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Deploying and Maturing Shared Services in Higher Education: Driving cost savings and operational efficiency

06/04/2019

Universities are complex institutions that balance public funding, responsible investment, and high-quality operations to support tens of thousands of students.

More and more of these institutions are opting to set up Shared Services Centres as a more effective and efficient means of running their operations. According to SSON data, of the 51 universities across Australia and New Zealand, 27 run Shared Services (51%). There has been significant growth in the adoption of Shared Services across universities in ANZ over the past 10 years. Since 2014, the number of Shared Services has doubled, in fact (compared to 2010, the number of SSCs has increased five-fold).

The responsibilities of shared services within universities are multiple and are particularly important as most universities are funded by public money and thus held highly accountable. Driving more revenue through students and increasing the intake of students from abroad; keeping costs low; ensuring probity and compliance; and enabling quality support – are all priorities for modern day university operations.

Ahead of the 22nd Australasian Shared Services and Outsourcing Week 2019 we explore the strategies harnessed by two Australian universities – the University of Southern Queensland, and Western Sydney University – that helped them transform their shared services and allowed them to drive cost savings and operational efficiency.

Western Sydney University

Western Sydney University (WSU) is one of Sydney’s more geographically spread universities with a dozen campuses over 20 different physical locations. When the University’s shared services were first established some seven years ago, the decision was made to consolidate three separate entities into one shared services unit.

Since then, the global context for universities has changed from a relatively constrained and capped market, to an un-capped and demand-drive system. This meant that for a period of time the number of university students grew exponentially. More recently, things have changed even more. Enrolments started to slow down and the Government started to reduce funding and looked for ways to extract efficiency dividends from the University sector.

With all the change happening WSU began a review of their shared services to focus on the low hanging fruit and find ways to drive greater efficiency across the organisation. This review began in 2015 looked only at some of the core traditional shared services such as HR, IT, internal communications and finance.

Peter Tow Director, Project Management Office, Finance and Resources at Western Sydney University shares the four strategies employed to ensure a successful shared services transformation:

Strategies for Successful Transformation

The path to least resistance

“At the beginning of our journey we brought in consultants review and provide advice for different options we could take. They provided a whole suite of different opportunities and answers, but at that point of our journey in 2014, the appetite for significant change was low in the organisation. The understanding of the benefits of shared services was immature across the organisation, meaning the relatively straightforward and easy to justify options were picked. So the initial stages of the journey were based around a path of least resistance.”

The Stepping Stone to Bigger Things

“But this initial stage enabled us to clean up one part of the organisation and was a stepping stone to the next area of development, which commenced in July 2016. This stage involved looking at a shared service model for the administrative services undertaken in schools. At that time, we had nine schools and three institutions, all of whom operated differently in their own way. We looked at what other universities had done in this space and had some good examples of what worked and what didn’t through benchmarking and then applied these lessons into our own model.”

Thinking outside the box

“Being a relatively young university, we had the opportunity to try get out ahead of the pack. We looked at the services, support, academic, students, teaching, research in schools and we took the approach of what shouldn’t we centralise - as opposed to what could we centralise. That view of the world actually drove a lot of outcomes and we’ve probably gone further than any university in Australia has gone.”

Gaining Leadership Support

“We brought Deloitte in for a four month visibility review. We used this review and information to engage with the university leadership. We had a very clear sponsor of the program, which is really important, so the Vice Chancellor was very clear on what he wanted to do. We went through the to-do list, ticked off most of the options and then the start of 2017 was the year of design and implementation.”

Results Realised

Since transforming their shared services, and centralising a number of operations, including IT, IT support, student communication and marketing, student administration and corporate travel, WSU has realised a number of benefits. Peter explores in more detail below.

“Since rolling-out shared services we have realised between a 10 to 12 percent operational cost benefits which was a little lower than what we were aiming for, but what we have achieved is about average, especially considering we haven’t finished the optimisation element of the journey.  We are positioning ourselves for growth because with some further optimisation we’ll be able to deliver a lot more efficiency.

We also realised other benefits which include the need for process mapping areas that have never had process maps before. A lot of the issues and challenges the students have faced in the past were hidden and are now visible. We have a shared group with single accountability who able to easily resolve student pain points. We’re also starting to get a unified voice for new systems, which is the next phase of the program. Now that we have a service provided by a single consistent group we are looking at things like Robotic Process Automation (RPA) and improving workflow opportunities.

All of those opportunities are starting to emerge, which will require further investment, but they weren’t possible before. Rolling out shared services has reshaped the organisation from a very strict hierarchal approach into a more of a matrix-based support model, which gives us a lot more flexibility.”

University of Southern Queensland

Institutions of higher education are supported operationally by dozens of different departments that offer administrative support across areas like Enterprise Finance, ITC, Travel, Health, Marketing, Student Management, etc. At the University of Southern Queensland, for example, there are 20 different departments that offer important services and support the running of the university.

The University of Southern Queensland (USQ) is a medium-sized, regional university based in Toowoomba.  With its some 30,000 strong student cohort, USq recently began planning, launching and maturing their shared services, specifically in regards to finance functions.

While the University has been leveraging shared services for over a decade they’re now developing a business case that allows them to continue evolving and optimising through the centralisation of operations and the reduction of locations by some 75%.

Exploring the planning, launching and maturing journey is Joe Guerrini, Shared Services Manager at USQ, who shares the needs informing USQ’s continued service transformation journey.

Strategies for Successful Transformation

Build a Cohesive and Aligned Team

“While finance officers were brought together under the Shared Services umbrella, the initial decision was to keep them embedded in or at least near their departments, as it was thought that the proximity would support service excellence best. We started from the premise that being close to their department was a good thing - it felt like we were imposing less of a burden and still retaining the proximity.

Over time, however, this approach did not solve the problem of contingency planning – a key priority for us. Overtime however this decision was reneged – we saw that our finance officers remained too closely aligned with their old departments and were unable to offer truly interchangeable support across all departments so we centralised and created larger teams that serve our university objectives better by offering better coverage and interchangeable skills."

Understand Need and Offer Modern Support

“Finance’s role today is much different to what it was 10 years ago. In the past, a finance officer would have expected to spend a lot of his or her time procuring goods and services, getting bids from a few different suppliers for even relatively small purchases. Today, in contrast, departments often already know which goods or services they want and where they want to buy them from.

USQ’s nursing department for example does not need us to pick their lab equipment for them. These purchase decisions are frequently already determined, and our role is more about effective execution. With this greater understanding and agility it means that Finance’s value add becomes more apparent in terms of speed of delivery, as well as ensuring probity and compliance.”

Balance Speed and Compliance

“While ensuring checks and balances is a key responsibility of Finance, at the same time it’s important that they do not hold up any aspect of operations unnecessarily. Inserting too many checks into a procedure might offer protection but could also fail the teachers and researchers that we are trying to support by holding up a process. Our main concern is that goods and services are offered in a timely manner so that our teachers and researchers can go about their business. We can't have them waiting for laptops because we've inserted four additional steps into the delivery process.

Maintaining a balance is key, therefore, and all the Shared Services team needs to be aware of how to strike the right approach. We are always conscious that we are using public money and that much of the money we spend comes from government funding. We have to ensure we are spending this money wisely. ‘Oversight’ is part of our commitment."

Results Realised

Since embarking on their shared services journey over a decade ago USQ has centralised a number of roles, processes and operations. However to continue realising tangible benefits the University understands that shares services need to be modernised and evolved. Joe explores in more detail below.

“When our Shared Services model was introduced 10 years ago, one of its objectives was to drive contingency planning, and protect departments - Enterprise Finance, ITC, Travel, Health, Marketing, Student Management - from the risk of their finance officer being out sick or on leave, leaving them unable to sign off on contracts or pay suppliers, for example. Shared services provided extra coverage to avoid such instances.

Our starting point was that we needed to take the risk associated with specialist Finance people being unavailable, out of the equation. One of the first decisions we took was to bring these Finance Officers together under the SSO umbrella so that they could step in and cover for each other. Over the years, we've also gradually reduced the number of officers from 23 to 17, currently, through natural attrition and leveraging synergies.

While this seems like a small thing, the affect of creating Finance groups and cross-training people to cover each other meant that our operations we’re able to continue regardless of absences. Additionally the reduction in officer numbers has further lead to cost savings which can be deployed elsewhere.

Realising the cost and effort saving of effective measurements of workload and resourcing, we’ll be further developing a business case to mature service. We’re always looking to do more with less and this is the natural next step in our shared services journey.”