Achieving New Efficiencies

in Higher Education
2 | Achieving New Efficiencies in Higher Education
As operating costs escalate, funding and
endowments erode, and tuition increases,
colleges and universities are faced with
the challenge: Do more with less. There
is a growing concern about education
costsand value for the education dollar
from parents, taxpayers, and lawmakers.
Broadly, students struggle to afford what
colleges and universities cost nowlet
alone if prices continue to increase.
This struggle to control costs appears to
have no simple solution. Research suggests
that college leaders are caught in a dilemma
between the costs of running their
operations, the number of students they
can educate, and upholding the quality of
educational services. At the same time,
many administrators realize that the gap
between their organizations operating
efficiencies and those of the average
private-sector entity has come under greater
scrutiny. As a longer-term fix, many college
and university leaders are promoting a
College administrators and regents are rethinking their
institutions administrative service models with an eye
toward achieving high performance. Taking a page from
business and government agency playbooks, they are
moving toward shared services models for functions such
as finance, HR, IT, student services and procurement.
Their goal? To gain greater operational efficiencies and
maximize service delivery quality, without sacrificing
their institutional missions.
Shared services is gathering momentum as colleges and
universities nationwide are exploring systematic structural
approaches for containing costs that have begun to prove
valuable in public services. This article explores the growing
movement toward shared services within higher education,
including how the model fits within the unique mission
and attributes of the higher education environment.
shift toward thinking about higher
education as a public good that should
be more strongly supported.
Still other leaders are looking to break out
of the dilemma by exploring how to reduce
the costs of administrative operations while
actually improving the quality of services
provided. Increasingly, regents and senior
administrators are starting to grasp the full
potential of shared services as a tool for
rethinking their operating models and
achieving consistent, long-term performance
improvements. (See sidebar, Yale dramatically
lowers costs and amplifies efficiency
through shared services.)

However, key differences between higher
education organizations and private-sector
companies need to be acknowledged before
this transformative model becomes a broadly
viable option for colleges and universities.
3
Yale dramatically lowers costs and amplifies
efficiency through shared services
Yale University had significant operational challenges before launching its shared services
activities. The schools regents and administrators saw an opportunity to improve administrative
functions and a need to continuously improve service levels and compliance in order to
support future growth and respond to financial pressures.
In September 2007, Yale launched a five-year initiative to transform its back-office functions
(HR, procurement, finance, and research administration) and information technology
department. Working with Accenture and the Hackett Group, the school began the initiative
by benchmarking best practices in back-office processes and systems, and diagnosing
Yales application suite and IT capabilities. The results of these first phases were organized
into a comprehensive program designed to standardize and improve service across
the university.
Ultimately, the project is expected to lead to more efficient and effective administrative
capacity, improvements in data accuracy, timeliness and availability, lower risk of
future compliance or control issues, and customer-focused shared service approaches
to administrative functions.
4 | Achieving New Efficiencies in Higher Education
Shared Services Defined
2. Treats the users of shared services (for
example, the departments or different
campuses of a university) as customers
who drive transactions.
3. Manages service delivery through clear
service-level agreements that define the
responsibilities of both the shared services
organization and its customers, with metrics
and costs for performance.
4. Operates within a performance-driven
culture that uses metrics and feedback
to analyze how well the business
processes are functioning, all the way
down to the individual level, to foster
continuous improvement.
5. Takes ownership of the processes behind
the services it provides, and monitors and
enforces compliance with the process
standards it sets.
Institutions currently establish their service
levels in myriad ways: based on availability
of school/unit funding, differences in
mission, compliance requirements, cultural
Accenture describes shared
services as the consolidation
of administrative or business
support functions (such as HR,
finance, IT, student services,
and procurement) from several
departments into a single,
standalone organizational entity
that has one mission: to provide
services as efficiently and
effectively as possible.
A shared services model has five key
characteristics that make it quite different
from decentralized, standardized or
centralized approaches. The shared
services organization:
1. Is a separate organizational unit,
but linked to its customers through a
governance model that involves customers
in decision-making.
norms and other needs. A natural question
generally raised is, What administrative
services are well-suited to a shared delivery
model? The typical concern is that most,
if not all, services could be swept up in an
enterprise initiative that prioritizes savings
over service. However, rather than services
being dictated from the center out, as
in a centralized model, shared services
design begins by engaging a broad base of
school and department customers to define
a common process for high-volume, routine
administrative service requirements. The
rationale is that when these high-volume,
standardized processes are done at scale,
shared services can perform them in a more
efficient, repeatable way than an individual
in a unit who performs them on an irregular,
sometimes part-time basis. From this
perspective, a shared services design
achieves consensus upon what services
are best suited for the unit to retain, and
what services are best performed by a
shared organizational unit.
FIGURE 1. Shared Services is a way of organizing service delivery to optimize the delivery of cost-effective, flexible,
reliable services.
Unit
Unit
Autonomous departments
Focus on responsiveness
Different systems and
non-standard processes
Separate functional staff
Schools/units run similarly
Typically some common
sub-systems
Common processes
Separate functional staff
Single department, division or
site which performs the function
Focus on efficiency and control
Typically some common
sub-systems
No service level agreements nor
performance targets
Separate organization but
linked to customers through
governance model
Managed service delivery
through clear service level
agreements
Customer driven transactions
Performance-driven culture
through measurement and
feedback
Process ownership end-to-end
Decentralized Standardized Centralized Shared Services
Unit Unit Unit
Unit Unit
Unit
Unit
Unit
Central
Unit
Shared
Services
Center
5
Understandably, some service elements
require unique knowledge of a college or
auxiliary unit. For example, approvals, even
for the most routine transactions, should
remain a unit responsibility. The ability for
the local unit to determine its own destiny
and retain a skilled professional staff is
essential to achieving the mission.
However, a major benefit of the shared
services model is that it frees up scarce
resources to allow departments to focus on
their core mission and on their customers
needs, while providing organizational
flexibility to have the traditional administrative
functions independent of front-line activities
and structures. Additionally, the financial
implications are considerable. Across many
industries and organizations, Accenture
finds that shared services can realize annual
savings of 15 to 35 percent for in-scope
functions. The use of standard systems,
processes and procedures alone can generate
up to 10 percent savings a year.
1, 2
6 | Achieving New Efficiencies in Higher Education
Differences That Impact Shared
Services in Higher Education
Rather, they should be viewed in light of
their impact both on the business case
behind shared services and the design of
the shared services model (e.g., in performance
metrics), as described in the sections
that follow.
Mission before margin in higher
education institutions
Higher educations mission and noble
aspirations suggest that cost efficiency
will not always be the most decisive factor
in operating decisions. Nevertheless,
administrative cost savings that come
from shared savings can be repurposed
toward the academic mission, as well as
student financials and attracting and
retaining distinguished faculty. Moreover,
standardizing on business processes can
help unify schools and units with very
different perspectivesto the benefit of
faculty, staff and students alike.
Preserving the value of
unique identities in higher
education institutions
The desire to hold true to the culture and
identity of the university (as defined by
academic programs, research, athletics,
etc.) may result in faculty interacting with
administrative functions in a more informal
manner than may be common in the
private sector. While the high level of
rigor and shared accountability required
for shared services to be successful may
be uncomfortable for some shared services
customers, our experience shows that the
considerable potential benefits should
sway the argument that standardization
in processes is essential.
Six out of 10 Americans now
think that colleges today
operate more like businesses,
focused more on the bottom
line than on the educational
experience of students.
3
Higher
education institutions are
understandably sensitive to
any perception that adoption
of private-sector practices
may impact their educational
mission. Thus, the differences
between how higher education
organizations and companies
approach shared services need
to be acknowledged.
Three key differences include:
Higher education institutions put mission
before profit maximization more often.
Higher education institutions typically
have more decentralized and, at times,
unique operating cultures across campuses
or across departments.
The independence and entrepreneurial
nature of schools and researchers creates
a perception that by surrendering a
portion of administrative work, the culture
of the school may somehow be put at risk.
These differences often cloud the ability of
colleges and universities to move forward
with shared services. Nevertheless, Accentures
perspective is that the differences should
not preclude the move to shared services.
The implications of decentralized
operating cultures across campuses
and departments
Governance policies and practices within
higher education institutions tend to be
more complex than is typical in business.
Likewise, deeply rooted organizational
histories are factors that have become more
influential than operational efficiencies. For
example, whereas an industrial companys
divisional vice president is highly unlikely
to intervene in the design of office space,
it is not unheard of for senior academics
to be vocal about such matters.
These circumstances seem to be magnified
at big public schools. Whereas most private
colleges and universities tend to have a
single campus, large public schools (such
as the University of Michigan and University
of Illinois, for example) often have sprawling
urban campuses, as well as multiple
campuses that, in general, are widely
dispersed geographically. Each campus
tends to have its own operational practices
and procedures, making the idea of a
single, system-wide procurement authority
seem idealistic.
There can be significant consequences to
this dispersion of operations. In a recent
client benchmarking study, Accenture
discovered that the costs of one large
state university systems finance function,
as a percentage of the overall operating
budget, were 52 percent higher than those
of a cross-section of peer group public and
private-sector organizations of similar size
and complexity. Further, our experience
indicates that, in general, the larger, more
complex, and more dispersed the institution,
the stronger the case for shared services
from the potential of reducing costsand
the more a shared services initiative requires
its own business rules.
7
8 | Achieving New Efficiencies in Higher Education
Basic Principles Behind the
Shared Services Model
Benefits estimate: Because shared services
focuses upon how a service is performed,
much of the benefits are derived from
labor changes. Automating tasks, reducing
exceptions that are typically arbitrated
by middle managers, and increasing the
ratio of transaction processors to managers
are all contributors to the benefits estimate.
However, some benefits become achievable
simply because a commonality in service
and staffing has occurred. For example,
future efforts to optimize processes are
easier if they are performed across the
enterprise in a common way, terminating
in a central location.
Investment: In Accentures experience,
project success is greatly increased by
making a significant commitment to
full-time involvement of the university
team members in building the processes
and organization of the new shared
service center.
The other implementation cost that can
be underappreciated is the transition
of the institution workforce. Training,
recruiting to the center, and, if necessary,
severance costs are all significant elements
of a project budget.
Implementation timeline: In Accentures
experience, higher education institutions
tend to express a preference for a longer
implementation timeline. This could be
attributed to the higher education culture,
which typically observes a consensus-
based decision-making process.
To balance the demands of the higher
education calendar with the rigors of an
implementation project, Accenture has
found that smaller implementation teams
that have broader responsibility for tasks
(e.g., process design through training) and
that have the same individuals touching
each significant project element, reduces
integration risks.
College and university executives
who have effectively undertaken
shared services gain an
understanding of the common
principles behind what it takes
to make these transformations
successful in higher education.
Focus on the benefits beyond
cost savings
As colleges and universities become
more familiar with shared services, they
increasingly recognize the benefits the
model can have beyond cost-cutting.
Ultimately, one of the biggest benefits
is the ability to put money back into the
education and research missions of the
university. For example, at the University
of Colorado-Colorado Springs, Chancellor
Shockley-Zalabak reported noticeable
gains in job satisfaction and lower attrition
among those who had been engaged in
the colleges shared services initiative.
Build a case for shared services
By providing context to key decision
makers and allowing impacted stakeholders
to own pieces of the change process,
the business case is critical to guiding
a successful transformation. Shared
service business cases typically include
the following key components:
Workforce transition: Workforce transition
is typically the greatest source of
misunderstanding for a shared service
project. This misunderstanding stems
from many sources:
- Fractionalization of effort: The
decentralized nature of administrative
services in higher education can lead
to staff performing seemingly unrelated,
routine tasks, such as paying bills
and processing orders. By measuring
this work effort across a suite of
administrative services and bundling
these services together to transition
them to a processing center, Accenture
has been able to identify transition
plans that provide valuable outcomes
for the school or business unit, elevating
their focus on school-specific research,
academic or patient-centric visions.
- Resistance to change: The higher
education culture is based in part on
tenure and long-standing service to
a higher mission of the advancement
of learning. Therefore, context for
the broader university constituents
is valuable when evaluating how
transition to a shared services
environment can be achieved. First,
shared services implementation
projects are typically longer term,
which gives staff advance notice
that change is coming. Second, in
Accentures experience only 10-20
percent of staff that performs
processes suited for shared services
is typically affected. The bulk of the
administrative team may see changes
in how work is done, but not in their
work location or in their employment
status. Third, todays demographic
indicates a trend of significant
retirements in the near future, making
shared services a potential response.
9
Garner strong executive support
As an approach for restructuring and
reform, shared services require the
unconditional support of senior officials
to provide support in times of uncertainty.
Executive sponsorship gives weight to the
changes being asked of people at all levels
of the organization.
Build strong governance that
includes customer representation
A strong governance structure provides the
team implementing shared services with the
parameters for flexibly responding to the
changes that will inevitably happen when
a large group of stakeholders is engaged.
When creating a standalone organization
within an enterprise or across enterprises
and jurisdictions, a credible governance
structure is one that gives the customer
a voice, while balancing service requests
with the objectives established during the
creation of the shared service center.
Communicate to alleviate concern
The move to shared services brings with it
concerns about the unknown. The leaders
at higher education institutions need to
proactively address these concerns, and
educate those affected about what is true
and what is false. Consistency in messaging
across the organization is a critical success
factor. Messages must be about more than
whats coming next; they must emphasize
why the change is happening and how it is
being approached.
While success may be founded in these
principles, what is also clear is that there
is no one-size-fits-all approach to shared
services in higher education. Managed
properly, a shared services project involves
systems that measure service to drive
accountability and continuous improvement.
Furthermore, it must be supported by a
strong institutional mission and a clear
vision of long-term goals, in terms of
cost savings, higher productivity, improved
customer service, a more disciplined
approach to cost management and greater
employee engagement.
10 | Achieving New Efficiencies in Higher Education
Conclusion
Higher education institutions feeling the pressure of
strained finances should never be distracted from their
true missions. The challenges associated with meeting
immediate budgetary shortfalls through contentious
tuition increases or programmatic cutbacks diminish the
potential for long-term success and continued organizational
growth. The shared services model can contribute to a
stronger financial footing, a greater ability for higher
educational institutions to meet their missions and,
ultimately, new efficiencies.
While the model is only just beginning to make headway
in the world of academia, already it has built a convincing
and growing track record of its efficacy in reducing costs,
developing new cohesion within universities, and refocusing
attention on colleges and universities fundamental
purpose of quality education and research.
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About the authors
David Metnick is a senior executive in
Accentures Management Consulting
practice, specializing in education, non-
profit and public sector clients. He has
advised more than 20 government, education,
healthcare and industry clients in designing
and developing administrative transformation,
human resources, talent and organization,
and shared services strategies and solutions.
david.t.metnick@accenture.com

Greg Condell is a senior manager in
Accentures Management Consulting
practice. He has spent the past several
years working with higher education and
public sector clients in shared services and
finance process improvements. Gregs client
work spans business case development,
implementation planning and delivery.
A former chief financial officer, he is a
licensed CPA in Illinois and holds an MBA
from the University of Chicago with a
concentration in finance and strategy.
gregory.j.condell@accenture.com

Mark Howard is a senior manager in
Accentures Management Consulting
practice. He has spent the past several
years supporting universities on a
wide variety of transformational work,
including enterprise resource planning
implementations, chart of accounts
redesigns, broad administrative services
process and organization redesign, business
case development, and shared services
planning and implementation.
mark.h.howard@accenture.com
About Accenture
Accenture is a global management consulting,
technology services and outsourcing
company, with approximately 275,000
people serving clients in more than 120
countries. Combining unparalleled experience,
comprehensive capabilities across all
industries and business functions, and
extensive research on the worlds most
successful companies, Accenture collaborates
with clients to help them become high-
performance businesses and governments.
The company generated net revenues
of US$28.6 billion for the fiscal year
ended Aug. 31, 2013. Its home page is
www.accenture.com.
References
1 Achieving High Performance through
Shared Services: Lessons from the Masters,
Accenture, 2009, www.accenture.com/
Global/Consulting/Finance_and_Performance_
Mgmt/Finance_Operations/R_and_I/
Achieving-Masters.htm
2 Driving High Performance in Government:
Maximizing the Value of Public-Sector
Shared Services, Accenture, January
2005, www.accenture.com/NR/rdonlyres/
0E50798A-97B0-4400-9519-460B09E80E7E/
0/driving.pdf
3 Squeeze Play 2010: Continued Public
Anxiety on Cost, Harsher Judgments on
How Colleges Are Run, National Center
for Public Policy and Higher Education
and Public Agenda, Feb 2010,
www.highereducation.org/reports/
squeeze_play_10/index.shtml
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