Shared Services in the USA

It’s probably not quite what they were hoping for

Inside Higher Ed reports on a bold plan at the University of Michigan to address shared services within the institution. The idea must have seemed such a good one at the time – centralise large parts of departmental administration into a single place in order to improve productivity and save money ($17m was the planned saving). The approach, described rather unfortunately as “lift and shift” seems to have run into a few problems though:

For one thing, department chairs were kept in the dark about the effort and then given what faculty members have described as “gag orders” to prevent them from talking about it. Now professors and graduate students are speaking out publicly, and it’s clear they are unhappy about losing staff members with familiar faces from down the hall to an off-campus facility.

For another, the plan is no longer expected to save nearly as much as once hoped: just $2 million or $3 million in its first year and $5 to $6 million per year in the near term, according to a university spokesman.

That savings doesn’t factor in $1 million a year the university will pay to lease a new building to house the staff in one place. Or the $4 million the university expects to spend fixing up that building. Or the $11.7 million contract Michigan has with the consultant Accenture for advice about how to save money. All told, an effort to save money might barely break even in the short term, though officials expect savings to ramp up in the long term.Michigan is just the latest campus to turn to “shared services,” a cost-saving approach being tried at an increasing number of colleges across the country, including the University of California at Berkeley, the University of Kansas, the University of Texas at Austin and Yale University.The idea is simple. Instead of each academic department having its own staff to handle bookkeeping, departments should rely on a pool of staffers. The theory is each of the employees in the pool could specialize in quickly dealing with certain paperwork instead of trying to be jacks-of-all-trades in departments across campus. One staff member would get really good at travel reimbursements, for instance, while another focuses on payroll.

So, all a bit messy. Whilst such shared service developments can work it does rather seem as the consequences of this kind of big bang approach might not have been fully anticipated in this case. It will be interesting to see if the promised savings do materialise. And whether the departments get the right level of service too.