The Role of Technology in HE Management
Chris Cobb (forthcoming)
Survey of 230 UK colleges reveals over half considering a move to shared services
Tribal Group news article, February 2011
A survey of 232 further education colleges in the UK has revealed how these institutions are planning to maintain and improve standards in education over the current academic year. One key finding was that over half of respondents (60.7%) are considering shared services, or have already planned to collaborate with other colleges.
Universities could reduce potential student debt or protect teaching and research by being more imaginative about how they are run. This study calls for the higher education sector to outsource functions like maintenance and accommodation that have little to do with education. There are big savings to be had from universities sharing services like finance, human resources or student records. Up to 30% of the total cost could be saved if more services were shared, according to estimates. Across the entire higher education sector, that would mean total savings of £2.7 billion.
Tax reforms that would encourage universities to share services and potentially save millions of pounds are now crucial as the sector faces severe funding cuts, the director of a mission group has said. Currently, institutions that want to share activities such as payroll management must save at least the cost of VAT – now 20% per cent - as although universities are classed as VAT-exempt, they cannot reclaim the tax paid on the services they buy.
The paper presents a case study conducted in an Australian university. The primary objective was to look out for inefficiencies and ineffectiveness in the financial administrative functions of Accounts Payables (AP), Accounts Receivables (AR), General Ledger (GL) and Travel & entertainment (T&E) as it was conventional knowledge that the processes involved in these functions were relatively homogeneous across organisations generally and universities specifically.
With regards to the systems and applications being used in practice in the higher education sector, the findings suggest that there is commonality among systems being used by universities in Australia; in other words, several universities are using the same applications independently to perform the same functions. This suggests that the potential for such universities to share such systems and services is significant. To further highlight this, the findings from a separate independent study by Higher Ed Services Pty Ltd23 provides examples of systems which are common to universities in Australia, suggesting that such overlap and homogeneity in the use of administration systems and applications further makes the idea of sharing common services to save cost a possible one.
The paper differentiates between traditional models for sharing services (intra-organisational) which are more common in the corporate sector and inter-organisational shared services (Yee and Chan 2008) which are investigated here.
JISC’s understanding of the term ‘shared services’ can be summarised as ‘institutions cooperating in the development and delivery of services, so sharing skills and knowledge, perhaps with commercial participation’.
The Duke & Jordan survey (carried out in April 2008 in advance of the JISC investigation) shows that between a quarter and a third of the responding institutions have at least one shared service in place, and nearly 10% are planning at least one such service. However, the amount of shared service provision actually in place is generally small, in non-critical service areas and predominantly regional in nature.
That said, the sector already has a number of shared services including:
The institutions surveyed by Duke & Jordan cited the following potential benefits driving the implementation of shared services:
The Duke & Jordan study identified the most important challenges as:
VAT liability is also considered an issue because if a group of public sector education institutions establishes a joint venture then the individual institutions cannot recover VAT on the provision of services through that joint venture. This means there is a 20% hurdle to leap before any return on shared service investment can be quantified in this sector. The funding bodies have made extensive representations to the Treasury about this matter.
The Duke & Jordan study identifies a number of factors that contribute to making shared services successful:
Further links to JISC resources
Further links to Hefce resources
Across the public sector, employers are increasingly turning to "shared services" as a means of saving money, under the guise of increased efficiencies. In the past this has typically referred to “back office” operations like processing records, payroll, finance and benefits. Shared services can be a complex and technical issue to grapple with. Merging services can throw up a multitude of issues which can have a major effect on services and staff working in them. UNISON guidance has now been published based on the experiences of UNISON branches, information from the bargaining information system (BIS) and research by the bargaining support group details on how to download this can be accessed in the links section of this briefing.
Eleni Stamou, Research Manager
For more information about the Knowledge Resouces contact:
Eleni Stamou, Research Manager