Building a Best-in-Class Shared Services Organization is Not Enough: Linking the Institution and the SSO

Several years ago, a popular television game show called “The Weakest Link” gave rise to the popularity of that phrase. The origin of the entire phrase “A chain is only as strong as its weakest link” can be traced back to the early 19th century. While true in a literal sense, it also applies figuratively to supply chains in the business world and provides a lesson higher education leaders can learn. Ultimately, an organization looking to develop an effective shared services organization (SSO) must include both sides of the supply chain — the institution and the SSO — in the design and implementation of the model.

Much has been written in the shared services space about the need to focus on the retained organization. This is certainly an important piece of a successful implementation. However, it’s equally important to include the rest of the college or university as well (e.g. executive/senior leadership, other departments not directly impacted by a change in responsibilities, etc.)

The following are three critical areas that should be addressed by the higher education institution:

1. Educate the organization on the shared services model and continue to reinforce the learning

Operating like an external supplier or a “business within a business” is critical to the integrity of the shared services model. Employees working in an effective SSO will understand this and operate as such. However, the rest of the institution must understand this as well. Employees across the university may have an intellectual understanding of the shared services model. However, when it comes time to make decisions and/or take action related to, for example, moving functions into shared services and/or requesting support from the SSO, many often disregard (or forget) the tenets of the model and revert back to treating the SSO like any other centralized department.

Examples:

• When an existing function is to be moved into an SSO, the institution may speak in terms of “transferring budget and headcount to the SSO.” While the SSO may indeed hire some or all of the employees currently performing the function, a budget transfer is not necessary if a chargeback model is in place. Instead, the college or university can use that budget to pay the SSO bill and, in turn, the SSO will pay for the resources via the chargebacks.




• When the institution requests support from the SSO that falls outside the scope of the defined transactions, an effective SSO will likely need to push back and/or try to negotiate a fee to charge for the out-of-scope request. A lack of understanding of the model on the institutional side can lead to a negative perception of the SSO — that it lacks customer focus/orientation when, in fact, it’s doing what is necessary to remain viable.

2. Develop a program office to manage the relationship with the SSO

Effective supplier management is critical to a business to maximize value from its external suppliers. As the SSO is, in effect, a supplier organization to the rest of the institution, it stands to reason that the same level of discipline/resources allocated to manage the relationships with external suppliers should also be applied to the SSO to extract the greatest amount of value. The SSO will be much more effective if there’s a single point of contact established on the institution’s side.

Responsibilities of a program office could include:

• Manage the relationship with the SSO




• Drive the education for stakeholders across the institution on the shared services model (in collaboration with the SSO)




• Hold SSO accountable to service level agreements (SLAs) and continuous improvement targets




• Serve as the escalation point for issues/opportunities identified by stakeholders and communicate with SSO




• Communicate (and drive, if applicable) improvement opportunities on the institution’s side to reduce costs/consumption related to shared services. These opportunities may be brought forth by the SSO and/or identified via key business analytics.

3. Establish a strategic governance team

In addition to a fully-dedicated program office, the college or university should also establish a governance team to advance the company’s shared services strategy. In addition to the leader of the SS program office and the SSO leader, other members of the governance team should include key stakeholders at the senior leadership level. It’s typically from this vantage point that a holistic view of the shared services model can be seen.

Responsibilities of a strategic governance team should include:

• Drive strategic, company-wide communications related to shared services




• Develop the criteria and the strategic roadmap for functions to move into the SSO




• Make “build versus buy” decisions




• Determine whether the institution will mandate use of shared services




• Approve/deny business cases presented for functions to move to the SSO that are not on the roadmap




• Review SSO performance information presented by the program office/SSO leadership




• Set cost savings/continuous improvements targets related to shared services expenditures

Conclusion

In summary, if shared services is indeed viewed as a key enabler by the senior leadership at the college or university, the model must be designed and resourced effectively on both the customer and the supplier side. If this doesn’t happen, the institution won’t realize the maximum value potential of the shared services model due to the following:

• The SSO will be crippled by a lack of understanding and a negative perception by the institution regardless of how high their performance against SLAs might be




• The need for the SSO to constantly educate customers will take away from their focus on service delivery




• Resulting inefficiencies related to the need for the SSO to manage multiple points of contact on the business side




• Lack of strategic focus around the model at the senior levels of the organization

It’s counter-productive to attempt to build a world-class shared services organization and not attend to the touch points/linkage with the business. As with the links in a chain, the shared services model will only be as effective as its weakest link.