The Challenge of Changing from a Control-Oriented Culture to a Customer-Oriented Culture in a Public University Environment
It is no secret that there is increased pressure on public universities across the nation to decrease administrative costs and to become more accountable to their stakeholders. The economic recession of recent years resulted in declining state tax receipts that have traditionally subsidized public higher education. For states like Illinois this has meant a decrease in general revenue funding in support of its flagship institution, the University of Illinois. The University used this dilemma to review its administrative support structure and explore means of reducing costs and creating efficiencies while minimizing the impact of the fiscal retrenchments on its core academic enterprises. This review and concurrent cuts in State funding resulted in a 25% reduction in administrative costs.
On the Urbana-Champaign campus the reductions in administrative costs led to significant organizational changes facilitated by the departure of several senior administrators. Facilities & Services was formed as a result of several mergers of administrative units. Corresponding with the retirement of one senior administrator, the first merger occurred in 2001. The Operation & Maintenance Division combined with the Office of Planning, Design & Construction to form the Planning, Construction & Maintenance Division. This merger brought together campus planning, construction project management, engineering and maintenance functions to foster increased collaboration in the delivery of capital facilities.
With the departure of another senior administrator in 2003, most of the administrative service functions on the campus were brought together to form the Facilities & Services unit. This combined service units such as Parking, Printing, Stores, Mail & Receiving and Safety & Compliance together with the Planning, Construction & Maintenance Division. Each of the service units had their own finance, IT, HR, procurement and customer relation functions. The Shared Administrative Services Division was formed at that time to consolidate the performance of like functions within one administrative unit. In many cases employees were relocated out of business units into consolidated shared services centers.
Our Shared Administrative Services organization is comprised of 6 primary functional areas supported by 62 staff members:
- Business Operations: Billing Center, Financial Services Center and Payroll Center
- Customer Relations & Communications: Communications, Graphics Design and Service Office
- Employee Relations & Human Resources
- Information Technology Services: Application Development, Desktop Support and Network Services
- Procurement Services: Payables, P-Card & Property Accounting and Purchasing
- Project Financial Management
We process over 100,000 transactions, account for expenditures in excess of US$200 million, support 1,400 employees, maintain and support 500 desktops, 20 different servers, approximately 15 different software applications and network hardware for more than 30 business units located in 8 locations across campus.
The objective of the initial implementation was to eliminate the duplication of services, create efficiencies in transaction processing, standardize financial reporting and gain financial control of all merging units. We accomplished this objective while reducing staffing by 10% and raising the quality of services provided. Our shared services implementation also coincided with a university-wide implementation of an ERP system by SCT Banner that allowed us to standardize transaction processing and financial reporting across the organization. Several significant legacy subsidiary systems for cost accounting and stores management are still required to support the business needs of the units we serve.
For the first year, the focus was on getting the staff situated in their new locations, developing common procedures for transaction processing and coordinating the realignment of tasks with business units. During this period of time there was a considerable degree of stress and uncertainty. Every effort was made to place staff in positions where their contributions could be maximized. The sea change in the way business was transacted, along with the Banner implementation and major organizational change, created significant challenges for the managers of each of the shared services departments. Fortunately, we had the right people in place in these leadership positions who steered their departments through the shoals of these previously uncharted waters.
The frontline staff were tremendous in stepping up to the challenge presented to them. With the coincidental implementation of the Banner system, everyone started at the same level in terms of knowledge of how to process transactions. This turned out to be a real boon for our transition because everyone had to begin from the same point and learn totally new methods. It also allowed us to re-examine procedures not directly related to Banner. In many cases we eliminated redundant filing of documents and moved to reliance on electronic images or data files.
One of the most tangible successes of the initial phase of the implementation has been the ability to provide financial reports that proclaim one truth across the organization. Organizational relationships were mirrored in the account structure within Banner. This allowed us to use enterprise-reporting tools to develop hierarchical reports using Banner data that is migrated to the University’s electronic data warehouse. Previously, we had to use a combination of University Financial Accounting System reports, Excel spreadsheet reports and reports from our cost accounting system to get a comprehensive financial picture of our organization. Now we can view information at three different levels: Executive Director, Division Director and Department Detail. The Executive Director report focuses on summarized information by funding source across the whole organization. At the Division Director level, reports focus more on uses of funds within each division. Department Detail reports provide transaction level detail in multiple systems that tie into the higher level reports. This change has been well received and has provided managers with timely, relevant and accurate information that they can use to direct their operations.
Campus customers have also seen the benefits from the shared services approach. By consolidating all billing functions within one shared services center, we were able to provide one point of contact for all billings to campus customers. Via our web based document retrieval site, customers can now view the majority of billing voucher transactions on-line, or download summary data to their desktops. This has reduced the volume of paper documents handled within our organization and distributed to campus customers. It has also provided a more timely delivery of data so that customers can make informed decisions on the management of their funds.
Early on, we recognized the need to engage internal business units more directly in decisions on the allocation of scarce IT resources. Historically, they would contact our IT Services department with their IT project and rely on them to figure out what to do, how to do it and find the funding. This approach required IT Services to prioritize work and determine where resources should be directed. It ended up frustrating both IT staff and the business units that needed work done. The solution was to develop an IT governance process whereby units would develop business cases that tell the story of why their project is important, how much it will cost and what the benefits will be to the organization. The business cases are submitted to an IT Governance Board comprised of the Directors of each major division and the Associate Director for IT Services. Each case is evaluated by a team of knowledgeable staff members using a standard set of criteria that are financial and non-financial in nature. Evaluation results are presented to the Board, which then prioritizes the cases and authorizes the projects to proceed. This places the decision making with the internal customer base, rather than with the shared services department. It fosters an open, fair and even-handed approach that aligns the projects to be undertaken with the strategic goals of the organization and the needs of the business units.
In the other areas of our shared services organization, positive results for our customers are being realized through less tangible outcomes. We have attempted to bring an organization-wide identity to the fore as we have modified procedures and practices to discourage a fragmentation of business operations and the fostering of organizational silos. Consequently, there has been a degree of frustration with what appears to be added bureaucracy and delays in responding to service requests. In some cases these criticisms have been valid while in others changes have been necessary to gain control of the financial operations and bring them in line with the rest of the organization. It is fair to say that the emphasis up till recently has been enterprise-centric. We are now swinging the pendulum more towards being end-user centric.
We are currently in the next phase of implementation, in which we are focusing on adding value to the business units and end-users. Preliminary Service Level Agreements have been drafted and distributed to Campus Service units for review. Shared service department managers are meeting in teams of two with each unit, to listen to feedback and questions about services. After this preliminary pilot feedback is obtained, Holland & Davis LLC will be conducting an on-site workshop on shared services methodology and to help our team develop an implementation action plan. This plan will include the development of a Service Level Agreement process, Service Level Indicators, benchmarking analysis and a business model that allows us to migrate from a cost allocation funding mechanism to a pay-as-you-go mechanism. Our desired end state is a fully self-supporting shared services business that could ultimately sell services to campus units other than Facilities & Services.
Admittedly, there was some initial skepticism that shared services was just another management approach de jour. Excitement is building, however, as our management team and the broader F&S management team gains a better understanding of shared services concepts by attending conferences where they have been able hear success stories of both public and private organizations around the world. We are enthusiastic about the opportunities afforded through the adoption of the shared services approach to dramatically increase customer satisfaction and add value to the core operations of our world-class academic enterprise.
If you are part of the public sector, and want to drive improvements through your organization, be sure to stay ahead on shared services strategies: find out who is leading at Shared Services & Process Improvement for Higher Education, Healthcare and Government, in the US; or the Public Sector Transformation Forum in Australia – both running in November. Also, don't miss the UK's Procurement Transformation Summit – this is where a lot of attention will be focussed in the future.