Identification of Shared Services

Identification of Shared Services

There have been various methodologies and techniques adopted from industry for use in identifying opportunities and priorities for Shared Services, with others based around quality and continuous improvement of business processes to support established Shared Services operations. These methodologies are used extensively for standardisation and optimisation of business processes whether or not they are in a Shared Services environment. Some of the more common are described below.

Lean principles stem from developments by the Japanese manufacturing industry, notably Toyota and seek continuous improvement in the name of efficiency. Lean theory places the customer at the centre of the process so that anything that does not create value for the customer is considered to be wasteful and should be eliminated. It requires a thorough understanding of an organisation and its processes or flow of production together with enduring commitment on the part of management and employees to the process of Lean improvement. See also http://en.wikipedia.org/wiki/Lean_manufacturing

Six Sigma: was originally developed by Motorola to systematically improve processes by eliminating defects. A defect is defined as nonconformity of a product or service to its specifications. The core of the Six Sigma methodology is a data-driven, systematic approach to problem solving with a focus on customer impact. Six Sigma asserts the following principles: succeeding at achieving sustained quality improvement requires commitment from the entire organisation, particularly top-level management; continuous efforts to reduce variation in process outputs is key to business success; business processes can be measured, analysed, improved and controlled. See also http://en.wikipedia.org/wiki/Six_Sigma

Systems thinking: used widely in the scientific community, it sets out the inter-related nature and complexity of organisations, encouraging a holistic approach to problem solving. It starts from the principle that issues do not exist in isolation and that any organisation can only be understood in relation to its processes and the way in which they operate together. See also http://en.wikipedia.org/wiki/Systems_thinking

Value Chain Analysis: the value chain categorises the generic value-adding activities of an organisation by identifying primary activities and support activities. Costs and value drivers are identified for each value activity - the aim being to maximise value creation while minimising costs, i.e. to increase the efficiency and effectiveness of an organisation. This approach allows an organisation to gain a better understanding of how its resources are distributed across a range of activities, highlighting those that are of most value from the customer's perspective. When done across an organisation, or organisations, it helps to identify significant areas of duplication and overlap, which would lend themselves to simplification, standardisation and sharing. See also http://en.wikipedia.org/wiki/Value_chain

Value Stream Mapping: part of lean principles and complements six sigma methods borne out of manufacturing, which have since been adopted and used in logistics, supply chain, and service related industries including Shared Services. Many of the leading Shared Services organisations have adopted these methods and principles. The aim is to improve processes and eliminate waste. Value stream mapping captures the whole process from end to end and uses a team approach and performance measures to critique activity. See also http://en.wikipedia.org/wiki/Value_stream_mapping

Lean principles stem from developments by the Japanese manufacturing industry, notably Toyota and seek continuous improvement in the name of efficiency. Lean theory places the customer at the centre of the process so that anything that does not create value for the customer is considered to be wasteful and should be eliminated. It requires a thorough understanding of an organisation and its processes or flow of production together with enduring commitment on the part of management and employees to the process of Lean improvement.
See also http://en.wikipedia.org/wiki/Lean_manufacturing

Six Sigma: was originally developed by Motorola to systematically improve processes by eliminating defects. A defect is defined as nonconformity of a product or service to its specifications. The core of the Six Sigma methodology is a data-driven, systematic approach to problem solving with a focus on customer impact. Six Sigma asserts the following principles:

• succeeding at achieving sustained quality improvement requires commitment from the entire organisation, particularly top-level management;

• continuous efforts to reduce variation in process outputs is key to business success;

• business processes can be measured, analysed, improved and controlled.

See also http://en.wikipedia.org/wiki/Six_Sigma

Systems thinking: used widely in the scientific community, it sets out the inter-related nature and complexity of organisations, encouraging a holistic approach to problem solving. It starts from the principle that issues do not exist in isolation and that any organisation can only be understood in relation to its processes and the way in which they operate together.
See also http://en.wikipedia.org/wiki/Systems_thinking

Value Chain Analysis: the value chain categorises the generic value-adding activities of an organisation by identifying primary activities and support activities. Costs and value drivers are identified for each value activity - the aim being to maximise value creation while minimising costs, i.e. to increase the efficiency and effectiveness of an organisation.
This approach allows an organisation to gain a better understanding of how its resources are distributed across a range of activities, highlighting those that are of most value from the customer's perspective. When done across an organisation, or organisations, it helps to identify significant areas of duplication and overlap, which would lend themselves to simplification, standardisation and sharing.
See also http://en.wikipedia.org/wiki/Value_chain

Value Stream Mapping: part of lean principles and complements six sigma methods borne out of manufacturing, which have since been adopted and used in logistics, supply chain, and service related industries including Shared Services. Many of the leading Shared Services organisations have adopted these methods and principles. The aim is to improve processes and eliminate waste. Value stream mapping captures the whole process from end to end and uses a team approach and performance measures to critique activity.
See also http://en.wikipedia.org/wiki/Value_stream_mapping

Scotland's Shared Services Guidance 2011

Shared Services Guidance 2011

from http://www.scotland.gov.uk/
This is an update of the Shared Services Guidance Framework issued in December 2007.
The concept of Shared Services is not new and there are now many excellent examples of sharing across the public sector. Shared Services implemented effectively, can enable an organisation and its partners (whether in the public sector or not) to sustain its services and embed continuous improvement which in the medium to long term can ensure real benefits are delivered both in terms of efficiency and effectiveness. It is important to state from the outset that it is not a quick fix or a magic bullet and it has to be considered alongside a range of efficiency options available to the public sector.
Any transition to Shared Services is an undertaking that needs careful planning and execution. It requires from the outset a clear business reason and Change Management Strategy as difficult decisions will need to be taken and clear leadership and buy in at all levels will be crucial to success. It also requires a comprehensive understanding of the delivery process including customer requirements and the delivery objective(s). The real challenge is in developing a strategy and vision, identifying the most effective business models and selecting the right people and partners, whilst securing political and organisational agreement to be able to turn the strategy into reality and make the transition as planned.
It is important to breakdown the barriers which challenge traditional ways of working. The best way to make any meaningful change is to take the workforce with you; if they realise that improvements are for the benefit of all - customers and staff - then it is much more likely that they will take ownership of the process. This in turn will allow greater opportunity to shape the transition, allowing continuous feedback from all levels on what works and what doesn't.
In the public sector, local democratic accountability and concerns about the possible impact on the workforce when taking decisions over location will be important factors to consider. However, it is equally valid to take account of the potential for Shared Services to support the positive movement of public sector employment between areas with differing prevailing economic conditions, for example from fast growing urban areas to rural locations, or (with recent advances in the ICT infrastructure) from a real to a virtual office with all the benefits - financial, social and environmental - that can be realised from investment in flexible patterns of working.
This Guidance for Shared Services seeks to provide information, guidance and case study examples: designed for those considering a move to Shared Services and those already making the transition. There are many public sector organisations in Scotland that are embarking on or already implementing Shared Services initiatives. It is intended that the examples of best practice contained in the following pages will aid those considering making the change.
The resources provided should not be seen as a single source of guidance as there are many other comprehensive research documents available; some of these are referred to herein and in the Further Information and Acknowledgements .

Before you start - key points to consider

Each section of the guidance will provide information on the key areas you need to consider from the outset. The following questions aim to summarise the must do's for any organisation embarking on a shared services journey.

Strategy
Is there a clearly articulated Business Strategy in place that has been approved and communicated to internal and external stakeholders? Do you have specialist advice on the legal and financial implications? Has the case for change been agreed and the business benefits and resources required been approved?
Change Management
Have you agreed a change management strategy and secured leadership and dedicated resources to deliver the change management requirements?
Business Process Review
Have you agreed the processes in scope and out of scope and then focused on mapping and redesigning to ensure they are fit for purpose?
People
Have you agreed the skill set to deliver the redesigned processes and engaged throughout the above 3 steps with the key personnel and representative bodies?
Technology
Do you have a clear ICT Strategy to support the Business Strategy that capitalises on the investment already made across the public sector?

Contents

The Guidance is designed to help you consider how to deliver on these key requirements and for ease of reference is set out as follows:-

SECTION 1: Shared Services Theory

What is Shared Services and how does it work?
What can be shared: discusses the work processes that can lend themselves to a shared services model.
Definition of Terms: provides an explanation of some of the more common technical terms used when discussing Shared Services.
Identification of Shared Services: sets out some of the more common methods and techniques used to identify processes which might benefit from a shared services model.
Collaborative Models: provides an overview of the different types of shared services model currently in use.
Diagnostics and Design: lays out the importance of a diagnostic approach.
Benchmarking: the importance of being able to measure progress against a clearly defined standard.

SECTION 2: How to put it into Practice

You have decided to move towards a Shared Services model for your organisation. How do you get started?
Checklist: points to consider when embarking on Shared Services.
Drivers: why would you want to share services.
Strategy: decide on what you want to share, who with and in what type of structure.
Process: work out in detail what you already do and what needs to change.
People: the importance of strong leadership and buy-in from staff and customers.
Technology: an enabler and facilitator in the transition to a Shared Services model.
Governance: how the organisation will be led and monitored.
Sourcing and Location: the type of organisation you want to be and where it will be located.
Legal and Procurement Issues: sets out potential issues to be considered - in particular the extent of powers allocated to public sector organisations, legal constraints (including EU competition law, data protection/privacy issues and tax implications ), staffing and organisational issues.
Continuous Improvement: How to maintain progress once underway.

SECTION 3: Summary and Next Steps

A brief summary of points to consider and to avoid, together with information on how to keep this guidance current, and contact details for the Shared Services Team.

SECTION 4: Detailed Case Studies

Contains a number of Case Studies of Shared Services operations in Scotland.

Summary Case Studies

Offers a list of examples of good practice both in Shared Services and other forms of sharing in the public sector in Scotland.

Glossary

Further information and acknowledgements

Additional references for further reading with acknowledgements of source material used in the preparation of this guidance.

Negotiating Effective Service Level Agreements (SLAs) | Article

Bill Deckelman from The Outsourcing Centre http://www.outsourcing-center.com/1997-11-negotiating-effective-service-level-agreements-slas-article-38377.html 

     

SLAs are now part of outsourcing’s alphabet soup. In recent years, outsourcing consultants and lawyers have heavily emphasized the importance of including SLAs in contracts. That trend comes from experience gained when many customers learned that they had little ability to influence the outsourcer’s performance without an SLA.
Although SLAs are included in rudimentary “best practices,” many customers still fail to negotiate an effective SLA that will provide value in the outsourcing relationship. An overview of effective SLAs and some of the challenges in negotiating these agreements helps explain why.

What Are SLAs?

In the context of outsourcing, “SLAs” simply identify certain service levels or performance standards that the outsourcer must meet or exceed. The SLA also specifies the consequences for failure to achieve one or more service levels, such as credits granted to the customer on future invoices or rights of termination on behalf of the customer in certain instances. The SLA may also include credits or bonus incentives for performance that exceeds targets.
Although in industry practice the SLA is a separate addendum to the outsourcing contract, it is not legally a separate agreement, but another set of terms and conditions of the outsourcing contract itself.

Structure of SLAs: Good, Bad, and Ugly

A good SLA will usually include a section that provides precise definitions of key terms. Next, specific service levels will be described in perhaps more than a dozen categories. For example, if data center functions are outsourced, service levels could include host CPU availability, CPU response times, batch job completion, help desk responsiveness, security administration, problem management and change management service levels. If other functions are outsourced, such as desktop or network services, they must be defined also. In most cases, service level compliance is measured on a monthly basis.
From such service levels, the parties identify certain “key” service levels. It could be that the host CPU availability is a key service level in addition to certain response time and batch processing measures. Key service levels will be weighted by importance or severity so they total 100 percent. Then, if the outsourcer fails to achieve some of the key service levels, the percentage of key service levels missed for the month can be applied as a service level credit against a percentage of the invoice. If all the key service levels were missed in that month, then the full percentage service level credit could be given to the customer.
In some cases, the parties may choose to identify not only a threshold level of acceptable performance for each service level, but also a level of “increased impact” if the performance is at an agreed level below the threshold service level. If the outsourcer’s performance falls below the increased impact level, the percentage service credit may increase substantially.
Another factor that may be included in calculating service credits is a “frequency factor” that measures the number of times a particular service level is missed during an interval, such as a rolling 12-month period. If the frequency factor is triggered, the percentage to be applied against the total service credit is increased by some factor, for example, 1.5 or 2.0.
Just because certain service levels are not included in the “key service levels” does not mean they have no significance. First, they provide an objective measurement for tracking performance in areas that are important to the customer’s business and can spotlight the problem areas. Second, these non-key service levels are in fact contractual obligations which if not met, could form the basis of a claim of breach of contract by the customer.

Critical Conditions

Often the parties identify a subset of the key service levels as critical. For these critical service levels the parties will agree that the outsourcing contract may be terminated by the customer if the outsourcer fails to meet them at the frequency specified. Why is it important to include this type of provision? Contract law generally entitles one party to terminate a contract if the other party “materially breaches” the contract. A breach that isn’t “material” may entitle one party to claim damages, but it will not entitle that party to terminate the contract. Identifying the “critical” service levels and providing specific conditions for termination eliminates ambiguity in determining whether circumstances entitle the termination of a contract for cause as a material breach.
Prospective outsourcing customers often are curious about industry standards for the range of service credits in outsourcing SLAs. If there are such standards, they are difficult to identify, but it is not unusual to see potential service credits ranging from 5 to 10 percent of a monthly invoice for routine service level failures and up to 15 to 20 percent of a monthly invoice for more severe or frequent failures. A severe penalty for service level failure could actually worsen the service problem if it results in the outsourcer making no profit during a prolonged period.

Carrots and Sticks

Two special issues that deserve extra attention are the performance bonuses for the outsourcer and negotiation of the force majeure clause.
An issue that can have a significant impact on both parties is the inclusion of “performance bonuses” if the outsourcer exceeds the service levels specified in the SLA. While the customer is entitled to credits for unsatisfactory performance, the outsourcer may be entitled to bonuses for performance that exceeds the service levels. In typical IT outsourcing, customers expect the outsourcer to exceed the service levels without special compensation.
The view of service levels as minimum standards means they are not considered the target optimum performance standards. If the outsourcer can add real value to the customer’s business, customers should be willing to share the value gained as a result of superior performance. Some customers are willing to include performance bonuses in the SLA if structured to provide real incentives for outstanding performance by the outsourcer. For example, any bonuses that are earned by the outsourcer might be earmarked for a bonus pool for key team members.
Force majeure clauses excuse a party’s failure to perform if the failure resulted from an act of nature such as an earthquake or other natural disaster beyond the party’s control. In outsourcing contracts, negotiating the provisions of excused performance in the context of the outsourcer’s responsibilities and liabilities can be most challenging and time-consuming.
Examples include failures resulting from the customer’s non-performance, failures of third parties, and failures in hardware and software. Outsourcers seek a broad definition of force majeure and customers seek a narrow, tightly defined provision. Fair resolution lies somewhere in the middle. In any event, provisions should be included in the SLA addressing the outsourcer’s responsibility to correct and mitigate the effects of an excused performance failure. A force majeure event should not completely absolve the outsourcer from any responsibilities whatsoever.

Negotiation Challenges

Customers negotiating outsourcing contracts for the first time may be surprised to find that outsourcers are generally not proactive in proposing a fair and well designed SLA structure to the customer. Unfortunately, outsourcers may respond to a proposed SLA from the customer and negotiate in hopes that the customer will ultimately agree to an SLA that favors the outsourcer. There is clearly an opportunity for progressive outsourcers to distinguish their services by drawing on their experience in drafting and implementing an SLA structure that thoroughly addresses the customer’s needs in a fair manner.
Every customer must be prepared to know what they want and why they need theSLA, and be ready to convince the outsourcer. Reasonable customers will avoid over-measuring and including every imaginable service level. They should agree to fair credits for failures in meeting the service levels. Outsourcers should be willing to understand that the customer requires significant protection in the SLA, and acknowledge that there are certain levels of performance that would justify termination of the contract.
SLAs are not easy to design or negotiate. But a comprehensive, fair and effective SLA is critical for a successful outsourcing relationship. In the course of negotiating an SLA, customers and outsourcers have the opportunity to learn a lot about how their future partner will approach important issues in the outsourcing relationship.

Value & Impact - Leadership and Strategy

Wednesday 21 March 2012, 10.30am-4.30pm
Fourth Floor, 184-192 Drummond Street, London, NW1 3HP


Booking form

This one day practical workshop offers Student Services leaders time out to focus on using the Value & Impact approach to improve their managerial and departmental performance.

The day follows AMOSSHE's national Value & Impact project. It addresses some of the issues that need to be taken into consideration at the planning stage and the skills associated with successful implementation, structured around templates from the toolkit. It draws on both the public Value & Impact Toolkit and the members' only Management Support Pack.

Delegates who are prepared to participate in group work and have familiarised themselves with both these documents in advance of the workshop, and have a basic level of understanding of the objectives and philosophy of the Value & Impact approach will benefit most from the day.

Who should attend?
Directors and heads of Student Services
Student Services department heads looking to implement Value & Impact approaches
Value & Impact champions at institutions
Student Services professionals developing Value & Impact assessments
Student Services professionals looking to develop their management skills
HE professionals interested in holistic service evaluation

Outcomes
By the end of the day, participants will have:
Considered Value & Impact in the context of their own institutional setting
Identified key issues and potential challenges to be considered prior to implementing the approach
Practised some of the skills associated with effective implementation
Identified their first (or next) steps in implementing the Value & Impact approach in their institution

Course facilitators
All of the course facilitators have been engaged in the Value & Impact work undertaken by AMOSSHE. Nicole Redman will chair the day, Jan Shine of Paullus Consultancy will lead on the professional development and reflective sessions, and Nicole Redman and Raegan Hiles will facilitate the Value & Impact case study work.

Nicole is a member of the AMOSSHE Executive board and led the work of one the original Value & Impact Project pilots at University of East London. Jan Shine has delivered development materials supporting the Value & Impact approach, including the members’ only Management Support Pack. Raegan Hiles managed the national Value & Impact Project and delivered project management training at HEFCE.

Spaces are strictly limited to 30 for our practical working days. If you are interested in 'Value & Impact - Leadership and Strategy' book now to reserve your place.

To book
Complete the Booking Form and return it by e-mail to info@amosshe.org.uk. Alternatively fax it to 0207 383 0794 or post it to Tima Moledina, Administrative Officer, AMOSSHE, Fourth Floor, 184-192 Drummond Street, London, NW1 3HP.

Fees
Member - £100
Not named member/ AUA Members - £125
Non Member - £135

*This is the total fee for attendance. VAT is not applicable to these events as they are education.

AUA Members who are not affiliated with AMOSSHE may book for this event at the middle fee tier. To take advantage of this discount, select 'Special AUA rate' on the booking form and include your AUA membership number.

Terms and Conditions
Cancellations or substitutions may be subject to a fee, depending on when they are received. Full details of our operating policies including events administration and our cancellation policy are at www.amosshe.org.uk/about/governance/docs

Willetts: less red tape + fewer tax burdens = more autonomy

 

By Jack Grove, THES

Measures to cut red tape and reduce tax burdens on universities will strengthen their autonomy, David Willetts has said.

Speaking at a meeting organized by the thinktank Politeia in central London yesterday, the universities and science minister said he was keen to maintain the independence of universities, citing research which indicated a strong link between autonomy and quality.
To this effect, he announced a string of initiatives which he believed would further institutional independence.
He confirmed that new rules scrapping VAT on shared services for universities would come into immediate effect.
The move, which was made to comply with European Union legislation, will open the door for greater collaboration between universities, which currently have to pay the 20 per cent tax if they outsource in-house administration services.
Announced by Chancellor George Osborne, Mr Willetts said the new rules would start immediately and that a new finance law was not needed.
A letter had been sent to Universities UK to confirm the decision.
The universities minister also announced an initiative to help cut unnecessary data collection by higher education institutions.
“I have discussed the issue of data collection with people from across the sector, and there is a widespread desire to go back to first principles,” he said.

“We need to establish precisely what information we already collect, what we actually need and why – and to reconcile the two, so that collection is useful and proportionate for all institutions concerned.”
He said that the Information Landscape project launched just last month was “seeking answers to these essential questions”.
“Participants will be identifying any 'quick wins' for easing the burden on universities, as well as publishing a road map for implementing a simpler model overall,” he said.
He added moves to lower the amount of state funding for universities would allow them to escape certain EU dictates.
With the state contributing only 40 per cent of the sector’s costs from this autumn, as opposed to the current 60 per cent, institutions would escape EU rules governing public bodies, which were defined as those funded by at least 50 per cent of public money.
“We are in a government that understands the value of autonomy,” Mr Willetts said.
He also announced a review of philanthropy in the higher education sector following the end of the government’s match funding scheme.
In the talk titled The Idea of a University, Mr Willetts said the university was “one of the most precious institutions that modern societies possess” and vital for “transmitting a body of knowledge, culture and skeptical understanding from one generation to another”.
jack.grove@tsleducation.com

University of East London - Placements shared service

Background

Tribal has been appointed by the University of East London (UEL) to develop and oversee a flagship project to manage a placements shared service for Allied Health Profession (AHP) students from ten universities (HEIs) across London and the South-East. The project was commissioned by NHS London.
Existing approaches to managing placements across the different AHPs within the HEI's were ad-hoc and adapted over many years and required considerable administrative input from academic staff.  Furthermore, placement providers were required to respond repeatedly to requests from multiple universities in varying formats.  A new solution was needed to address inefficiencies and promote a networked system between the different AHPs and HEI's.
The solution 
The project will see the development of a database to maintain details of placement providers and students seeking placements. The database will include placement options for students across seven Allied Health disciplines, including physiotherapy, occupational therapy and podiatry. A corresponding software application will be developed to enable intelligent matching suggestions of students to placements across hospitals, GP practices and community practices. Tribal will work with representatives from each discipline to ensure that all discipline-specific requirements, as well as the generic system capabilities, are captured.
Following the system's go live in early 2011, Tribal will provide an administration service to support practice placement organisation for students, working in partnership with the placement providers and the university co-ordinators.
 
The solution is designed to be completely extensible so that additional courses can or HEIs can be added to the consortium.

“We have chosen Tribal to oversee this project because they have the in-depth expertise to tackle what is a very complex brief. The database will make the organisation of students’ placements much more efficient for the academics within the universities, the placement providers, and the students themselves. By centralising details of students at all these universities and contacts at placement providers, the system will allow universities and students greater choice and flexibility in their choice of placement, and will take an administrative burden off the shoulders of academics.”

Jacqui Potter, Principal Lecturer in Professional Health Sciences at the University of East London and project champion.

Cloud and Shared Service Solutions

An event for IT and strategic decision-makers in HE to discuss how to create a level playing field for business and environmental optimisation. This workshop was held at the Institute of Chartered Accountants in England and Wales, London, on Monday 12th December 2011.

Overview

This workshop aimed to give IT and strategic decision-makers in HE a chance to find out more about the potential advantages and disadvantages of cloud and shared services, and the opportunity to reflect on the key factors that are likely to influence decisions in this area
The workshop was been jointly organised by two JISC-funded projects: Responsible Energy Costs led by the Forum for the Future, and Green IT for Science led by the University of Bradford.

Full details: http://storify.com/eventamplifier/cloud-and-shared-service-solutions