Leadership Foundation

Shared Services in Higher and Further Education

The Role of Technology in HE Management
Chris Cobb (forthcoming)

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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.

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Higher Education in the Age of Austerity: Shared Services, Outsourcing and Entrepreneurship
Alex Massey, Policy Exchange, December 2010

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.

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Lift Tax-Barrier to Shared Services, Alliance pleads
Simon Baker, THE, June 2010

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.

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A Preliminary Decision Model for Shared Services: Insights from an Australian University Context
Jonathan Yee, Felix Tan Ter Chian and Taizan Chan, 20th Australasian Conference on Information Systems Decision Model for Shared Services, 2-4 Dec 2009, Melbourne

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.

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Shared Services in Higher Education
JISC, November 2008

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:

• Universities and Colleges Admissions Service (UCAS)
• Association of Northern Ireland Colleges (ANIC) consortium manages the supply of Corporate Information Services to the country’s six large multi-site FE colleges
• The JANET network. Its success was recognised by winning the shared services category of the e-Government National Awards 2007
• M25 Consortium of Academic Libraries comprises sharing resources and services for the benefit of students and researchers
• University of the West of Scotland and South Lanarkshire Council shared data centre
• Research Councils UK (RCUK) Shared Services Centre Project – probably the largest shared service initiative in the sector – covering all seven Research Councils, HR, payroll, finance, procurement, IT, telecommunications and grants processing
• Bishop Burton College uses the University of Hull’s student system for those students that are on Hull validated programs

The institutions surveyed by Duke & Jordan cited the following potential benefits driving the implementation of shared services:

• Continuity and resilience of service
• Raising quality and adding value to existing services
• Securing cost savings and sustainable efficiencies
• Releasing staff time for more customer facing activities
• Improving system scalability
• Ensuring improved and more up-to-date systems
• Gaining competitive advantage
• Ability to offer otherwise unsustainable services
• Levering transformation
• Collaborating with other institutions and improved cooperation

The Duke & Jordan study identified the most important challenges as:

• Problems in establishing and maintaining satisfactory partnerships
• Reluctance to rely on a third party for service delivery and concern over loss of local control over critical services
• Problems of leaving the partnership
• Later problems incurred in running re-procurements
• Risk to competitive advantage
• Reluctance to have data stored elsewhere

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:

• A collaborative culture – such as embraced by institutions in Wales
• Institutions that have already changed significantly or employ people previously experienced in change (successful or otherwise)
• ‘Buy-in’ by Vice-Chancellors and senior management to drive change through

Further links to JISC resources

• JISC Study of Shared Services in UK Further and Higher Education Reports 1, 2 and 3 April 2008
• JISC InfoNet Shared Services infoKit
• Higher Education & Local Authority Shared Services (HELASS) - Project HELASS (Higher Education & Local Authority Shared Services) aims to explore the possibilities of developing a shared services framework for ICT infrastructure and support services across a HE institution and a large local authority. In partnership with Serco plc, the University of Plymouth intends to work collaboratively with Plymouth City Council to explore innovative ways of improving service quality, cutting costs and improving agility through the appropriate sharing of ICT infrastructure and support services.

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Hefce Funded Report on Shared Services in the Higher Education Sector
KPMG, 2006

Key findings:

• Definitions of shared services vary. Typically they describe a model of providing services (not just so-called “back-office” services) in a combined or collaborative function, sharing processes and technology. In the private sector this is usually within the same group of companies, but in the public sector it will most often be between separate entities. The most sophisticated models involve establishing a completely new organisation, run and managed as an autonomous business.
• HEIs are already co-operating to achieve savings and improve performance in a range of areas.
• Sharing support functions are not the only form of collaboration which could offer benefit – also taking advantage of existing shared service arrangements within higher education and other sectors and extending other forms of collaborations, as well as considering dedicated shared services centres.
• The fact that VAT is irrecoverable on outsourced shared services is a major barrier to realising its potential in higher education.
• In order to realise the potential for shared services (assuming the VAT issue is resolved), the impetus for moving towards sharing additional services must come from the institutions themselves.

Further links to Hefce resources

• Case study in shared services (Finance) and the Liverpool experience, BUFDG Seminar 28th June 2006, Powerpoint presentation
• Shared services in cloud computing to be funded by HEFCE
• LGM Funded projects – shared services
• Hefce shared services approach
• Liverpool feasibility study of Shared services

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Fact Sheet on Shared Services in Higher Education, UNISON

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.

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For more information about the Knowledge Resouces contact:

Eleni Stamou, Research Manager