Implementing Shared Services

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Academic Affairs ForumImplementing SharedServicesShared Services Structures, Transitions, and OutcomesCustom Research

Academic Affairs ForumLEGAL CAVEATThe Advisory Board Company has made efforts to verifythe accuracy of the information it provides to members.This report relies on data obtained from many sources,however, and The Advisory Board Company cannotguarantee the accuracy of the information provided or anyanalysis based thereon. In addition, The Advisory BoardCompany is not in the business of giving legal, medical,accounting, or other professional advice, and its reportsshould not be construed as professional advice. Inparticular, members should not rely on any legalcommentary in this report as a basis for action, or assumethat any tactics described herein would be permitted byapplicable law or appropriate for a given member’ssituation. Members are advised to consult with appropriateprofessionals concerning legal, medical, tax, or accountingissues, before implementing any of these tactics. NeitherThe Advisory Board Company nor its officers, directors,trustees, employees and agents shall be liable for anyclaims, liabilities, or expenses relating to (a) any errors oromissions in this report, whether caused by The AdvisoryBoard Company or any of its employees or agents, orsources or other third parties, (b) any recommendation orgraded ranking by The Advisory Board Company, or (c)failure of member and its employees and agents to abideby the terms set forth herein.Cate AuerbachResearch AssociateLauren EdmondsResearch ManagerThe Advisory Board is a registered trademark of TheAdvisory Board Company in the United States and othercountries. Members are not permitted to use thistrademark, or any other Advisory Board trademark,product name, service name, trade name, and logo,without the prior written consent of The Advisory BoardCompany. All other trademarks, product names, servicenames, trade names, and logos used within these pagesare the property of their respective holders. Use of othercompany trademarks, product names, service names,trade names and logos or images of the same does notnecessarily constitute (a) an endorsement by suchcompany of The Advisory Board Company and itsproducts and services, or (b) an endorsement of thecompany or its products or services by The AdvisoryBoard Company. The Advisory Board Company is notaffiliated with any such company.IMPORTANT: Please read the following.The Advisory Board Company has prepared this reportfor the exclusive use of its members. Each memberacknowledges and agrees that this report and theinformation contained herein (collectively, the “Report”)are confidential and proprietary to The Advisory BoardCompany. By accepting delivery of this Report, eachmember agrees to abide by the terms as stated herein,including the following:1. The Advisory Board Company owns all right, title andinterest in and to this Report. Except as stated herein,no right, license, permission or interest of any kind inthis Report is intended to be given, transferred to oracquired by a member. Each member is authorizedto use this Report only to the extent expresslyauthorized herein.2. Each member shall not sell, license, or republish thisReport. Each member shall not disseminate or permitthe use of, and shall take reasonable precautions toprevent such dissemination or use of, this Report by(a) any of its employees and agents (except as statedbelow), or (b) any third party.3. Each member may make this Report available solely tothose of its employees and agents who (a) areregistered for the workshop or membership program ofwhich this Report is a part, (b) require access to thisReport in order to learn from the information describedherein, and (c) agree not to disclose this Report toother employees or agents or any third party. Eachmember shall use, and shall ensure that its employeesand agents use, this Report for its internal use only.Each member may make a limited number of copies,solely as adequate for use by its employees andagents in accordance with the terms herein.4. Each member shall not remove from this Report anyconfidential markings, copyright notices, and othersimilar indicia herein.5. Each member is responsible for any breach of itsobligations as stated herein by any of its employeesor agents.6. If a member is unwilling to abide by any of theforegoing obligations, then such member shallpromptly return this Report and all copies thereof toThe Advisory Board Company. 2013 The Advisory Board

Table of Contents1) Executive Overview . 4Key Observations . 4Definition of Terms. 42) Shared Services Functions 5Motivation. 5Structures. 53) Shared Services Transitions . 7Timeline Overview . 7Change Management . 8Infrastructure Building . 10Implementation . 11Optimization . 12Costs . 13Constituent Support . 134) Shared Services Evaluation and Outcomes 15Evaluation . 15Outcomes. 165) Research Methodology . 18Project Challenge . 18Project Sources . 18Research Parameters . 19 2013 The Advisory Board

1) Executive OverviewKeyObservationsShared services centers (SSCs) consolidate transactional processes (e.g., payroll) andimprove customer service to faculty. Contact administrators at all profiled institutionsreport that initial faculty and staff resistance to the shared services model dissipates within ayear after initial implementation. Campus constituents praise faster processing times, theresponsiveness of SSC staff to client unit needs, and high standards of customer service.Service level agreements (e.g., agreements between IT staff and academic faculty) serve ascontracts between shared services center staff and clients to guarantee service standards.Shared services initiatives do not yield immediate cost savings; shared servicesadministrators should not present shared services initiatives as short-term costcutting measures. Upfront implementation costs (e.g., new space, staff trainings) preventcost savings immediately after shared services transitions. Contact institutions typically adjustsavings estimates throughout the course of shared services implementations due to revisedtimelines and unexpected costs (e.g., construction projects).Shared services require four to five years to implement. The transition to shared servicesoccurs in phases: change management, building shared services infrastructure,implementation, and optimization. Gradual transfer of functions reassures non-client unitsthat SSCs function effectively and encourages new clients to participate in shared servicesinitiatives.Definition ofTermsShared Services Centers (SSC) refers to the units that provide centralized transactionalprocesses and services to participating academic and administrative units. Shared servicescenters can serve: A single academic unit (e.g., college, school) and serve participating departments, Multiple academic units and serve participating departments across units, or Institution-wide and serve all academic and administrative units.Shared services are either: Consolidated, with one director and function-specific divisions based on service type, or Distributed, with distinct centers for each function and service type. 2013 The Advisory Board

2) Shared Services FunctionsMotivationInstitutions Implement Shared Services to Reduce Inefficiencies,Improve Processes and Service QualityShared services initiators strive for business process improvement and administrativeefficiencies. Shared services center creation requires process reengineering, workforceplanning, technological upgrades, and change management.StructuresDistributed Shared Services Centers Serve Multiple Research,Academic, or Administrative Client Units 1Administrators develop shared services modelsthat create either multiple SSCs to serveclusters of client units or a single, consolidatedSSC that performs all selected functions for allclient units. SSCs distributed by function enablestaff specialization in specific tasks, whereasdistribution by client units fosters closerelationships with client units.College-based SSCs ensurecustomization of service to theneeds of particular academic units.SSC staff specialize either by clientunit (e.g., department) or byfunction (e.g., procurement).Transaction-Based Shared Services Functions Accounting: SSC staff prepare monthly budget reconciliation reports for clientunits and prepare client budget requests prior to annual budgeting. Payment Card (P-Card) Administration: SSC staff process all statements,payments, and records for client unit p-card activities. Purchasing: SSCs process client unit purchase orders for supplies andequipment. Travel: SSC finance staff process reimbursement requests and per diem reportsfor staff traveling on university business. Onboarding: HR SSC staff process new employee paperwork and hold generalorientation sessions for new staff. Payroll: Finance SSC staff process employee timesheets and oversee payroll forclient units. Grant Management: Research administration SSC staff document expenses anddistribute revenue associated with external grant funding.1) Education Advisory Board. “Transitioning to a Shared Services Model,” Education Advisory Board, accessedNovember 2013, page 7, red-Services-Model 2013 The Advisory Board

Shared Services Models at Profiled Institutions Distributed: Shared services centers perform administrative functions for a designatedcluster of academic, research, and administrative client units. Distributed SSCs’ functionsinclude finance, human resources, and occasionally research administration.InstitutionCenters and Client UnitsFunctions PerformedInstitution B 4 Human Resources SSCs 3 Finance SSCs Finance Human ResourcesInstitution D 1 Arts and Sciences SSC 1 Engineering SSC 1 Medical School SSCInstitution E 5 Academic SSCs 2 Administrative SSCs Institution G 3 Research SSCs 4 Academic SSCs 2 Administrative SSCs Finance Human Resources Research Administration Human Resources FinanceAccountingFinanceHuman ResourcesResearch Administration Consolidated: SSCs perform designated functions for all client units across the university,including university auxiliaries and medical units. The SSC at Institution A also serves theUniversity’s hospital network. Consolidated SSCs include finance and may include humanresources, accounts payable, and accounts receivable.A single sharedservices center atInstitution H willserve 40 launchclients.InstitutionFunctions PerformedInstitution A Institution C FinanceInstitution H Finance Human ResourcesAccounts PayableAccounts ReceivableFixed AssetsHR/PayrollSponsored ProjectsSupply Chain Finance– Vendor compliance for all university unitsInstitution I– P-Card administration for most universityunits– Expense Management (travelreimbursement) for most university units 2013 The Advisory Board

Hybrid Distributed: Shared services administrators at Institution F establish singlefunction shared services centers for individual client units. Contacts report that early clientunits require dedicated SSCs to perform human resources, communications, and researchadministration work.InstitutionCenters and Client UnitsFunctions PerformedInstitution FThree centers serve theInformation Technology Officeand the College ofEngineering Communications & MarketingFinanceHuman ResourcesInformation TechnologyResearch Administration3) Shared Services TransitionsTimelineOverviewShared Services Require Four to Five Years to ImplementThe transition to shared services occurs in four phases: change management, buildingshared services infrastructure, implementation, and optimization.Overview: Process to Develop and Implement Shared Services Models2Note: Only two ofnine profiledinstitutions havecompleted theshared servicesimplementationprocess.Identify sharedservicesobjectivesDetermineshared servicesmodel andfeasibilityConsult withdepartmentchairs, faculty,and staff onshared servicesEvaluatedepartmenttasks andresponsibilitiesRelocate staff toshared servicescenter andimplement newproceduresInformdepartment andunit staff of newresponsibilitiesand proceduresReviewresponsibilitieswith departmentstaff d tasks torelocate2) Education Advisory Board. “Providing Faculty Support Under Shared Services Models,” Education Advisory Board,accessed November 2013, page 13, ort-Under-Shared-Services-Models 2013 The Advisory Board

ChangeManagementDisseminate Plan for Shared Services Implementation to Build SupportProof of ConceptShared services administrators conduct site visitsand consult with peer universities that employ ashared services model; initiative administratorsdetermine appropriate staffing levels for sharedservices units that match their planned model.Beyond Higher EducationShared services administrators tourshared services units at stateagencies and private companies tosee shared services models in otherindustries.Business CaseExternal consultants analyze university workprocesses and create a business case that estimates total initiative savings and feasible workimprovements associated with the planned SSC model; shared services administratorsrecruit an advisory committee that helps unit staff communicate questions and concerns toshared services administrators.Workforce PlanningInitiative administrators identify transaction-based functions to move to shared services;initiative administrators develop a work profile of launch client units and identify staff totransition to the SSC. Client unit leaders review and approve work profiles and create newwork portfolios for staff retained in client units.Task Evaluation Process for Transfer to a Shared Services Center3Do multipleInstitution unitsperform thistask? Doesmore than onetype of unit(e.g., academic,administrative)perform thistask?YesDoes this YesDo all units usean ERP (e.g.,BlackBoard,PeopleSoft) tocomplete thistask?NoYesStrongcandidate fortransfer to asharedservicescenterNoPoor candidate for transfer to a shared services center3) Education Advisory Board. “Transitioning to a Shared Services Model,” Education Advisory Board, accessedNovember 2013, page 6, red-Services-Model 2013 The Advisory Board

Employee Work Portfolio Evaluation Process at Institution G4Activity AssessmentGroup InterviewsData VerificationClient unit staff list tasksthey performed in theprevious year andestimate the percentageof time spent on eachtask type.Administrators organize90-minute groupinterviews with unit staffwho perform similartasks to discussbusiness processes,time-saving initiatives,and willingness totransfer to a sharedservices center.Shared services staffevaluate databasetransaction data (e.g.,reimbursement requestsubmission records) toverify self-reportedactivity assessments.Staff summarize unitwork distributions in adocument that identifiesunit staff likely totransfer to the SSC.Transfer Rule60%Administrators atInstitution Ftransferemployees whospend at least 60percent of theirtime processingHR or financetransactions fromclient units to theSSC.Components of Unit Work Profiles at Institution I Department Basics: Shared services staff meet with client unitleaders and evaluate the size and scope of the unit, including totalfaculty, staff, and student FTE, unit mission, and unit governancestructure (i.e., internal reporting structure, unit leaders andsupervisors). Client Function Data: SSC staff evaluate transaction data anduniversity records to determine how many staff perform some or allwork associated with a particular function. Client Business Processes: Unit leaders and SSC staff createbusiness process maps that identify duplicative or unnecessary unitbusiness practices to eliminate prior to function transfer.4) Education Advisory Board. “Transitioning to a Shared Services Model,” Education Advisory Board, accessedNovember 2013, page 12, red-Services-Model 2013 The Advisory Board

Campus Dialogue and CommunicationShared services committees create shared services plans; deans communicate sharedservices plans to colleges, schools, and units. Campus dialogue sessions discussrecommendations and garner additional feedback through workshops, focus groups,interviews, and community forums open to faculty, students, and staff.Strategies to Generate Faculty, Staff, and Adminstrator Support5InfrastructureBuildingEmphasizeService Qualityand EfficiencyDepartment and unit administrators, faculty, and staff anticipatereductions in service efficiency, quality, and personalization withshared services implementation. Administrators emphasize theefficiency benefits (e.g., faster processing times, fewer auditedtransactions) of transactions through informational sessions andmaterials, presentations, and one-on-one meetings. They alsohighlight service level agreements, which establish and guaranteeservice standards between shared services center staff anddepartment chairs, faculty, and staff.Involve Facultyand Staff inShared ServicesDevelopmentShared services and academic administrators include faculty andstaff in development through: Advisory committees, One-on-one meetings, and Shared services ambassadors (i.e., faculty and staff who learnabout shared services and inform their counterparts within unitsabout services and transitions).This involvement and awareness ensures that shared servicescontinue to meet faculty needs and staff can perform tasks.Shared services administrators should restrict faculty and staffparticipation to advisory roles; inclusion on planning committeesresults in prolonged processes and ineffective recommendationsdue to initial shared services opposition and reluctance.Maintain Client-Support Relationships to Ensure Service QualityLocation SelectionContacts locate shared services staff together toenable close coordination among teams withsimilar clients or functions. Shared servicescenters near client centers facilitatecommunication and relationship building.College-based SSCs maintainlocalized service delivery.5) Education Advisory Board. “Providing Faculty Support Under Shared Services Models,” Education Advisory Board,accessed November 2013, page 14, ort-Under-Shared-Services-Models 2013 The Advisory Board

Group Shared Services Staff to Reduce Space NeedsShared services administrators at one profiled institution group sharedservices staff into pods based on their client locations. The podsconsist of a small group of staff dedicated to a few departments. Thepod structure: Enables staff to specialize their services and delivery to clientneeds, Eliminates the need for a large SSC to house all shared servicesstaff, and Maintains existing staff and client partnerships.New Process DevelopmentContacts create cross-functional teams to improve current processes for each department;collaboration ensures shared services staff understand the need for change and engage staffin transitions from old to new processes, eliminating redundancies.ImplementationGradual Transition to SSC Builds Staff Confidence and SupportVolunteer Units Move First to Shared Service CentersShared services administrators recruit volunteer units to participate in the shared servicesmodel; contacts report that a voluntary approach mitigates campus constituent criticism of theshared services initiative.Allow Departments and Units to Participate in SharedServices Models VoluntarilyInstitutional and academic administrators typically recruit volunteerunits to participate in initial shared services transitions to improveservices, procedures, and organization before full implementation.Voluntary participation reduces shared services model resistance asunit and department leaders determine when transitions occur,internal organization, and staffing changes, instead of externalinstitutional administrators.Administratorsrequire between oneand four months tocomplete functiontransfers, dependingon functioncomplexity and clientunit size. 2013 The Advisory Board CompanyGradual Transition of Other Units to SSCThe progressive transfer of functions reassures non-client units that SSCs function effectivelyand encourages new clients to participate in the shared services initiative. Contacts atInstitution I report that once 50 to 75 percent of units migrate a function to the SSC, theremaining units quickly and voluntarily follow

OptimizationSolicit Feedback to Inform SSC Process ImprovementsFeedback SolicitationRecent press surrounding shared services indicates discontent due to a lack ofcommunication and feedback surrounding shared services implementation. At the Universityof Michigan, faculty express a desire to work with the administration on cost-cuttingmeasures, including shared services; faculty have their own ideas about how to save moneyand want to be involved in the decision-making process.6Strategies to Collect Faculty, Staff, and Administrator Feedback7Create AdvisoryBoardsAdvisory boards provide guidance to shared services directors onconcerns and recommendations to improve procedures,practices, and organization. Faculty representatives, departmentchairs, and associate administrative deans serve on advisoryboards.AdministerSatisfactionSurveysShared services administrators distribute electronic clientsatisfaction surveys that include Likert scale questions and openended responses to all units and staff served. Questions addressservice area quality and efficiency, staff interactions andknowledge, and procedural clarity and effectiveness.Administrators aggregate customer satisfaction data and createaverage scores by division and function.Maintain ClearReporting andCommunicationLinesInstitutions and academic units organize shared services modelswith multiple channels of communication (e.g., advisory boards,reporting lines) for faculty, staff, and administrator review ofshared services. Faculty or staff report concerns (e.g.,discrepancies, confusing procedures, timeliness) to departmentchairs who report to deans, who forward concerns to associatedeans for administration.Process ImprovementMeasure SSC performance, diagnose gaps and identify performance enhancements, andconduct continuous improvement meetings between SSCs and departments to continue toimprove administrative processes.6) “Shared Services Backlash.” Inside Higher Ed. November 21, ulty-opposition7) Education Advisory Board. “Providing Faculty Support Under Shared Services Models,” Education Advisory Board,accessed November 2013, page 15, ort-Under-Shared-Services-Models 2013 The Advisory Board

CostsShared Services Transition Requires New Space and LeadershipShared Services Implementation Costs8Contacts at allprofiled institutionsidentify spaceavailability as asignificant obstacleto shared servicesimplementation. Equipment: Administrators at Institution F purchased new computers for staff in theshared services center launch. Staff moving from client units to SSCs at Institution Ebrought desktop computers with them, significantly reducing overall costs. Space: Administrators at Institution E spent 200,000 on space renovations for theinstitution’s network of seven SSCs. Costs included new carpeting, basic refurbishments(e.g., additional telephone lines, new cubicle-style workstations), and new wallpaper andpaint. Managerial Salaries: Most shared services staff transition from client units laterally and donot impose new costs on the institution, but administrators create new managerial positionsto oversee SSC functions. Most profiled institutions distribute costs associated withmanagerial salaries to client units through service charges.ConstituentSupportEngender Campus Community Support for Shared Services throughCommunication and FeedbackContacts at most profiled institutions report negative initial responses to shared servicesinitiatives that accused university administrators of sacrificing service quality to reduce costs.Shared services administrators emphasize potential service quality improvements rather thancost-saving goals to generate campus constituent support for shared services models;contacts at two profiled institutions emphasized to faculty that specialized shared servicesstaff would process transactions faster and with fewer mistakes or audits than unitgeneralists.Communicate Frequently withAffected Constituents“Whenever there is going to be afundamental change in the way auniversity operates, includingimplementation of shared servicemodels, communicate with affectedconstituents ten times more than youthink you need to.”-Forum InterviewHold Open ForumsAdministrators at Institution Borganized monthly open forums forinstitution constituents attended by atleast one senior university officer.Contacts report that the provost’sstrong, public support for theinitiative mitigated dissent byacademic unit staff and faculty andreinforced the message that sharedservices would improve servicequality and efficiency.8) Education Advisory Board. “Transitioning to a Shared Services Model,” Education Advisory Board, accessedNovember 2013, page 13, red-Services-Model 2013 The Advisory Board

Communicate Staffing Changes as a Result of Migration to SharedServicesTo communicate to staff the realities of staffing changes due to shared services,administrators at the University of Texas at Austin 9 emphasize the reliance on naturalattrition over time to transition to reduced staffing levels for shared services centers; theshared services website notes the many professional development and training opportunitiesfor employees as a result of shared services.Suggested Script: Shared Services Staff Changes“The experience of our current staff is invaluable, but it is a reality thatin the process of consolidating functions and relocating staff that somepositions will no longer be necessary. Implementing a SharedServices Organization will take several years to fully implement. It isour belief and hope that much of the reduction in positions can beachieved through natural attrition over the long transition period. Whileit is true that jobs can be affected, it is also important to look at thehuman benefit of having an organization dedicated to specificadministrative functions. A Shared Services Organization can providean enhanced career path and career development opportunities thatmay not exist in today’s University environment.”Conduct Interviews with Employees to Determine Work PreferencesShared services administrators at Institution E interviewed staff identified as likely transfercandidates to determine willingness to transfer from client units to the shared services center.Interviews revealed that staff who had indicated reluctance to transfer on electronic surveysactually felt ambivalent and open to new positions in the SSC. Contacts attribute initial staffreluctance to a lack of information about the transfer process and the safety of accruedbenefits. The University of Texas at Austin’s shared services website uses the followinglanguage to convince staff that shared services benefits employees:Suggested Script: Shared Services Staff Benefits“A common complaint of University of Texas at Austin employees thatperform administrative functions is that they are unable to further theirskills to pursue advancement opportunities inside and outside of theuniversity. A Shared Services Organization could provide training andprofessional development that in many cases is not

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