6 Tips to Ensure Shared Services Success at Your Institution

What has changed in shared services for higher education institutions over the last few decades? The need to create a financially viable, stable, and successful shared services organization (SSO).

Institutions need to be highly strategic and deliberate with their approach to shared services to see a return on their investment. This blog post will outline six tips to set your institution up for success if you’re considering a shared services approach. But first, let’s align on how we define shared services.

What Are Shared Services in Higher Education?

Higher education shared services are accessible when a group of institutions form and fund a new organization to provide services to more than one unrelated entity, typically as a consortium. When executed successfully, a shared services approach can help the participating institutions strategically align resources to achieve financial savings, operational efficiencies, and business goals that otherwise would be out of reach.

Just as institutions have varying definitions of an “active student,” definitions of “shared services” can also differ significantly. Some define shared services as a centralized organizational model at the institution or system level. However, this blog post will provide tips for institutions interested in the consortium-style approach, similar to the Green Mountain Higher Education Consortium.

6 Tips for Shared Services Success in Higher Education

1. Develop a Business Strategy

One of the most critical factors in the success of higher education shared services is having a documented business strategy that outlines why your institution needs to invest in shared services, what the business organizational structure will be, and how the SSO will be managed, financially funded, and measured for success by the participating institutions. Institutions should not enter into a shared services arrangement to be able to afford a technology solution or service. Shared services must be a strategic business decision to enhance your institution’s operations to meet business needs and desired outcomes. That’s why it’s essential you understand, manage, and monitor the right business metrics to reach and exceed your desired results.

2. Consider Geographic and Business Alignment

While institutions that create or join a shared services organization don’t need to be in the same geographic area, there are factors to consider if you’re working with colleges or universities outside of your region or state. For example, suppose you’re sharing payroll or finance solutions or services. In that case, you should consider how your shared services setup might impact your compliance with state or country tax laws if institutions or their employees operate in different states or countries, and how that may affect the services offered by the SSO. Further, if the participating institutions share student systems or services, do they also share the same accrediting body/bodies or agencies for the impacted programs and academic offerings? This is another factor to consider.

Tambellini data shows that approximately 62 percent of shared services instances in US higher education involve human capital management (HCM) and finance. Unlike academic offerings, finance and HCM functions do not differentiate an institution in the market. When looking to create or join an SSO, understand the longer-term vision and goal and start with a smaller, less complex cohort with similar business functions. Doing so will allow you to prove the shared services concept and gain the necessary buy-in to expand the services to additional operating areas and entities. It will also enable your institution to devote more time and energy to enhancing its unique and notable qualities rather than spending time on less valuable administrative or operational tasks.

3. Involve the Right People in the Planning, Decision, and Execution Phases

As with any major decision or change, involving the right people at crucial phases will determine the effort’s success. Shared services are no different. The following individuals should identify and document your institution’s shared services mission, vision, operational and governance structure, five-year plan, and the metrics to monitor success:

• President
• Chief financial officer
• Chief technology officer
• Chief information officer
• Cabinet members
• Board of directors

Leadership and staffing changes will occur. Documenting the agreed-upon shared services strategy and business model will contribute to cross-institutional alignment and commitment that will ensure the SSO survives leadership and staff changes.

4. Create a Legal Entity and Governance Structure

The biggest mistake we see institutions make with shared services is failing to develop a formal business agreement. An SSO is another vendor, and a signed agreement is essential to ensure the services expected are the services delivered, regardless of staff or leadership turnover at the institution or the SSO. It articulates precisely how the SSO will execute on and achieve the goals set forth in your business strategy.

Here are a few tips that institutions should keep in mind when developing a formal shared services agreement with participating institutions and before entering into an agreement with a services provider:

• Disperse financial and reputational risk: Institutions shouldn’t make a purchase for the benefit of the SSO without having the SSO’s commitment to help support it. Otherwise, the institution may incur more expenses and burdens than necessary. Institutions should also ensure that liability is shared between the SSO and the individual institutions so that neither is taking on a disproportionate amount of risk. For example, consider your data and cybersecurity risk if other institutions are processing personally identifiable information (PII) in your shared environment. 
• Establish key policies and accountability: Document the services of the SSO and the requirements of the member institutions. These policies should address how member institutions access the SSO and what information is shared across institutions.
• Determine how the SSO will measure and track success: Align the SSO’s goals and expectations and how they support individual institutions’ goals and expectations. Establish how the SSO’s expected outcomes will be continuously measured and monitored. The SSO is another vendor relationship and must be well aligned with the organization’s long-term strategic initiatives.

5. Avoid Customizations

The goal of a shared services organization should be standardization, not customization. It’s the reason many SSOs focus on finance and HCM systems—because they are often standard business functions that lend themselves well to a shared services environment.

To achieve efficiency at scale, evaluate and identify opportunities to simplify all your institution’s operational processes, procedures, and policies. To gain the most efficient, effective, and financially viable SSO, you must make concessions and changes, including evolving your data strategy and eliminating point solutions that don’t meet the collective SSO’s needs. During the development of the SSO, you can identify how to use the SSO and its anticipated solutions to fill gaps currently supported by point solutions.

Developing an SSO is like moving from a custom on-premises solution to SaaS—you’ll lose some customization and functionality, but you’ll gain efficiencies.

6. Invest Heavily in Change Management

You can successfully align with the right institutions and plan and document your shared services agreement, but your SSO will fail without addressing change management. Realizing the value of shared services requires a multiyear commitment to change management at the institution and SSO levels. It will support the adoption of policies, processes, procedures, and the institution’s goals. 

For the most substantial impact, leadership must support and communicate change management, including role realignment, upskilling, reskilling, and how the SSO and the institution’s employees are helping the institution achieve goals that would otherwise not be possible.

First, assess your institution’s needs and identify current and related skills and employee aspirations. Second, invest the time to understand the affected teams to determine how the institution can realign them to benefit the college or university and team members. Pro tip: Start early in the pre-planning phase. Third, communicate openly and transparently.

For specific change management guidance and tips, watch our on-demand webinar “How to Lead Change Initiatives at Your Institution.” Tambellini clients can also access our recent 2023 Practice Guide: Change Management in Higher Education. 

Takeaways for Shared Services Success

Shared services in higher education provide a lower-impact avenue for institutions to access the services they need, allowing them to prioritize resources toward efforts that contribute the most value. When executed successfully, SSOs can offer a higher quality of service at a reduced cost through process standardization and organizational realignment around business goals and outcomes. 

While finance and HCM are popular choices for shared services, we’re seeing a slowly growing number of institutions sharing student core services with reported early successes. We believe student systems haven’t had as strong a rate of adoption as back-office functions because the student and academic experience often distinguish an institution, making it difficult to scale and standardize.

Before embarking on an SSO, evaluate and understand your areas of differentiation and operations to determine whether an SSO or outsourcing operations may be appropriate. Here are a few questions to consider:

• Do you want a vendor relationship you can put out to bid periodically? If yes, an SSO is not the right fit.
• Is leadership open to sharing strategic enterprise decisions, such as enterprise technology solutions? If not, an SSO isn’t right for you.
• Are you trying to solve a temporary problem? An SSO is a long-term strategic decision and not the solution in this situation.

If you need assistance aligning your technology strategy or addressing concerns, or if you want to know how institutions and technology and service providers are approaching shared services, please contact us.