Shared services gaining ground in higher education

Since January 2010, Yale’s Shared Services Center in Science Park has handled common tasks for departments.
Since January 2010, Yale’s Shared Services Center in Science Park has handled common tasks for departments. Photo by Gavan Gideon.

Despite the criticism shared services has received from faculty, administrators at other universities with efforts to streamline and centralize administrative tasks say Yale is at the forefront of a movement in higher education.

At the February Yale College Faculty meeting, about 20 professors challenged shared services and its alleged cost-cutting merits, describing it as an across-the-board model that cannot meet the needs of individual departments. But administrators at three other universities working with the shared service business model said its cost-reduction advantages are attracting colleges and universities to the system, especially during a period of tight finances caused by the nationwide economic recession.

“I see shared services as something that is inevitable,” said Rowan Miranda, associate vice president for finance at the University of Michigan. “It’s the next logical influx of thinking in the business world brought into higher education.”

Miranda said he estimates that up to 12 schools in the United States have implemented, or are implementing, the shared services model on a university-wide level. Yale and other frontrunners in this transition may face resistance, Miranda said, because people are unfamiliar with the system. But administrators at colleges and universities will eventually be unable to ignore the long-term cost-cutting advantages of the system, he added.

When University President Richard Levin and Vice President for Finance and Business Operations Shauna King first announced plans to implement shared services at Yale, their aim was to reduce strain on faculty and staff by streamlining administrative tasks. But the onset of the recession in 2008 forced administrators to reexamine their priorities, and shared services became part of efforts to reduce a $350 million budget deficit the University faced from its declining endowment.

Over the past few years, administrators at Cornell University, the University of Michigan and the University of California, Berkeley have also stepped up efforts to bring the shared services model to their institutions.

The University of California, Berkeley, approved a university-wide project about a week ago that will consolidate services in finance, research administration, information technology and human resources, communications manager for the project Sybil Wartenberg said. Though implementing the project will increase costs at Berkeley during its first few years, Wartenberg said the system is projected to save money in the long run.

Organizations implementing shared service models often face “certain start-up investments with savings being generated in future years,” King wrote in a February email. But that has not been the case at Yale, King said, as tight finances during the recession required administrators to scale back plans for improvement in areas such as IT infrastructure.

Even as administrators made adjustments, they still proceeded with plans for the creation of three shared service groups. Though Yale has used shared services in the sciences for at least a decade, the Yale Shared Services Center for financial tasks — designed “to take common, repeatable work out of departments,” King said — was formed in January 2010 through the consolidation of three preexisting business service units. It was moved to its current location at Science Park’s 344 Winchester Ave., roughly one mile from main campus, in January 2011.

Ronn Kolbash, assistant vice president and director of the Yale Shared Services Center, said the shared services model can help trim costs by improving how back-office tasks are handled, and that shifting work to shared services employees can also allow for reductions in departmental staff through attrition. Kolbash said the vast majority of the center’s 67 employees were transferred from other parts of the University, and King said all shared services staff have been transferred from other administrative units, largely her own office.

While the shared services model is most commonly used in the private sector, Kolbash, who used to head a shared services system in the State of Ohio before coming to Yale in November 2010, said he thinks it can also be effective in higher education. But he added that the model applies differently in higher education, as private companies have less diverse needs than those of colleges and universities.

Joseph Grasso, associate dean for finance, administration and corporate relations at the Cornell University School of Industrial and Labor Relations, noted that accounting arrangements in higher education often have to consider restrictions placed on gifts and funds, making them more complex than those of most businesses in the private sector.

Grasso said some schools at Cornell started transitioning to the business model about 10 years ago. Though the model does not exist university-wide at Cornell, Grasso said administrators created seven different financial transaction centers in 2010 — partly driven by financial difficulties from the recession — that were designed to share services among groups of schools.

Faculty were at first “skeptical” of the changes, Grasso said, but he added that faculty have not since complained about the management of financial transactions. He said the regional shared service centers eased the transition by helping the model adjust to the needs of individual departments.

“The financial challenges in higher education in general, I think, are accelerating the use of shared services,” Grasso said.

Miranda, who is also a professor at Michigan’s public policy school and law school, said Michigan is only now planning for a university-wide system, though some regional shared service centers have been in place for over a decade. Though Miranda said a gradual transition to shared services can make the process easier for those involved, he said the benefits of the model — most notably cost-reduction — can be realized more quickly through a university-wide push.

But achieving savings is only one potential advantage of the business model, which also frees up resources for the “academic and research mission” of a university, Miranda said.

Administrators at Yale and three other schools working with a shared services model disputed the claim that shared services cannot meet the needs of individual departments and programs. They said the system can be designed to meet the varied requirements of departments, emphasizing that only tasks common across programs are brought to shared services.

“Shared services isn’t a simple and militant consolidation,” Miranda said. “It’s a model that recognizes differences among the customers and tries to develop processes that are responsive to them.”

Kolbash said there will always be a need for “local presences” of staff in academic departments. He said employees at the Yale Shared Services Center work to understand the nuances of different programs before a department’s transition to shared services begins. Kolbash said he recognizes there is always room for improvement, noting that his office recently expanded its contact center — where employees communicate with faculty and departmental staff who encounter problems with services.

Though departments in the Faculty of Arts and Sciences are in different stages of their transition to shared services, all currently receive some support from the Yale Shared Services Center.

Comments

  • grd11

    “Despite the criticism shared services has received from faculty, administrators at other universities with efforts to streamline and centralize administrative tasks say Yale is at the forefront of a movement in higher education.”

    Exactly. That’s the problem.

  • joey00

    Vice President says we won’t see any savings for many years to come.Probably never.
    All we have seen is many 50-60 year old ,30 -40 year employees get the boot.We have seen them replaced by much younger,related and currently politically and / or union connected workers..we are seeing a doubling of duties as let’s say a Science Park employ is doing the same task as somebody from the Medical School,i guess they now have copies in quadruple (squared) of the same work order or purchase