Monday, 26 April 2010

Sharing things...

We had a lot of things to discuss at last week's UCISA meeting, but we kept coming back to one topic - Shared Services. It's a well known secret that there is a view in some quarters in government that Universities are inefficient (note the comments made after Mandy's Christmas letter on the cuts that we could absorb them and not affect learning and teaching or research). Discussions about sharing services have been going on for some time - in fact for so long I felt a distinct sense of deja-vu during the meeting.

So, could we make large efficiency savings by sharing services with other Universities? Do we need all to be running our own back office systems (by that I mean Payroll, Finance, HR, Student records). This wouldn't necessarily be a re-run of the mac initiative (for those old enough to remember), as that involved groups of Universities commissioning systems to be written - now we'd be looking at using software which already exists, and possibly being hosted outside of the University environment. Could a group of us get together and run the same version of SAP as our Finance system, or could one of us run it for the rest? How about putting the functions as well as the systems together - paying invoices for example?

There are some shared service projects which should soon be coming to fruition, but it's been a slow process - sharing data centres for example. There seems to be a real fear of loss of control though.

Outsourcing is another option for reducing costs - including commodity services such as email, where we can currently get suppliers to run systems for us for free.

We mustn't forget that we have some really good examples of shared services in the sector - JANET and UCAS being two of the most successful. Although by some definitions, these aren't shared services at all, because we have no choice but to use them.

The government is pointing to huge savings made in other areas of the public sector such as the NHS when shared services were introduced, but I think we are starting a different point - we are already quite lean and efficient in many of our back office areas. I remember sitting round a table with a number of other IT Directors working out how much we would save if we outsourced our payroll, and it was tiny in comparison to the savings made in the rest of the public sector.

But, and a big but - hard times are coming. Our back office systems will have to become more efficient and cheaper to run if we are to continue to put our efforts into supporting teaching and research. Hard decisions will have to be made, and some of our users will have to accept compromises in the level of service we can offer. For example, we are currently consiering outsourcing some more of our functions to Google, including our diary. The Google one is not as functional as the one we currently have, but it is much cheaper to run. As I said earlier, difficult decisions....

Watch out for a UCISA Shared Services Summit later in the year.


George Credland said...

I'm concerned that this is being publicly debated without engaging with relevant support staff about what the issues and options are.

The lesson from the MAC (Management and Administrative Computing) Initiative was that one size fits all doesn't work. Trying to create systems that suited a small number of Universities resulted in hugely inefficient software and processes which we then spent years sorting out.

Before any shared service could be viable institutions would need to reconcile and standardise processes. At present institutions running the same software such as SAP use it in quite different ways.

Perhaps before looking at standarisation across institutions we could sort out our internal processes so that we have efficient processes that work for the organisation rather than each faculty or department coming up with their own way of achieving the same result?

By moving to a hosted service all flexibility is lost. e.g. our plans for this year include roll out of fixed-term contract functionality adapting and re-using eRecruitment functionality, extending the scope of employee and manager self service to provide more direct devolved maintenance of information. The aim being to have information maintained as close to source as possible instead of centrally managed, thereby avoiding delays, data entry errors and such.

Maybe someone could talk to us about the work we're currently undertaking and planning to improve efficiency?

What about liabilities in a shared environment? Would one institution really trust another to handle its HESA returns and such? (thinking of the London Met debacle)

What about commercially sensitive information such as research grant applications? How would this work in a shared environment?

There are no shortage of external consultancy firms willing to tout hosted SAP services, but please keep in mind they have a vested interest in glossing over the issues to draw customers in. e.g. SAP claimed we could have the system installed in 6 months, but it actually took 2 years (+ eRecruitment subsequent to his). Throughout the implementation process they sought to marginalise in-house support staff to push their own consultancy services. We were then left to sort out the problems that arose. e.g. Finance integration where they failed to deliver a single working interface yet contractually were not held to account. In the end the work was picked up and resolved in-house.
Similarly forms were off-shored to India to cut costs. Problems included having the University crest back to front, and columns of numbers that didn't add up from one page to the next. The University ended up paying for the work to be re-done.

The issues are far more complex than some would portray and I'd appreciate it if we were actively involved in this process.

Chris Sexton said...

Thanks George, all good points - especially the one about standardising processes internally, before we look at sharing them with others.

Chris Gayner said...

George - you bring up several good points in regards to standardisation / issues with sensitive information and increasing efficiency of existing projects.

Many practitioners have written about the pros and cons of setting up shared services in which ultimately depend on the maturity (of the function/process), human factors involved in a function/process and capability of the business unit to efficiently and effectively provide the service back to the rest of the group.

Standardisation of administrative processes such as AP are more easily attained due to the potential to automate and streamline the overall process at a central point. On the other end of the spectrum, standardising such processes as recruitment still requires a high level of human involvement to carry out the process and has less capability to be automated or streamlined.

Both of the above cases should and will have 2 very different shared service models - the question is should you choose a Captive shared service model (relying on your internal capabilities and resources) or an Outsourced Shared service model (looking to take advantage of external specialists who may also have scale to provide the service) - both have varied degrees of flexibility, scalability and opprotunity for expansion which all need to be evaluated in light of your overall objectives.

Tools such as SLAs (service level agreements), performance metrics and KPIs are but a few to ensure the service that is being provided by the service center/operation is to the degree which satisfies expectations - these need to be reviewed regularly and measured (often through benchmarking) against industry standards to ensure your shared service is performing.

Ultimately the development of shared services is to allow an organisation to focus on their core business

Below are some articles which may add some more light to the above:

SSON Clinic:“Make or Buy” sourcing decision

Roundtable discussion – Make or Buy?

The World’s Next Top Model?

Chris Gayner
Shared Services & Outsourcing Network (SSON)
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Pablo said...

The fact that the NHS is offered as an example of success says a lot.

There's some interesting stuff challenging the 'shared services' and 'efficiencies of scale' arguments, and indeed the whole target culture, at