First UC-CSU Shared Services Conference
Thursday, July 11, 2013
UC Irvine Campus
BREAK-OUT SESSION
Management Track 11.10 to 11.55 am
What’s Next in Shared Services:
Future Trends
North America | Latin America | Europe | Middle East | Asia-Pacific
Slide 1
Break-Out Session Purpose
This session will examine shared services trends over the past 20+ years,
with a special focus on trends in the public sector (including Higher
Education).
Content will include a look at broader trends in shared services, both in
the US and other countries (e.g. Canada, UK, Mexico, Ireland, Other EU
Countries), and what can be derived from correlations in these trends and
the relative maturity of operational shared services models.
Based on these observations and some “lessons learned”, we will examine
what the future looks like in shared services, how we are likely to get there
from here, and why this is so important.
Session will include open Q&A time.
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Slide 2
Agenda
Some General Trends in Shared Services
Trends in “Public Sector” Shared Services in Last Few Years
Examples of Shared Services in the Public Sector in Last Few Years
Examples of, and Comments on, Shared Services in Higher Education in US
Lessons Learned
What Does the Future Look Like?
Q&A
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Slide 3
Some General Trends in Shared Services
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Slide 4
Shared Services Concept started in mid 1980’s. Concept initially driven by
private sector multinationals
Shared Services and Outsourcing initiatives typically result in "cost savings
of 20%-50% on processes in scope” (Hfs-PWC report June 2011)
"In today's business environment, nine out of every ten enterprises have
shared services". (Hfs-PWC report June 2011)
Mainly Finance driven early on in Europe/HR driven in North America
Multi-process Shared Services much more a reality today
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Slide 5
Now much more end-to-end process focused
Data privacy and security an issue that always needs to be considered
Shared Services moving up the Value Chain
Technology options continue to grow (e.g. document management,
workflow approvals, user self service, ERP, open architecture, software-asa-service, “cloud computing”, etc)
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Slide 6
Trends In Shared Services In The Public Sector In The
Last Few Years
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Slide 7
While the private sector has embraced shared services over the past 20 years
plus, the public sector has, until recently, been slower to do the same.
With the deepest downturn in the economy since the great depression,
Government, Higher Education and Healthcare are facing short falls in revenue
and funding and cuts to their spending.
The budget issues in the public sector are global in nature. As an example
Canada's population, as in many other “developed” countries, has an aging
population that requires increased health care, as well as public expectations
to improve the efficiency of the National Health system.
US, France, UK and many other European counties as well are seeing spiraling
health care costs.
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Slide 8
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Slide 9
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Slide 10
100%
80%
Strong positive impact (greater
that 20%)
60%
Modest positive impact (+6% to
+20%)
Minimal impact (-5% to +5%)
40%
Modest negative impact (-6% to
-20%)
20%
Severe negative impact (greater
than -20%)
0%
Finance operating
costs
Finance operating
efficiency
Overall business
performance
improvement
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Slide 11
Examples of Shared Services In The Public
Sector In The Last Few Years
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Slide 12
In the United States the President’s Management Agenda directs federal
agencies to fulfill goals with maximum efficiency. The US office of Management
and Budget (OMB) issued directives advised turning to shared services to
meet these directives.
Australia and New Zealand have Shared Services operating at the federal and
local government levels. For example, Auckland Health Board consolidated
back-office function that supports major hospitals.
In Mexico, the Ministries of Public Service, Agrarian Reform and of Agriculture,
Livestock, Rural Development, Fisheries and Food joined in a program in mid2009 for the implementation of a Shared Service Centre that included the
redesign of processes and the development a GRP (Government Resource
Planning - ERP for Government) that will support all in scope processes.
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Slide 13
UK Home Office and the UK Ministry of Justice are saving budget through their
Shared Service Programs. The Home Office has reported savings of £13m per
annum and Ministry of Justice reports £20m per annum.
In the UK up to 40% of local authorities (in 2011) were bringing forward their
plans to move to a shared model. At the end of 2011, 219 councils across the
country were engaged in 143 shared service arrangements resulting in £156.5
million of efficiency savings.
US large Federal Agencies that have either completed or are in the process of
creating shared services include the United States Post Office and the National
Aeronautics and Space Administration (NASA). NASA is saving more than $12
million per year in back office services in order to move funding to missioncritical space exploration.
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Slide 14
The US Department of Heath and Human Services (DHHS) Shared Services
“Program Support Center” (PSC) provides support services to all components of
the U.S. Department of Health and Human Services (HHS) and other Federal
government agencies worldwide. PSC has a broad range of nearly 60 services
and products, which include: administrative operations, health resources,
information technology support, financial management, and strategic
acquisitions
The National Business Center of the Department of Transportation (DOT) is
providing IT services to the DOT and other federal agencies.
The U.S. Department of Agriculture’s National Finance Center (NFC) in New
Orleans, La., has implemented shared services to streamline the provision of
payroll and human resources for 60,000 government employees in 174 civilian
agencies.
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Slide 15
The Government of Ontario launched its IT transformation initiative in 1998. It
reports that at maturity it saves $100 million annually, representing 10% of the
total IT spending, and between 20–25% of IT infrastructure spending.
The Government of British Columbia began its IT consolidation in 2002 and
has reduced its data centers from over 100 to 2 in 2011. It further reports that
energy costs are expected to be 50% lower.
The Government of Australia has developed a data centre strategy to
consolidate data centers, which support over a hundred agencies, from 2010
to 2025. Anticipates avoiding $1 billion in future costs
The Government in Ireland is actively pursuing Shared Services for the Public
Sector, as outlined in its Public Sector Reform White Paper, November 2011
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Slide 16
$
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Predominant Structure
Integrated shared services m odel
Functional shared services m odel
Decentralized m odel / No shared
services
Primary Business Drivers
Status of Shared Service Model
$
Cost savings
Resources
E
Established shared services
m odel
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Efficiency
Im proving
services
IP
In progress of establishing
shared services
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Slide 17
IP
$
Examples of, and Comments, on, Shared
Services In Higher Education in the US
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Slide 18
The recession/slowdown impacted both Public and Private Universities, but the
impact has to some extent different for the Public Universities. The
recession/slowdown and the accompanying revenue decline at the state level
has left less money to fund education
The private institutions, except for grants provided by the federal government
for research, are to some extent less dependent on government funding.
However, many private institutions saw their endowment values decrease as a
direct result of the recession, and the private institutions also responded by
increasing student fees.
Increasing student fees alone has not been sufficient to close the budget at
many Universities and Colleges, and these institutions are looking to shared
services to help them close the budget gap, increase efficiencies and provide
better service.
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Slide 19
Accenture reports in their December 5, 2011 article “Shared Service Government and
Education Break the Status Quo”, that over the last five years a few forward looking
education institutions have used shared services to gain greater efficiencies,
improve service, enhance compliance and improve worker experience
Shared services already underway pre recession at many Universities, e.g. Yale
University, Harvard College, University of Michigan, University of Illinois & Cornell.
UC Berkeley administration division began in 2008 to move to a shared services
model for HR, and successfully opened its center on July 1, 2010. In 2012 the
University approved a project to implement shared services for finance, research,
information technology and human resources.
As part of its Synergy Initiative, CSU’s Procure to Pay (P2P) Shared Services Initiative
seeks to leverage the success of implementing CSU’s Common Financial System and
improve the efficiency and effectiveness of processes to purchase and pay for goods
and services.
North America | Latin America | Europe | Middle East | Asia-Pacific
Slide 20
The University of California has begun implementation of a University System Wide
Shared Services center called UCPath for HR and Payroll.
The Yale Finance shared service center was formed in January 2010, to take
repeatable common work out of departments. The center was formed through the
consolidation of three pre-existing service units. The center provides Financial
Management and transaction processing for procurement, accounting, accounts
payable and client accounts.
Lawrence Berkeley National Laboratory has had an HR Service Center since 2011,
and is looking to expand scope of services provided.
Accenture predicts that the next wave of implementation in higher education will
see a broadening of the functional areas that are in scope for shared services.
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Slide 21
Lessons Learned
1.
2.
3.
4.
Strategic
Structure
Business Case
Implementation
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Slide 22
1.
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STRATEGIC CONSIDERATIONS
Shared Services is no longer a radical idea in the public sector as the concept has
been operating and proven in the private sector for 20 years
Shared Services is moving from an opportunity to a necessity (US, Healthcare,
Higher Education)
Make It Mandatory and High Profile (Canada, UK)
Shared Services Can Work Across a Large Geography and Multiple Jurisdictions
(Canada, Latin America)
Opportunities are “Borderless” (US, Canada, Private)
Core Challenges Unchanged (Private)
Not Just Transactional (Private)
End-to-End, Not Functional (Private)
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Slide 23
2.
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2.
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STRUCTURE
Independence is Important (UK)
Governance Matters (Canada, Private, UK)
Create Durable Structures (Canada)
BUSINESS CASE
Prepare Business Cases (Canada, UK)
Recognize Need for Funding (Canada, US, UK)
Infrastructure can be Enabler and Barrier (Canada, Private, Latin America)
Taxes Matter (UK)
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Slide 24
4.
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IMPLEMENTATION
Do that which is easier … first (Canada)
Co-Locate Staff (Canada)
Operate as a Business (Canada)
Benchmark Relentlessly (US, Canada, UK)
Adapt rather than Adopt (Canada, UK)
Changing Culture is challenging (US, Private, Europe)
Multifunctional Enabled by New Technologies (Private)
Outsourcing and Off-shoring Risks (Private)
Delivery of Shared Services is Not a Core Government Skill (UK)
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Slide 25
What Does the Future Look Like?
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Slide 26
The Public Sector, and of course, Higher Education, has a huge opportunity to
leverage Shared Services to meet today’s very significant challenges. It is
therefore likely to continue to expand and grow.
Public Sector organizations will start to embrace standardization, as they
become more centralized under shared services, and IT continues to make it
easier to move toward standard solutions.
Technology will increase productivity with more automation in transaction
based processes. Impact of “the Cloud”
The budget and funding challenge in higher education is accelerating the use of
shared services.
Will likely be much more collaboration for Shared Services across
“indepenent” organziations. Just like CSU-UC.
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Slide 27
Change Management vital. Universities need to overcome resistance from
departments, whose leaders are not necessarily familiar with shared
services and may be dubious that shared services can meet the needs of
individual departments.
University leaders need to convince their faculties that Shared services can
assist Universities to free up resources for the academic and research
mission of a university.
Interest in Shared Services illustrated at conferences and events, such as two
Public Sector Shared Services events in Chicago in 2011 and 2012, and
upcoming 2013.
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Slide 28
Q&A
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Slide 29