I attended the Shared Service for Higher Education conference on-line last month, and have subsequently reviewed the videos and documents of the event. From these I have compiled a summary of the event under the following headings:
In his introduction Mike Baker set the scene stating that HE have a large collective purchasing power which could be better harnessed. As Malcolm Gillies continued, this is a current “hot topic”, not just in HE but also in local authorities, companies and education providers. It is, however, not a new thing. London HEIs have been collaborating continuously since the 19th Century, a theme carried through by Steve Butcher, Chris Cobb and Daniel Perry.
The VAT issue
Before looking at possible approaches to implementing Shared Services it is best to address the elephant in the room, VAT. This was taken up mid-morning by Glynne Stanfield, Education partner at Eversheds. Transactions involving a VAT liable organisation require VAT payments to be made. At current rates this would mean that a shared service must cost 20% less than the non-shared equivalent before any overall saving could be realised by the partnership. In a subsequent interview Glynne explained that a European directive should make shared srevices VAT exempt, however this has yet to be implements in the UK. Arrangements are still possible within the UK framework to avoid VAT liability. This can be done through an HEI partering with an NHS trust or local authority which would provide VAT benefits from the Private Finance Initiative. In addition the joint employment model for sharing services could be used to avoid VAT however this does come with a caution. Since the conference the Government’s Autumn Statement has clarified the situation for HEI’s with the paragraph:
2.34 VAT: cost sharing exemption – Following consultation after Budget 2011, the Government will introduce a VAT exemption for services shared between VAT exempt bodies, including charities and universities.
So there are possible solutions to the VAT “barrier” but, as Glynne points out, it is essential that any partnerships are based on a business agreement.
Preparing to share services
A consistent theme throughout the conference was that of addressing people issues. While almost any technical barrier can be engineered out, with people come the needs for reassurance and building trust. In order to assist this process Chris Hale stressed the importance of streamlining services ready for sharing before aligning them between prospective partner organisations. Daniel Perry stressed the importance of being absolutely clear on what services an organisation is prepared to share and what they are not. And as Chris Cobb had stated previously, it needn’t be whole services that are shared, it may be discrete processes within a service.
This last point really does open doors to the thought process. By bringing the shared services discussion to a processes level it is easier to make decisions on what can and can’t be shared as the number of factors affect those choices should less extensive.
Neville Cannon expounded the importance of having senior management buy-in to any moves towards sharing service from the very outset. Backing Chris Hales view that shared services are a long term strategy rather than a short term solution, Neville built on this: All partners to a shred service must have common goals for the service, and common expectations of the commitments required and benefits provided by the partnership. He also noted the need for a “get-out” arrangement in the partnership so that if any partners wished to leave the shared service it would be under terms agreed and understood by all from the beginning.
Building on experience
The message from Malcolm Gillies and Mike Roberts was to start small and expand. Remembering that shared services should be a long term strategy the aim should be to build commitment from the earliest stages. Deliver small early and grow and start with existing proven technology and processes wherever possible. Mike Roberts went on to point out there any service sharing requires standardisation between organisations. This provides the opportunity to adopt best practices, however it this will only be possible if managed in a way that recognises potential improvements in established processes.
Martine Carassik continued the theme of growing relationships. HEIs in Ireland started with a common need to reduced costs through bulk purchasing which they did through An Chéim. As the relationship built through trust actual services were shared and external IT service providers were used leading to An Chéim current role which is essentiall a service management provider.
Mike Roberts summerised his presentation with success factors and issues which I feel make a good starting point when considering any shared services:
- Start with a small foundation group
- Consider a commercial participant
- Build commitment NOT Commit then build
- Target relevant processes valued by all partners
- Deliver small early and grow
- Use existing proven technology where possible
- VAT – To be most cost effective this needs setting up carfully
- Procurement rules – No distortion of competition
- Willingness to standardise – Be open to adoption of better practices
- Decouple service and data from the technology- Accept the possibility of new tools