation in order to service multiple

internal partners at a lower cost at higher

service levels thereby enhancing

corporate value’

Schulman, Dunleavy, Harmer and Lusk

(1999)

Characteristics

Centered on fostering a front-office mentality and culture to complete what are normally thought of as back-office functions (non –core).

Accountable for a very high level of performance and quality.

A cost-effective service provider. The organization design must support this critical balance

A Shared Service organization that has no familiarity with the larger organization being serviced is destined to fail. (Accenture, 2006)

Shared services have been heralded as a

means of enhancing services and improving

the efficiency of their delivery. Thus embraced by

the private, and increasingly, the public sectors.

Yet implementation has proved to be difficult and

the number of success stories has been limited.

Which factors are critical to success in the

development of shared services arrangements is

not yet well understood. (Borman and Jansen 2012)

Trends in Shared Services Shared Services Concept started in mid 1980’s. Concept

initially driven by private sector multinationals

Shared Services and Outsourcing initiatives typically

result in "cost savings of 20%-50% on processes in

scope” (Hfs-PWC report June 2012)

"In today's business environment, nine out of every ten

enterprises have shared services and 97 percent

manage outsourcing relationships". (Hfs- PWC report

June 2012)

Mainly Finance driven early on in Europe/HR driven in

North America

Trends in Shared Services (continued..)

Continued increase in scale and up the value chain

in Shared Services (e.g. Reporting, Policy)

Very important now in the Public Sector – how to

reduce deficits while not impacting front line

services.

Current economy has led to austerity agenda

today in public sector: Shared Services is moving

from opportunity to necessity.

Trends in Shared Services (continued..)

Technology options continue to grow (e.g. document

management, approvals, user self service,

“cloud computing”, etc)

Across all industry sectors the trend is towards

shared services, hybrid shared services

organizations with some outsourcing, and

multifunctional shared services

“Quick fixes” are not the solution. Right direction,

adapted to each organization’s unique

requirements

Growing and developing. Also more focused on

being a key support for enablement and delivery of

business strategic goals

Trends in Shared Services (continued)

Now much more end-to-end “wing-to-wing”

process focused

“Big data” and Data Analytics now a key “output”– feeding the business the data and information to support

growth.

As well as need to manage costs and working

capital, biggest concern in last couple of years has

been about needing visibility and control – the

“classic” centralized vs decentralized dichotomy

Trends in Shared Services

Ultimately this is “all about the business”.

This, despite its name sometimes, is not an

“industry” but more of a service delivery

option – a means to an end

Achieve the Triple Benefits of Shared Services

Higher Quality

Lower Costs

Improved Control

Shared Services is the organization that…

Providing services that are…

Achieve by leveraging…

Employs a specialist team

Geographically unconstrained

Client-focused

Organizational realignment

Technology

Standardization

Best Practices

High quality Non-core

Mission critical

Repetitive or professional

Lower cost High efficiency

Remote from business

Unresponsive and inflexible

No Business/ Operational control over costs

Viewed as central overhead

Prevalence of shadow operations

Centralized

Challenges

Disparate processes

Multiple standards

Duplication of effort

Different control environments

High cost and costs unclear across the business

Not scalable

Decentralized

Challenges

Responsive to Business and Operational needs

Business/ Operations control decisions

Customized solutions to meet Business/ Operational requirements

Benefits

Shared

Common systems and support

Consistent standards and controls

Tight control environment

Economies of scale

Benefits

Responsive to Business and Operational needs

Business/ Operations control decisions

Customized solutions to meet Business/ Operational requirements

Benefits Highly client

focused

Commercially driven

Service Partnership Agreements

Clear unit costs

Flexible delivery

Clear understanding of drivers and activities

Common systems and support

Consistent standards and controls

Tight control environment

Economies of scale

Benefits

Shared Services vs centralisation

Attribute Shared Services Centralization

Accountability Business Unit Corporate

Key Performance

Target

Service

excellence and

continuous

improvement

Cost reduction

and central

control

Service

Partnership

Agreements Widespread Rare

Classification An independent

unit

Another

corporate

function

Responsibility Partnership Demarcation

Activity Classification Type of

Activity

Characteristics Examples

Transactional

&

Administrative

• Results more quantifiable

• Processes benefit greatly from

standardization, automation and

technology

• Clear linkage between effort and results

(outputs generally experienced in short-

term)

• Generally not client-facing

• Accounts payable

• Payroll

• IT service desk

• Fleet management

• Facilities

management

• Mailroom

Professional &

Technical

• Results are more qualitative

• Standardization, automation and

technology have less of an impact

• Relationship between effort and results is

not as clear (medium-term perspective)

• Generally requires interaction with client

• Procurement

advisory

• Recruiting/staffing

• IT applications

• Health & safety

• Space planning

• End user training

Policy &

Strategic

• Distant relationship between effort and

results (long-term perspective)

• Standardization, automation and

technology are not significant factors

• Clear linkage to strategic goals of

organization

• Signing authority

policy

• Business & strategic

planning

Shared Services Models Usually 4 models, (Quinn, B, Cooke, R and Kris, A., 2000)

Basic

Consolidation of transactional processing – Finance,

HR, IT

Drivers – cost reduction

Focus on client interest

Marketplace

Extends basic – includes professional and advisory

services – business analysis, legal, materials

management

Principle: internal consulting company, customised

products, additional cost but not mandatory to use

Shared Services Models Advanced Marketplace

Provide internal clients with the choice of the most

effective supplier for cost

Internal services charged back to the at market rates

Competition: internal and external, limited

commercialisation of internal services

Independent Business

Evolve to compete commercially and provide to

external

Shared Services models Some say:

There is no standard Shared Services Model

- call by different names

Different priorities

Customise to ‘customer needs’

Common

See a valid need

Process

• Processes documented

• Standardized, controlled & repeatable activity

• Recharging methodology

• Benchmarking – internal/external

• Metrics: Control Based; (ii) Efficiency & Effectiveness

People • Skilled Leadership in place – do not compromise on competencies

• Team shape & stability – process shaped/spans of control/staff – perm v temps

• Team members – culture, values & behavioral competencies assessed

• Team morale, reward & retention

• Working environment conducive to team working

Why Higher Education Increasingly competitive marketplace for students

(both local and international), research funding,

infrastructure funding and various other scarce

resources. (Chazey Partners 2014)

escalating cost-containment pressures, higher

education institutions “must start working together to

attain academic and operational excellence”. (Accenture, September 2013)

The private institutions are less dependent on

government funding.

Shared services to help close the budget gap,

increase efficiencies and provide better service.

According to a TIME magazine and Carnegie

Corporation 2012 survey, 96% of the American

public and senior administrators at US colleges

and universities said “higher education is in crisis”.

“I see shared services as

something that is

inevitable,”

“It’s the next logical influx

of thinking in the business

world brought into higher

education.”

(Rowan Miranda, Associate

Vice President, Finance at the

University of Michigan)

Australian Context

The ‘Bradley era’ - major change

Increases in student participation rates;

The advent of TEQSA and AQF;

Uncapped student demand;

Decreasing government funding;

Decreasing international student cohort;

New players and competition;

Lowering of ATAR scores;

New or different delivery modes for

students;

The student experience and retention;

Increasing importance on research

Australian Context (cont…)

More recently:

Further decreases to government

funding;

Proposed changes to legislation;

Even greater competition from other

providers (access to CSP);

Further decreasing research funding;

Decreased or lost capital funding;

Meeting the challenge Position for future viability,

particularly of a financial

nature.

Trend - corporatisation of

universities

Utilising methods such as:

provision of new delivery

avenues and thus revenue

alternative sources of funding

or third stream income

review current practice and

process to gain efficiencies.

re-structuring for effective

leaner structures

Meeting the challenge

Effective in the delivery of outputs whilst supporting the main functions of a university – teaching and research.

Responsive to the environmental pressures

maintaining market share, profile, viability and service and quality standards and requirements, often across multiple campuses

Meeting the Challenge

Turning to business models which might drive leaner administration structures and systems – cost savings, efficiencies

One approach - implement a shared services model.

Thus shared services in

The Australian Higher

Education context.

What am I doing?

Explore the effectiveness/perceptions of.. shared

services in the Australian higher education context.

Specifically consider:

the drivers and benefits

the fit of shared service models for the Australian

higher education sector

possible hybridisation to move towards required

efficiencies

perceived levels of efficiency

Frameworks which can be adapted to fit the

Australian Higher Education sector (possible

development)

Why

A brave new world for the management of

service provision in a complex tertiary

education context. - timely and topical

Seeking a clear understanding of shared

services in the Australian higher education

context (little Australian literature)

Suitable models for efficiencies in the higher

education sector in Australia

The Exploration

What are the frameworks for the delivery of services.

Similarities and differences between institutions and campus types

determine ‘better practice’ and

possibility of the development of a preferred framework for such operations.

The Research Questions

1. To what extent is the implementation of a shared services model in higher education institutions perceived to be of benefit/effective?

2. What are the success factors for shared services in the Australian higher education context and why?

3. Are hybrid versions of shared services models evolving due to the Higher education context?

Small scale study

Small scale study The institutions

1. 1 x dual sector and 3 Australian campuses - 51,012 student enrolments (2011 Annual report) – NG

2. 1 x dual sector and 12 Australian campuses – 63,872 student enrolments (2011 International Profile) - NG

3. 1 x single sector and 6 Australian campuses - 63,338 student enrolments (Based on 2011 end-of-year data) – Go8

4. 1 x single sector and 4 Australian campuses – 41635 student enrolments

(2011 xx at a Glance) - NG

Small scale study - interviews

Interviews with the following staff:

University 1

2 x Faculty General Managers

University 2

1 x Faculty General Manager/Project Leader

University 3 1 x Group Manager, Exec Services,

1 x Manager in corporate area

University 4 1 x Faculty General Manager

Sampling

A representation of:

single sector

dual sector

older well-established higher education provider – tradition, culture

new generation universities - a different culture.

Staff

Faculties

Senior management

Corporate

Variables

Small scale study spread addresses

variables of:

Size

Geographical spread Implications for decisions related to which services are best

shared and the kinds of technology required to assist

administrative processes.

Questions

The interviews will be semi-structured to allow for wide exploration of issues.

Groundwork questions – position, campuses work on, how consider own university campuses (regional/metro)

Which campus do you work on and how often do you visit other campuses? What are some of the issues as regards this?

Is there an agreed and recognised framework for the delivery of programs and services across the campuses? If so is this documented? Can you describe it in your own words?

In your opinion how well does the framework (agreed or otherwise)

work? Do you believe there are different needs for each campus and location? What needs improvement and why? What works well and why? What are the constraints if any?

If it was up to you how would you organise the delivery of programs and services across campuses?

1 x FGM metro campus, 1 at outlier

No model – although ITS services works – integrated, Mail and Security

Outlier services are less than at metro (main) but personalised (Press an anomoly) – cost…. (Dr’s)

Different rules for provision eg/ furniture funding

No communication as to needs or service provision

All meetings held at Metro

Travel an issue – time out of day for those in outlying campuses

University 1

cont..

Poor technology – not same as being

there - access

Provision based on $ not necessarily

needs

Need to look at campus needs – whether

supply locally or centrally and what works

best for the students- issue of who runs it

Current Project underway (has moved on

since then)

University 1

Restructuring – to colleges from Faculties

and schools

Interesting combination – shared and

integrated – hub and spoke

Criteria for service – how often, if at all,

head office

Standards – eg admissions procedure

Technology – office communicator

- peoples comfort with it – pushing it

Travel costs time and $

University 2

cont..

‘I talked to everybody far too much, I

knackered everybody in a short space of time

and so I managed to get 100 web cams. …and

…everybody had a webcam. You couldn’t

then say to me “I can’t participate” and …I

brought the training to them. I hooked up some

computer labs and got people to train.. so that

they would be comfortable.’

‘Now I’ve ensured that your PC’s come…

complete… with a webcam. But I’ve still

got...spares.. I give them a webcam because

theirs stopped working. So there’s no excuse..’

University 2

cont…

Small campuses difficult – who pays?

eg/ outlier – 78.2 EFTSL

Reduced services

Where 4 small locations close by = 1 person

Multiple jobs in one person – specialist generalist

So… Faculty services or campus services or university services – working through – cost savings?

Human beings are the constraints

Industrial instrument is a constraint

Communication and training key

University 2

Implemented a shared services model across

6 campuses for

Finance

HR

Procurement

Working well for Finance and HR – not so

much for procurement

Comprehensive change management

process but…

University 3

cont…

Different perceptions re: communication

Depts sense of loss of ownership

Difficulty accepting change

Loyalties

No cost savings to date

However…..

Better and consistent processes

Greater compliance and co-ordination

Access to same levels of service

Staff experts

University 3

No framework – but expansion of some services

eg/ Academic at risk program

Outlier campus (328 EFTSL) – specialist generalists –

small campus and strategic

Regional campus $ but Bus programs not viable

Withdrawal of corp services eg/ 10-2 lots online

Travel between campuses esp outlier – isolation

Technology utilised but also face to face –

especially Management

Policy re meeting start times

Technology issues – body language, glitches

University 4

cont…

Consistency of approach and HEW level

issues

Standardisation – leave outlier alone

Single reviews Uni wide – student support

services

Idea of moving services off busy campuses

eg/ finance to regional and not metro

Provision of service is dependant on

leadership

University 4

Findings …

Shared services proliferating

2 different focuses:

Services within a Faculty across campuses

Corporate and student services for Faculties

across campuses

The need to respond to the external

environment – funding a particular driver

Efficiencies and effectiveness

Cut or maintain funding

Outlying campuses – strategic? Reduced

service - Small campus/community provision

Findings Grappling with attaining efficiency

(standardisation; improved process; reduced

duplication; cost), effectiveness of service

delivery across campuses

What services are needed and whether to deliver

them face to face or through technology)

Regional and/or small campus issues (different

requirements based on size; distance; cohort;

Use of specialist-generalists as well as funding

constraints where services are reduced).

Use of technology was raised consistently

Technology perceived as essential

But - technology in use was not systematically installed in all campuses,

Use of technology – patchy

Communication an issue (staff resistance)

Isolation

Technology balanced with personal approach for services (intended)

Findings

Findings Distinct foci for the delivery of services across the

universities rather than a uniform approach

a similar observation to that was made by Knol et al (2014:11) in their meta-analysis of shared services.

Universities either utilised university-wide services across all campuses or faculty-based services across campuses linked to some university wide services.

Reasoning unclear

Where both were in evidence

reviews of delivery were done

in silos

Research into the best approach for the provision of services was not evident from the interviewees

Low hanging fruit are often Finance, HR and IT services

Maintaining consistency of standards – efficiency

Staff travel (reduction) and presence – cost saving

Findings

Findings …. Meeting staff and student requirements – not always

Change – IR and people – an issue

Local or central provision or combination of both -

hybrid

Literature supports…

Shared Services

2 types

Faculty based

University wide

2 – planning Faculty Based

2 – University wide

What does it mean? That consistent frameworks are not the

norm; and

Drivers - that in response to the current

tertiary climate we are seeing a

predominant shift to Shared Services

models within universities, whether that be

university wide or Faculty wide.

Begs the question – are the conditions in

place for shared services?

Factor Shared Services Uni 4 Uni 1 Uni 2 Uni 3

Cost Able to maintain low operation cost in the long run

(Quinn, Cooke and Kris, 2000)

Savings When an organisation wishes to have long term

savings in cost (Melchior, 2008)

N

Motives Seek reduction in cost with improvements in quality

and efficiency (Forst, 2002, McReynolds and O’Brien,

2002, Sharma, 1999, David, 2005)

N/Y

Knowledge Management When employees already possess the knowledge of

how processes work (organisation culture and work

familiarity)

Best Practice When there are already procedures in place, when

the organisations employ common package

software/applications (overlap in processes etc)

Nature of Improvements When the organisation wishes to seek a more

proactive method of continuous improvements in

service levels and efficiency

Strategic Benefits Shared services itself is not strategic. It is more of a

tactical move to consolidate and improve the

efficiency and effectiveness of non strategic

activities; resulting in affected business units and

corporate managers to fully devote their time and

energy to strategic activities (Schulman, 1999)

Y/N Y/N

Nature of suitable functions Functions being considered at the basic level should

be back office/transactional operations but as it

evolves to an advanced model, strategic functions

may be considered (Quinn et al, 2000)

Conditions for Shared Services – Yee Hon Weng, J (2009)

Guiding Principles – Operating Model Addresses

Ensure each function is

considered individually from

an end to end operating

model perspective as well

as its interfaces with other

functions

Eg/ Finance, HR - Consistency of approach - Standardisation - Interface

Premise the design on the

services at the university

and Faculty level.

(understand the business)

Except where the function is

- Unique and critical to a school or centre

- Provides no benefit in aggregation

- Special needs based on campus/community/size/mission

Ensure shared services

consider the impact of:

- Scalability and leverage - Affordability of the

integrated IT systems, processes and operations

- Client business: compatibility of client base and client requirements

- Service features: the specific nature of the service/function

- The economic, capability or strategic benefit

- Size, interaction, specialist generalists

- Technology solutions - Funding driver - Differing needs of client

cohorts - End to end process and

standardisation - Cost benefit

Allow resources providing

Corporate and Shared

Services to be physically

located based upon:

- The nature of the service provided and its ability to be leveraged

- Client proximity requirements - A more remote model where

services can be delivered to anybody, in any location from anywhere and still achieve direct customer service and service intimacy outcomes (includes self service and automation)

- Possible geographical

aggregation - Availability of local skilled labour - Ability to provide career path

- Use of staff and reduction in duplication

- High touch requirements - Small/regional campuses or

departments

- Technology - Campuses in close proximity - Specialist -generalists

Ensure Corporate and

Shared Services are

standardised as much as

possible with a tailored front

end and comprise:

- Standardisation and consolidation of common functions and tasks

- Clear service engagement model and contact points

- Transparent service, performance and (if applicable) billing/pricing systems

- Client facing relationship, planning and subject matter

expert capability - Enable multi-skilling of resources

to assist in the front-line as required

- Standardisation - Efficiency - Client/stakeholder

engagement - Performance - Specialist-generalist - Hi touch - Low touch

Guiding Principles – Delivery Management Model What these address in relation

to multi campus service

issues

Undertake a

‘purchaser/provider’ model

but embrace a partnership

culture

Include all layers in decision and

issue resolution and as close to

the service as possible

- Provides a ‘working together’ and solutions based approach rather

than imposition of services that may not fit a particular circumstance eg/ small campus

Provide clear contact

channels and a focus on

‘getting it right the first time’

by:

- Having the right location, person and process

- Standard proven

technology model and support

- Dynamic service development

- the regional and small campus issues

- the need for use of

technology - need to change based

on client and location requirements

Immerse all in a service

excellence culture which

has:

- Client intimacy - Understanding of client

business - Quality service - Responsiveness to client

needs

- The need for some face to face services which

may be dependent on location

Drive the standardisation

of processes, systems and

service levels.

- Temper this however with the impact on clients

- Small/regional campus client needs

Explore where

standardisation may link

with other areas for further

improvement

- Breaks down silos - Further efficiency

Ensure clarity of roles with

clear functional and

service decomposition

- De-composition – unpack

the composition of the

service and the

requirements

- Clearly articulate roles and

responsibilities and points

of hand off and decision making

- Location and

requirements eg/small

campus, Ability to

provide higher touch if needed

Have in place clear

mechanisms for recourse

and underperformance

for all parties

- Performance

management systems - Service Charters and KPI’s

- Consistency of service

Ensure services are

supported by skilled and

capable staff providing

the services

- Provide mobility and

ongoing development and career paths

- Specialist-generalists

and training for same

Enable Faculties, schools and

departments to manage their

businesses effectively through:

- Transparency - Direct access to timely,

accurate, analysed data and information

- Providing the ability to interrogate information directly

- Reducing duplication through direct access which can be undertaken on an as needed basis – through technology

Enable and support continuous

transformation and

improvement through:

- Aligning users with the agreed

levels of service and updating as required – a robust customer engagement model

- Providing standard service delivery whilst taking into account the need for customer intimacy

- Regular contribution by those within the shared services model

- Location

- High touch vs low touch and where required

- Small/regional campuses - Staff contribution

Provide commercially sound

management of the shared

service operations

Eg/ capital and people

management

- Overview of costs, savings and maintenance

Drive end to end accountability

with:

Single point end to end process

accountability

Success measures driven by the

client

Clear information about patterns of

usage and ability to reduce costs

- Costs - Efficiency - Standardisation - Client focus

Problems with Shared services

1. Not measuring costs or service levels before a move to shared services

2. Not documenting processes and work streams pre-implementation

3. Not focusing sufficiently on the transition period

4. Not having a robust project plan clarifying employee resources

5. Fighting the battles of yesterday, not those of tomorrow

Problems cont.. 6. Becoming bogged down standardizing technology and processes pre-implementation

7. Believing that “it’s already a centralized process: there’s nothing we should do”

8. Having no, or inadequate, risk management or monitoring

9. Omitting the “make versus buy” equation

10. Not working with the client on their needs Liddell, J (2012)

Recent backlash from Faculty at the

University of Michigan highlights the

importance of engaging key

stakeholders and internal customers at

the beginning of the initiative and

providing open communication

channels throughout the entire process

(Chazey Partners 2013)

Next Steps

Finalise Research

Questions

Further literature

Ethics application

Canditature