Wednesday, 9 April 2014

Happy Birthday, Janet

(Or, five things you need to think about to make a shared service idea work)

Janet – the Joint Academic Network – is thirty this month. There’s a website giving some of the history of Janet, and fascinating it is. (I particularly like the second upgrade to a whopping 256kb/s. At the time this would have been spectacularly fast – but my! how things have changed.)

It’s a good example of a shared service. Undoubtedly Janet provided staff with connectivity on a uniform and high quality basis which they wouldn’t otherwise have had, and thereby enabled collaboration between universities. This makes it very important: the UK’s universities are very impressive internationally, and it’s only by making the most of our strengths that they can continue to be so.

Janet’s just one of the shared services in higher education which makes a positive difference. Other examples of sector-wide shared services include UCAS and the Leadership Foundation for Higher Education. And smaller groups of universities collaborate: internal audit services such as UNIAC or the Kingston City Group; and there’s a fascinating development in Wales: the Wales Higher Education Library Forum (WHELF), which includes all HEI’s in Wales, the National Library of Wales, and NHS libraries in Wales, is jointly procuring a library management system. These are all good things which grow the capacity of individual universities, and which enable more value to be had for less money – what’s not to like?

And for this reason shared services have been very popular with governments and funding councils. But it’s felt to me that the promise has never been fully realised. The 2012 Finance Act included provision for cost-sharing groups to have VAT exemption, which removed one barrier. But there are others, more practical, about managing the transition to a shared service. Here are five things which you should think about, if considering whether a shared service approach might work for you.

How core is the service to your operation? If you share the service you inevitably lose some control, whether it’s over the details of things are managed and prioritisation when things get tough, or whether it’s in the specification and working out what matters in designing the shared service in the first place. If the service that you’re thinking of sharing is critical to your offer – because it’s a fundamental building block, or because the specific quality, price or location matter to those who you serve, think hard about whether sharing is right for you. It’s an expensive mistake to rectify later.

How stable is the environment for the service? Sharing is a long-term activity, and if there’s foreseeable disruption round the corner, you need to factor this into your considerations. Many shared services have at their heart a common database or IT system for managing processes. How would the model look if the technology underpinning it changed completely? In the same way that cloud computing changed fundamentally the business model of many organisations in the field, so other technological (or legislative) changes will make a difference too. This need not be a show stopper, but time spent thinking about the core of the shared business model and how stable this is will be time well spent.

What is the business model? There are many activities in universities which get cheaper and better by being larger – think about the many processes which involve bulk handling of data, and once you’ve got the workflow it doesn’t cost much for a computer to repeat a calculation or a process. But if this is true for universities it is true for other sectors as well. Take payroll, for example: if several universities shared their payroll operation then the unit cost of managing a salary payment would certainly be cheaper. But banks and other commercial providers are managing payroll systems which pay millions of people every month: that’ll be cheaper still. Unless a shared service provides a benefit which is unique to the sector, then it’s quite likely that the financial savings will be outweighed by those available by looking at a different sort of provision. And that’s a big impact upon the business case.

Are you doing it for efficiency or for service quality? Shared services can deliver either, but if you’re thinking of sharing an existing service then you need to be very clear about this. You’ll have staff, buildings, customers and systems involved in what you currently do, and thinking about the change that a shared service will mean for them, thinking about how you’ll manage this, and whether the efficiency savings will really materialise is an important exercise. You’ll get more buy-in from staff and customers if you’re talking about making things better; you’ll have a stronger business case if you’re talking about efficiencies and cost saving. And it’s really hard to do both at the same time.

Do the sharers have the commitment to learn to trust each other? The human dimension is really important, and easy for management teams to overlook. Put simply, the people who will make this work come from all of the different sharing organisations, and unless they trust each other enough to work openly, honestly, and without a hidden agenda, then even mighty efforts can be frustrated. Time spent at the outset of a shared service project in bringing teams together, letting them get to know each other, and learning to work well, is critical to the project’s success. Remember the forming, storming, norming and performing model for team-building? You need to go through all four stages, and do so consciously. Make sure that it’s someone’s job to see that this happens, and listen to their concerns.

Don’t let these issues put you off – the benefits of good shared services are real and long lasting. But if it was easy, there’d be more of them.

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