More on shared services

The UCISA Forum on Shared Services was particularly timely given HEFCE’s announcement of shared services activity under the auspices of the Universities Modernisation Fund (UMF). There are two strands to the activity – one focusing on infrastructure and the other on administrative systems, predominantly research administration. The initiatives come at a time when IT directors are looking for ways of reducing costs. The business cases for the services are not yet proven but they will need to be in order for the developed services to be widely adopted and so sustainable. They don’t have the luxury of time with only a year to spend the money available but (and I had some input to the programme, you’d expect me to say this) I am confident that the sector will reap tangible benefits from the programme.

Part of the reason the Government came up with funds for the sector to develop shared services was their continued belief that the sector can make significant savings by sharing administrative functions such as HR and Finance as well as IT. This may be true but the focus is inevitably on the IT rather than the services per se. There may well be savings from sharing finance systems but these are only likely to be realised if instances are identical which in turn means that many of the processes are also common. And if processes are common then the bigger savings through sharing services rather than servers may be realised. Ian Lewis from HEFCE acknowledged that there was potential for delivering efficiencies through process improvement but the possibility of pump priming Lean projects across the sector to achieve this had not been considered. If there was a widespread initiative to streamline processes then there would be a reasonable chance that some standardisation would emerge which, as I’ve said before, is a prerequisite to fully sharing services.

Standardisation was key to the success of the An Chéim shared service in Ireland. An Chéim provide packaged administration applications for the 14 institutes of technology in a single data centre. All 14 institutions are on the same applications, developed to the same design, located in the same place and upgraded to the latest releases. This clearly has advantages in terms of support and maintenance and helps keep the costs down. Getting over the we’re different arguments to standardised processes was a challenge but one that realised benefits – as the Gartner review of the service states “Common standard design … crucial for the ability to centralise and outsource which in the end saved the institutions millions of euros”. Despite its success the rationalisation of the number of institutes of technology (from 14 to 3 or 4) presents a threat to the service. The larger institutions will be more demanding and may seek variations on the standard processes in order to work in a more flexible way that may better suit their missions. Secondly, if the merged institutions are paying the same proportion of the costs as their composite bodies then there is a chance that the difference between an in house service and paying for a hosted one will narrow to the extent that it becomes attractive to bring the solution in (notwithstanding savings made through collective purchasing). It will be interesting to see how An Chéim’s service evolves in the new environment.

Some common themes emerged during the day, a number of which echoed the discussion at the FOTE think tank a couple of weeks ago. Firstly, that people will buy into services where they exist but do not have time or the resource to set them up (a point also raised at a meeting of JISC’s strategic partners the following day). The counter to this is that there is potential to start small and grow so if there are areas where a small number of institutions can cut a deal and start to share, then they should be encouraged to do so. The feeling was that pump priming would be required to establish larger scale services, which is precisely what the UMF money is attempting to deliver, or an organisation needs to take a risk and develop a facility or service that they hope others will buy into. That was the approach Eduserv took with their data centre, taking a gamble that one government contract would lead to others. The start small and grow philosophy was highlighted the presentations from Mark Gawley of Worthing Borough Council. Many of the Council’s back office functions were merged with a neighbouring council and the expectation is that the project will deliver a return on investment within two years. Moreover the IT services will be providing services for two more councils in the near future and the prospects of further expansion have not been ruled out.

VAT remains a significant barrier to the adoption of shared services. Ian Lewis expressed some optimism that the matter would be resolved in time to be included in the forthcoming budget but I understand that the Finance Bill will only include a recommendation that there is consultation on the issue. If this is the case it will only give sceptics a reason not to share.

Finally there were a couple of staff issues that were raised. The first is that, in the majority of cases, the impact of a shared service (or outsourcing) is that you need to make people redundant to then get the saving. IT Directors have little experience of what their legal obligations are in these circumstances and no experience of TUPE (the Transfer of Undertakings (Protection of Employment) Regulations) so some development is required. The other staff issue is that there is a lack of vendor management skills – these are essential to ensure that organisation providing a service, be it shared or outsourced, delivers the service required to the agreed level.

Overall it was a full and useful day. As is always the case there seemed to be more questions and answers – I look forward to the day when the reverse is true.

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