To ensure the long-term fiscal stability of their institutions, many chief business officers are broadening their search for financial models. Increasingly, CBOs are considering shared services as an avenue for maintaining—or even exceeding—student, faculty, and staff expectations while balancing their budgets.
The staff on eight of Indiana University’s nine campuses coordinated their efforts to implement a shared services initiative starting in 2013, making IU a relatively early adopter of this financial model. "We were looking at how we could provide better services to students, reduce costs, and be more efficient," says James Kennedy, associate vice president for university student services and systems.
According to research conducted by the analytics group at the Shared Services and Outsourcing Network (SSON) in August 2018, of the 2,369 higher education institutions in the U.S., only around 3 percent have started to implement shared services. Risk aversion, fear of loss of autonomy, and competing priorities were among the challenges the study identified to account for low adoption of the shared services model in higher education.
Despite the potential challenges associated with implementing a shared services model, Sarah Lawrence College, Bronxville, N.Y., and College of Saint Benedict, St. Joseph, Minn., are also counted among its early adopters. "Shared services is part of a larger initiative toward achieving fiscal sustainability," says Stephen Schafer, vice president for finance and operations at Sarah Lawrence College, about relatively recent efforts to implement shared services at his institution. "We are working to develop a longer-term and more financially stable budget model."
At College of Saint Benedict, the initial conversation about shared services began three decades ago. "During [the] 1970s, many single-sex institutions like ours started to look toward the future," says Susan Palmer, vice president for finance and administration. "At one point, we considered becoming coeducational and merging with Saint John’s University [the nearby all-male institution]. Later, we tried coregistration. Then we took more intentional steps to develop shared services."
Parameters of Sharing
Higher education institutions enter the shared services arena to reduce administrative costs while maintaining the same level of—or even improving—services to students and other stakeholders on their campuses. This goal is similarly at the heart of how most industries or sectors outside of higher education define shared services. In their 2013 report, Achieving New Efficiencies in Higher Education, Accenture analysts David Metnick, Greg Condell, and Mark Howard defined 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, stand-alone organizational entity that has one mission: to provide services as efficiently and effectively as possible."
To achieve their goals, institutions may opt to consolidate departments, functions, or staff positions internally or externally through partnerships with other institutions or service providers. However, Metnick, Condell, and Howard indicate that implementing a successful shared services model goes beyond merely consolidating or centralizing business functions. Following their approach, a well-structured shared services model in higher education would have five distinguishing characteristics:
- Separate organization but linked to customers through governance model.
- Customer-driven transactions.
- Managed service delivery through clear service-level agreements.
- Performance-driven culture through measurement and feedback.
- Process ownership end-to-end.
Despite procedural differences—both Indiana University and Sarah Lawrence College focused internally while College of Saint Benedict partnered with an outside institution—all three institutions incorporated these key characteristics, in varying degrees, in their approach to implementing shared services on their campuses.
The One-Stop Shop
Between fall 2013 and fall 2017, Indiana University moved its student administrative functions to a shared services model. These functions included admissions, financial aid, student records, bursar operations, institutional research and reporting, veterans’ services, security, and international student services. According to Kennedy, IU’s shared services project for student operations was one of the first to be implemented for a multicampus institution. "Our process of evaluating the shared services model started with benchmarking," Kennedy says. "We didn’t know how we compared with other institutions, but we knew we had some duplication across campuses."
As noted in the Student Services Initiative Phase I Report from January 2012, the benchmarking review, which included a range of student services, "revealed duplication of services and proliferation of unproductive or counterproductive divergence. It also found potential for the increased use of shared resources to minimize duplication and to expand and improve services. In addition, the project recommended the adoption of ‘one-stop’ points of service on each campus in the student service area, where customers can obtain assistance from all of the functions within student services."
Based on these initial findings, the Student Services Initiative (SSI) project team recommended that IU’s University Student Services and Systems department, formerly Student Enrollment Services, begin managing back-office student services functions in a shared services model. To implement this vision, Kennedy and campus student services experts embarked on an extensive review and analysis of 187 business processes. Successful implementation of the model required concentration on campus coordination, automated assets, and student satisfaction and has resulted in $3.6 million in annual savings.
Campus coordination. "In higher ed, there are lots of silos," Kennedy says. At IU, "each campus had different processes, but we wanted to look at standardizing those processes. This was a great project because we were able to utilize expertise across the campuses to develop an overall service model." Initially, IU partnered with Accenture, but "when we got into business process review, we used our internal resources," Kennedy says.
While the specific project spanned four years, it continues to stay relevant as the shared services model becomes applicable to other situations and circumstances. To facilitate its ongoing application as a preferred model, the SSI project team established four key objectives for shared services at IU based on the overarching objective of achieving efficiency and responsiveness: (1) eliminating redundancy through process and technology standardization; (2) consolidating and redesigning noncore support functions into service centers; (3) redesigning organization and responsibilities in local units; and (4) driving shared responsibility for results using two-way, service-level agreements with a sustainable metrics model.
As Kennedy observes, "Now it’s a go-to model for us. For example, when we need to put changes to federal regulations in place, we immediately look to shared services to see how we can implement those changes across the campuses."
Automated assets. Standardizing technology platforms in order to automate key business processes also proved critical to implementing shared services at IU. "The technology piece is also very important," Kennedy says. As part of IU’s shared services implementation, the university revamped its existing Student Information System—which Kennedy described as "expensive and not standardized"—and as much paper has been eliminated as possible. Kennedy cites admissions as one area where IU’s new SIS is creating efficiencies: "We had lots of different people collecting information; now the process is centralized so that information is received in one location for all campuses. And we enhanced our electronic document management systems. At our smaller campuses, staff don’t have time to stand back and look at these processes. We don’t want admissions staff focused on back-office functions; we want them focused on the strategic aspects of their jobs."
Student satisfaction. While the financial savings from the project are significant, Kennedy notes an important, nonfinancial benefit. "In general, responsiveness to our internal customers has improved with the establishment of service-level agreements, and students see the benefit from [a] one-stop shop model," he says. "They can go to one place to take care of their services. Applying for admission, scheduling classes, and getting financial aid should be easy for students. For instance, they can go to a portal online, pay their bills, and really understand them. It’s been a smoother process for them."
That’s not to say that the entire shared services implementation at IU was smooth sailing. Kennedy acknowledges that "some people didn’t want to change. We talked about the project on our different campuses, which were sometimes difficult conversations. People wondered where they would fit in with all this efficiency.
"You have to have the right people in place to embrace change, who can convince naysayers to move forward. Our message was ‘this is good for our students.’ Initially, there was some skepticism, but as you move through the process, people see the benefit to students and the university."
Kennedy hopes and expects that conversations about shared services will be ongoing at IU. "Discussions about efficiencies and the best way to do things have to continue. Having this structure in place enables you to do that more easily. Shared services is the default for us now. It may not work in every instance, but it’s always a model worth considering."
College of Saint Benedict (CSB) and Saint John’s University describe themselves as having "a one-of-a-kind partnership" that began more than 60 years ago. Today, students at both institutions have full access to the campuses, courses, faculty, facilities, and programs of the two top-ranked liberal arts colleges. "We’re both nationally recognized Catholic colleges, so we have a shared ethos," Palmer says. "We worked independently for many years. Now students have the benefit of a coeducational experience but coupled with a single-gender experience they can’t get elsewhere."
The primary objective behind the two institutions’ shared services partnership is to offer students opportunities that leverage their limited resources. "[Together] we can deploy resources more efficiently and effectively than we could as stand-alone institutions," Palmer says. Still, each shared services decision requires careful assessment of its overall pros and cons, particularly the potential cost savings and impact on service to students. In this regard, the success of CSB’s shared services implementation has hinged on establishing a common curriculum, staffing synergy, and fiscal finesse between the two institutions.
Common curriculum. Sharing a common curriculum with St. John’s University enables CSB to offer a broader variety of courses. "We wouldn’t have the number of majors that we offer without the shared academic program," Palmer says. "We would have a smaller number of academic programs overall, and individual departments, such as information technology, would not have as robust a staff if we were stand-alone." One benefit of CSB’s shared curriculum has been the 17 semester-long study abroad programs on six continents available to its students. According to a 2017 list in U.S. News and World Report, CSB ranked ninth in "most students studying abroad" with 72 percent of its graduates that year having done so.
Staffing synergy. In addition to sharing a common curriculum and faculty, the two institutions also share staff members. For example, one bookstore director and one human resources director serve both institutions. According to Palmer, about 60 percent of employees are shared between the institutions. However, the business offices of the two institutions are separate. "We meet regularly and coordinate our budgets," Palmer says. "IT and HR report to both CBOs. You could argue that it takes a little more time to coordinate between the two institutions, but it’s worth it to us."
Fiscal finesse. Coordinating and codifying communication about financial matters has been essential to the success of this partnership. "We have a memorandum of understanding," Palmer says. "Regardless of the level of sharing you’re engaged in, it’s important to codify why you’re doing it." The finance committees of CSB and St. John’s meet together and separately. "We regularly review governance processes," Palmer explains. "We also maintain a financial principles document that delineates how we’re sharing each service. You need to specify financial arrangements and service levels and regularly review these documents to ensure both institutions are being served well."
Ultimately, for institutions to truly benefit from a shared services model, their students have to be well-served. Sometimes this means deciding not to move forward with sharing a particular service. In fall 2018, St. John’s and CSB considered combining their student account offices. "St. John’s had a [staff] retirement, and we looked at sharing that service," Palmer says. "We have two small staffs (1.8 FTEs at each institution), and we decided not to share this service because it would have only worked if we reduced office hours and had only one office. We felt that was too big of a change."
From Palmer’s perspective, the goal of implementing shared services is to do more with less for the overall benefit of students: "While we have limited financial resources, our students are getting a better education in and outside of the classroom. We feel like our success has been from using collaboration to improve outcomes and service to our students."
A Step Toward Shared Services
While some institutions have mature shared services programs, others are just beginning to explore their possibilities. Some schools have found that the best way to begin is to start small by focusing on lowering costs in one specific area. Sarah Lawrence College, for example, approached implementing shared services by consolidating several senior administrative positions over a three-year period. "We used opportunities created by normal attrition and vacancies to reevaluate work functions and implement consolidated positions," Schafer says. "We saw the opportunity to lower costs and simultaneously enhance internal efficiencies."
Creating collaboration. Beyond reducing costs, consolidating these positions has helped to reduce silos, increase communication, and strengthen collaboration. "We’re noticing an enhancement of collaboration, which for us goes beyond supporting and helping each other. Teams and departments are partnering in a manner that maintains a level of ownership in addressing issues," Schafer says. "For example, we’re developing a model for enhanced collaboration around events held across campus relative to summer programs and external rentals. The primary departments involved are facilities, events support, communications, and marketing."
Expanding efforts. Building on the work done internally, Schafer’s next step is to expand these efforts by working with external partners to implement shared services. "I have met with the CFO of another local campus," he says. "The two of us have begun the process of identifying the functions we manage and external service providers we use. We created a grid and looked for overlap as we contemplated potential opportunities for shared services."
In these discussions, Schafer is focused on other advantages of shared services implementation beyond the financial ones. "Shared services is often thought of as a way to save money, but it’s also a way to expand opportunities for staff, faculty, and students at minimal cost," he says. "We have [to] look at ways to do more with minimal incremental costs. For instance, a lot can come through sharing facilities rather than having to build or expand them."
APRYL MOTLEY, Columbia, Md., covers higher education business issues for Business Officer.