OCTOBER 21, 2013


A. Shared Services.
Mr. Kevin Hegarty (vice president and chief financial officer) started his presentation with some background on the *Define system the University has been using since the early 1990s. A large campus-wide committee, that was formed about two years ago, began looking at the system and deemed it had passed its shelf life using long-outdated programming language, and therefore the University began searching the market for a replacement. Vice President Hegarty said that over a four-to-five year period installing a new system would cost the University over $100 million. He announced that the issue had been pondered for the past two years and a product had been chosen and funding had been secured.

Vice President Hegarty then referred to the “Smarter Systems for a Greater UT” report from the Business Task Force on Productivity—comprised of thirteen members of the business community—that made recommendations that could save the University a lot of money. President Powers charged Vice President Hegarty with shepherding research to adapt those recommendations appropriately, which led to the formation of a number of different committees, including one on Shared Services. The Shared Services Steering Committee, with about twenty members (deans, faculty, staff, and students), was formed to perform a “job task analysis” by contacting business officers across campus and asking them for a rough outline of how employees perform their various tasks. At the same time, committee members conducted research outside the University, considering Yale University, the University of Michigan, and the University of North Carolina at Chapel Hill, all of which are universities in various stages of implementing Shared Services. Some committee members also attended “a three-day colloquium at Harvard on Shared Services, and were surprised to learn that Shared Services have actually emerged now as a very definite field, a career path for people.” After returning, the steering committee decided to recommend to the campus the idea of Shared Services and to move forward in determining if it would be feasible to implement Shared Services in a very large conglomerate of diverse activities such as those here at UT Austin, and if so, to develop a plan for such Shared Services. He added that in order to develop and make such a plan work, the people in the departments, units, colleges, and schools would have to embrace the changes. He noted that the proposal that was subsequently created can be viewed at the Transforming UT website.

The next proposed step is to determine “job by job, person by person” how a plan could be developed and then “select a college, or maybe even several colleges, but some limited scope” for a pilot project to see if services could be improved by reducing redundancies across campus. A possible side effect might also be that the process of Shared Services may create more interesting jobs that produce skill levels that actually lead to more meaningful career paths, rather than just performing a variety of different jobs with no real depth.

Vice President Hegarty then pointed out that very conservative projections indicate savings to be around $30-40 million a year. He stated that there are about 12,000 people at the University that are administrative titles, of which about 4,500 people perform activities in the areas of information technology, human resource, finance, and procurement. Of those 4,500 positions, he believes about 500 could be eliminated using a Shared Services approach, mostly through attrition over a span of four to five years. Areas that might lend themselves for Shared Services were identified as being information technology, human resources, finance, and procurement. Vice President Hegarty extended an invitation to visit with any groups on campus to discuss the proposal in more detail. After vetting the proposal for the next few weeks, a recommendation would be put forward to the president with a pilot program in some volunteer units that are most representative of the campus.

Vice President Hegarty noted that implementing Shared Services along with the replacement of *Define would have the benefit that the new system could be set up to fit the new Shared Services approach. Additionally, the new system could be financed with a loan that would be repaid by the savings of Shared Services.

The vice president then addressed four “myths” he had heard: 1) that the Shared Services project is an Accenture-driven project; 2) Shared Services is outsourcing; 3) it’s not necessary; and 4) the fear that the same work will have to be done with fewer people.

The first issue was addressed by explaining that Accenture was hired by the University to manage the volumes of data requests and to help develop a plan moving forward, but that Accenture had since been positioned more on a strategic level. Mr. Hegarty said that the Shared Services plan would either be owned by the campus, and be successful, or not. “If it’s an Accenture plan, it’s not going to be successful.” With regard to the second issue, Vice President Hegarty said “services are provided by UT employees today, and anything in the shared service model would be provided by UT employees, just fewer UT employees. There is no intent to outsource.” In addressing issue three, the question of necessity, Mr. Hegarty stressed that things will not fix themselves, that UT Austin is on a very distressed financial model, and one reason for this is because tuition has been frozen and will be for the foreseeable future; he also added that the investment from the state over time varies, but the trend is downward. He stated that it is “our responsibility to look as hard as we can and rethink what we spend and how we spend it. And we believe …it’s a model that might help us address the needs of the campus itself.” And finally, he addressed the contention that Shared Services is doing the same work with fewer people, which he said is clearly the model we’re on today. The Shared Services model is saying “let’s rethink the work that comes in, let’s undergird it with current, more modern technology, let’s give you the training that you need, etc., etc. Believing we can re-engineer 20 percent, at least 20 percent, of the labor that goes into it today, or the work that goes into it today, enhance the labor.”

Before opening the floor for questions, Mr. Hegarty stressed that the program could not be dictated and could only be implemented if everybody is on board.

Dr. Dana Cloud (associate professor, communication studies) expressed concern about Accenture’s negative association with the Texas food stamp program, as well as its association with Enron. She was further concerned about the “dislocation of staff support” by having fewer staff members locally in each department and also “with a broader vision about a corporate kind of University.” She asked for clarification if this new process would be introduced “no matter what,” or if faculty might still have input. Mr. Hegarty reiterated that implementing this program without the backing of the entire campus would not work.

Dr. Alberto Martinez (associate professor, history) asked for some clarification about funding at the University. In particular, how do reductions or resources connect with growth, such as the construction of new buildings, or the announcement of recent fund-raising results? Could the strategy of resource usage be changed to address more eminent needs across campus? Mr. Hegarty noted that donors are usually very specific in how their donations are to be spent and generally do not want to give money to pay recurring expenses, which, in their opinions, are the obligation of the state.

Dr. Douglas Morrice (professor, information, risk, and operations management) noted that the School of Business had already re-engineered many processes and centralized many services. If other colleges have done the same thing, would Shared Services mean another round of the same thing? Vice President Hegarty lauded all the herculean efforts that are constantly happening on campus that can be capitalized on and learned from. Despite the importance of a pilot program, he also warned that no implementation should reach a point of no return where it cannot be stopped if it does not work. The vice president concluded by repeating his invitation to visit individual units.

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