As many institutions continue to struggle with rising costs and increasing complexity of their technology environment, the notion of Shared Services as a solution to these problems needs to be more closely examined. But, what exactly is “Shared Services”? Depending on your perspective, it can mean a lot of different things to a lot of different people - a bit like the old "six blind men and the elephant" parable from the Hindu Rigveda.
Breaking things down into the categories of People, Process, and Technology, here is a start at an explanation.
Ideally, a shared service model would result in staff and employees from the various participants sharing duties in support of each other. For example, a common payroll department that all participants use or a centralized data analytics department that produces forecasts and strategic reports for each member, with corresponding staff reductions at the individual member institutions.
A perfect shared service model would have all participants following the same basic processes for administrative and academic work. Workflows would be similar, if not identical. For example, paying a vendor or creating a new employee in the ERP would follow the same basic steps at each member institution.
Each member would agree on a common set of standards and software to be deployed, possibly at a central host institution that would provide data center and technology infrastructure support (whether on-premise or outsourced by the central host). Each member would draw on the resources provided centrally, and under the best of circumstances agree upon a single non-customized instance of ERP and other software.
Models for Shared Service Deployment - A Few Samples
One School Serves as Host - let’s imagine that an institution didn’t see the trends in virtualization coming and overbuilt a data center, and now find themselves with enormous excess capacity and unused costly resources to support it. One solution is that the institution could serve as a hosting site for other institutions that want to house their servers and storage with the institution. The hosting service would be provided at greatly reduced cost versus a single institution’s on-premise deployment or commercial hosting providers.
An interesting aspect of the “one school / host” model is sharing of a common ERP, such as Banner or Peoplesoft, or an open-source collaborative development.
The model becomes significantly more complicated when considering sharing of ERP and providing a single instance for institutions - for example, a multi-tenant/single instance model. Many schools desire customizations which can quickly erode the benefits of collaboration. Also, departing from a vendor based solution for a custom written collaborative solution, while attractive in freeing one from license fees, introduces new issues of continuing support and currency as for-profit vendors continue to expand their offerings. Worse yet, some collaborative software development models provide “shared software”, but require individual members to find their own hosting (on premise at their own institutions, or hosted with a cloud provider).
One School Provides a Service Center - Like the One School / Host model, this option requires a deep commitment from member institutions to use one school as their administrative service provider. This can range from a few shared functions (hiring processes, payroll) to an overarching administrative common service that includes all typical administrative functions (finance, HR).
Although this model can provide the greatest savings to the institutions, it requires a firm and lasting commitment from the members to not deviate from or abandon the effort. It also implies a significant reduction of staff in the administrative departments at the participating institutions, which is not often a popular notion especially when it may directly affect the office of the CFO!
Collaboration Around a Single Function - imagine a situation where all the potential members of a collaboration essentially need the same kind of data reports for compliance, forecasting, and strategic management. This model would provide a collaborative effort, including shared staff and technical resources, to produce the desired reports, analytical tools, and interpretative services to the membership.
While this is perhaps the easiest model to start with, institutions will struggle with handing off the responsibility for institutional reporting and effectiveness to a group effort. Sometimes in fear of losing competitive advantage vs. the other members, sometimes because their needs and priorities are so different from each other.
Although my example uses institutional data reporting as a model, it can be extrapolated to other “single functions” that institutions may wish to share, and with the same concerns and complexities. Ultimately, the minimal cost savings may not be worth the effort.
With Shared Services, it is “think big, or go home”.
While there is a tremendous need and great potential for shared services in higher education, it will take a strong external impetus for schools to abandon their closely held desires for “uniqueness”, which extends to aspects of their operation that are not part of their competitive advantage. However, it is my firm belief that those schools that will survive and thrive in the next decade will be the ones who figure out how to form effective collaborations to minimize costs of common operations while at the same time growing their competitive advantage around academic programs and other offerings that make them unique and marketable to their target audience. The last thing schools need who are focusing on the latter is to take on additional costs that could be minimized by adopting new thinking about administrative shared services.
For further information or assistance in exploring your institution's shared services options, please contact me!