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News and Updates

Shared Services: A Matter of Cost vs. Investment

It’s a question we’ve all asked or been asked repeatedly: how to do more with less?

Over the past couple of decades, one solution has been gradually picking up momentum in IT circles – a solution based on collaboration and cost sharing, which we know as shared services.

Michael Berman is Vice President of Technology and Communication at California State University Channel Islands (CSUCI). An experienced leader in higher ed IT, Michael will deliver a keynote presentation at the CUCCIO member meetings, February 17-19 in Vancouver.

“My first major introduction to shared services was when I joined Cal Poly Pomona [California State Polytechnic University, Pomona] in 2000. At that time, it was part of the California State University system, with 23 institutions answering to one governance board. While each campus was pretty independent, the idea was to bring all 23 campuses together under one common software platform for their ERP [enterprise resource planning] systems. For students, management, finance, human resources, etc., California State University would purchase one PeopleSoft license for all 23 campuses. We were asked to migrate all those systems and information to be hosted in a single data centre, with one management centre to oversee it. It was very large and complex, and overall it was a very successful project, but it was not without many bumps and bruises – both political and operational. I hope to talk about the politics around that project a bit with CUCCIO members in Vancouver.”

Michael says the recent increased interest in shared services is linked to a CIO’s drive to make the most of their financial and human resources.

“I’ve never felt I had enough budget and people to do what was demanded of me,” he said. “I’m always looking for ways to leverage people and budget dollars, in order to provide more services for the same or less money.”

This can take many forms, Michael says, with the first step being to determine if there are key services you are currently delivering that can be commoditized, and that another campus could do cheaper or better for you.

But since the actual implementation of shared services arrangements is still a relatively new area, the process is not always as simple as it sounds.

“One of the challenges is that, in my experience, campuses are not always very sophisticated service providers,” Michael said. “They’re often used to a fairly informal set of service objectives and SLAs. In their ability to respond and provide 24/7 services, they’re fairly limited. So they must ask, to what extent does it make sense to ramp up capabilities, processes and personnel to be able to provide a third-party quality level? When a CIO says they have a service catalogue and they’re doing service management, it may be adequate, but there really is a leap from providing services to your own campus versus other campuses. I don’t think most campuses are ready to have a conversation about putting their counterparts’ needs in front of their own.”

Michael says personnel changes within an institution’s upper ranks can also pose challenges.

“Different leaders – from the President, to the Provost, to the CFO and even CIO – can have very different views on shared services. Some are open to it, and some are not,” he said. “Often an initial collaboration will get started, but then key leadership changes and things are derailed.”

Despite all the potential pitfalls, Michael still feels there can be a strong enough rationale – and a broad enough variety of models – to make shared services work.

“For one, there’s a case for thinking small,” he said. “If you have just two, three or four campuses working together, with similar missions and a good degree of trust, that can make a lot of sense. As you get larger, things get more complex. You have to ask how many conference calls you want to be on – there’s an overhead to that.”

“Another model is to have one larger institution providing excess services as an exchange. In Canada, you might have one or a few of your largest institutions receiving a large portion of available research money. So for them to have some excess capacity to serve smaller universities – that could make a lot of sense.”

“There are lots of different models and ways to govern. But since it’s a relatively new area, you need to invest a considerable amount of energy in governance to create these models,” Michael continued. “The choices you make around how to make things work, who makes the decisions, how communications will work – it all takes time. So you really need to determine if you are building a service that’s compelling enough – with enough savings and ROI – to pay you back for the time spent pulling it together. We can tend to overestimate value and underestimate cost.”

Michael says the concept of shared services is growing in the U.S., and that the trend toward moving services off campus will continue.

“The initiative in the States that’s received the most press is Unizin, which is being treated not so much as an IT initiative, but as an academic issue. They’re being very careful to get buy-in from the right academic folks, which might be a good strategy, but they’re being quite cagey about their goals and what they will accomplish.”

The most important distinction to make when exploring the world of shared services, Michael says, is the difference between cost-savings and a return on investment.

“When I was CIO at CSUCI, from 2008-2010, shared services was being presented as a way to save money during a tough economic time. The problem with that is when you’re in money saving mode – making cuts and layoffs – you don’t have time or money for anything new. And to take on shared services, even though you might save money in the long run, it still requires upfront investment in new hardware, travel, training, etc. You don’t just buy a new piece of software and lay-off 50 people. So where do you actually find the savings?”

For more information on CUCCIO’s member meetings, visit the website.