SHARED SERVICE CENTER: Now the real work begins

by Dave Jones
January 28, 2011

The Davis campus first heard official word of a “shared service center” in September 2009, during the second year of this most recent wave of big cuts in state funding.

Since then, as the budget picture has worsened, the shared service center project has been moving forward — with data analysis, evaluation of alternative approaches, a consultant’s report and campus discussions.

“All of our work to date has been about laying the foundation for implementation,” said Lisa Terry, director of organizational development and communications for the Shared Services Implementation Team.

That changes Monday, Jan. 31, with the official launch, not of the center itself, but the detailed work of creating it — by subject matter experts from each participating administrative unit, and from the central units of Human Resources, Accounting & Financial Services, and Information and Educational Technology.

The center’s first department, which will process payroll, is expected to be operational in about six months.

After that, according to the implementation team, the finance, human resources and information technology units will come on board, in phases, over the next 12 to 24 months.

The transfer of select human resources, finance and IT activities for five administrative divisions — Administrative and Resource Management, the Offices of the Chancellor and Provost, Information and Educational Technology, Student Affairs and University Relations — is expected to generate savings of $25 million from this year through 2015-16, and $10 million annually starting in 2016-17.

The savings will come from process standardization and re-engineering, the implementation of enabling technology and the consolidation of staff.

A new way of doing business

Next week’s launch takes the form of a two-day orientation and work session for the project teams in payroll, finance, human resources and IT. As they gather for the first time, they will be hearing from, among others, Associate Vice Chancellor Karen Hull, who heads Human Resources and leads the Shared Services Implementation Team, and Mike Iadanza, the newly hired program manager.

On the morning of Tuesday, Feb. 1, the teams will get to work.

“This is where the work really begins,” said Terry, adding that the project teams have a “monumental opportunity” to fundamentally change the way the university does business.

Their first assignments include a “current-state assessment” of the payroll, finance, human resources and IT processes in the five affected administrative units; i.e., how many transactions each unit is handling, what processes are being used, and how many people are doing the work. This will reveal specific opportunities for improvement in process, workflow and operational efficiency.

Last year, ScottMadden Management Consultants gathered some of the necessary data, by way of surveys and interviews, to develop a business case for a shared service center.

“Now we must take a deeper dive into the data,” Terry said.

She said the project teams have been charged with deciding which activities will be included in the shared service center (and which will remain in the administrative divisions), assisting in process re-engineering, and developing the organizational design and staffing model — even helping to write the job descriptions.

The current-state assessment also will provide the base metrics that the university will use in calculating performance improvement, to see if the shared service center is achieving the forecasted gains.

'The people closest to the work'

Each project team comprises nine to 11 people from the affected administrative units. See who’s on the four teams.

“As we go about implementing shared services, the people closest to the work are the best source of information,” Iadanza said. “They may know of easier, more efficient ways to get things done — but they may have never been asked to give their input before.”

Iadanza, who has previously worked in shared services implementations at such companies as Coca-Cola and MetLife Insurance, said the most gains in productivity will come through making our processes more efficient and effective.

“The more money we can save by doing things efficiently, the more we put toward the university’s core mission,” Iadanza said.

Examining our processes

In examining processes, Terry said, the teams also will be looking at the many different ways in which various units do the same kind of work, say, in payroll.

She gave these examples of the processes that the other project teams will examine:

• Finance — Travel and entertainment expense reimbursement, purchasing and accounts payable.

• Human resources — On-boarding (bringing on new employees), off-boarding (when employees separate from the university), benefits, and salary action and reclassification transactions.

• Information technology — Desktop support and server consolidation.

Terry said the project teams will consider: “What are our current business processes, how many people do we need to do these processes, and what are the best internal and external processes that we can incorporate and share.”

In addition, the Shared Services Implementation Team and the project teams will be looking at new technologies — including some that the UC Office of the President may consider for systemwide implementation. Any or all of these new technologies could affect the staffing models for UC Davis’ shared service center.

Another factor in the staffing models will be to establish which positions do what work, Terry said. This stems from a ScottMadden finding that managers often spent too much of their time handling routine transactions and answering routine questions, when, in fact, these managers should have been devoting their time to strategic, long-term planning, and other higher level work.

Maintaining business continuity

As the shared service center moves from design to reality, in phases, Terry and Iadanza stressed that the university will strive to maintain business continuity — so that no one is receiving less service than they receive today.

The planners also are well aware of the “cultural transformation” that comes with the shared service center, which is one reason that they are being transparent and inclusive in the design process, so employees will have a sense of ownership in the finished product.

In this respect, Terry said, the project team members are conduits between the shared service center project and their respective units — for the exchange of information.

“We are trying to balance the business reason for this center, with the people side,” Terry said. “We are very cognizant of the effect that that shared service implementation will have on human beings.”

The university expects to have approximately 140 full-time equivalent positions in the center. The downside: The university will be shedding 120 to 170 other FTEs. Officials expect some of these employees will take jobs elsewhere around the campus, to fill openings that result from attrition.

Also, two weeks ago, Human Resources announced a new voluntary separation program for almost all of the Davis campus. The application period will run from Feb. 15, 2011, to Aug. 15, 2012, and separations must occur between April 1, 2011, and Oct. 1, 2012.