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Shared services and procurement: To share or not to share?

Computer pioneer and naval officer Grace Hopper once said, “The most dangerous phrase in our language is ‘We’ve always done it this way.’” As the assistant vice president of business services at Duquesne University, I’ve encountered that phrase from myself and others, and let’s just say Grace was right. 

With today’s economic climate, business leaders are continually seeking ways to boost operational efficiency and do more with less. The most challenging part of achieving that is changing how the organization has “always done” things. Adopting a shared services model means changing how your organization functions and creating a profound transformation. 

In this article, I’ll share how adopting a shared services model has helped Duquesne achieve optimal operational efficiency, especially in procurement functions, and how eProcurement helps to make our shared service operations seamless. I’ll also share some lessons we have learned along the way to help you avoid the same mistakes. 

What is a shared services model?

According to Gartner

A shared services model delivers services to internal customers by consolidating, standardizing and automating processes in low-cost locations. Services are delivered to many different divisions, departments and groups within an organization and may include: accounts payable and receivable, travel and entertainment (T&E) reimbursement, payroll, general ledger and cost accounting.

Put simply, shared services is the consolidation of services to achieve operational efficiency and effectiveness within the institution. We (shared services) are a true liaison. We represent and advocate both for the individual departments and centralized areas, ensuring both get what they need to operate efficiently and effectively. 

After thoroughly considering all departments and the financial transactions they generate, Duquesne moved financial transactions for facilities, information technology, human resources and central finance into a shared services model. 

Why adopt a shared services model?

Realizing your institution needs a change doesn’t necessarily mean you’re doing it wrong. It just means you’ve realized you could be doing it better. And that is where waves of improvement happen. 

As you consider a shared services model, you will undoubtedly identify unique ways shared services will benefit your institution, but here are some general but consequential positives I’m confident you’ll enjoy.

Improved organizational processes

At Duquesne, adopting shared services began as a way to improve processes. Financial transactions like budget transactions, journal entries and entry of requisitions and invoices are handled at the department level. For our centralized financial departments, like procurement and accounting, this often means considerable inefficiencies caused by inconsistent processes. 

Shared services remedies this by acting as the liaison between those at the department level in the highest financial transaction areas and the centralized areas. For example, before we adopted shared services, once a requisition was passed around and approved, procurement received it and often had to do a lot of backtracking before entering the order in our ERP (Ellucian Banner). 

Fast forward to now. Requisitions are entered into our Unimarket eProcurement solution at the department level, then reassigned to a shared services subject matter expert (SME). The SME works with the department to make sure the requisition is complete and includes all the necessary details, and then the SME completes the requisition and sends it to procurement for final approval. 

The end result? Procurement is no longer spending valuable resources and time tracking down needed information, and departments are waiting far less time for their orders to be entered. It’s a win/win. No juggling paper, reduced non-value-added procurement time, faster processing, higher compliance, and a much healthier organization.

Optimized organizational talent

In higher education, it is common for an employee to gain responsibilities over time that are outside of their original job description — sometimes far outside of it. Shared services allows  an organization to lift and shift. That means pooling existing talent, putting employees into roles they excel in, and taking operations to the next level. If that isn’t an option, you may choose to start over by posting the positions.

Duquesne chose the lift and shift approach. Shifting our wealth of institutional knowledge and resources into positions best suited for their skills resulted in a shared services team with over 70 years of combined higher education experience. Using our existing resources also allowed us to pass on the knowledge to any new hires, preparing us for the gradual departure of an aging workforce.

Maximized organizational technology

By adopting shared services for various financial operations, we reduced the number of employees who needed access to certain financial systems. Fewer people using those systems meant less time training individuals and more time for the shared services team to learn how to maximize and optimize the use of the systems. 

Our ERP solution is vital as the institution's system of financial records, and it has its strong points. Our eProcurement solution is just as vital as our procure-to-pay solution and has different yet equally critical strong points. Adopting shared services has allowed us to maximize the strengths of both solutions.

How to implement shared services

Your shared services implementation will, of course, be unique to your institution. But here is some general guidance on how to implement shared services that can be adapted to fit your needs.

1. Identify desired outcomes and goals

For any implementation to be successful, including that of a shared services model, it’s imperative that key stakeholders first identify the organization’s desired outcomes and goals. The primary goal for implementing a shared services model is often simply to use the least amount of resources to execute tasks within an organization effectively. But what does that mean for your organization? 

For Duquesne, it meant:

  • Centralizing resources
  • Standardizing processes and procedures
  • Preparing for the “brain drain” that would occur as our aging workforce began to retire
  • Reducing costs. 

2. Develop mission and vision statements

Creating and establishing a mission statement and vision was the next step in Duquesne’s journey to adopting a shared services model. It’s very important to us that we never lose sight of our purpose, and the mission statement and vision help keep our purpose at the forefront. 

Create a mission statement that is concise and clearly defines what your shared services team does and who they do it for. As an example, here is ours:

“Shared Services organizes administrative functions to optimize the delivery of consistent, cost-effective-flexible, and reliable services to all customers, including finance, labor, contracts, purchasing, chargebacks, and human resources.” 

Next, consider a vision statement. This brief statement focuses on the future and the overarching goal of shared services. Duquesne’s shared services vision statement is:

“Provide stakeholders the necessary resources to do their job effectively.”

With a clear mission statement and vision, stakeholders can quickly identify the what, who, and why of your institution's shared service team. 

3. Establish processes to support the desired outcomes

Once the mission statement and vision are in place, it’s time to think about what processes and policies the institution needs to support those outcomes. 

  • Are there policies in place that require departments to use shared services instead of using other avenues to complete tasks?
  • Are there systems, like eProcurement, in place that support shared services functions?
  • Have you established key performance indicators (KPIs) that will help measure the success of shared services?
  • Is there a service level agreement (SLA) in place?

4. Create a team

Duquesne leveraged the shared services adoption to assess existing talent and align it properly into the roles the talent could benefit most. This is called the lift and shift approach, and it was a slam dunk for us. 

Employees who had inherited work far outside their original scope (and wheelhouse) were realigned to focus only on their areas of specialty and expertise. Special skills and expertise are important, but there are some general skills that we look for in every team member. 

Shared services team members should: 

  • Possess the ability and desire to think outside of the bo
  • Be unafraid to speak up and challenge the status quo
  • Be eager and willing to ask questions
  • Have the ability to work collaboratively
  • Be a strong change agent or champion for shared services.

Creating a solid shared services team will not be an overnight effort. Diligent effort, intention, and patience are vital. But, it will pay off richly because a great team will help drive the organization to achieve its goals and beyond. 

5. Communicate

Take it from me, lack of internal communication about an upcoming change, like shared services, can be a dealbreaker for a smooth implementation. This was a major lesson learned for us. 

We got so engulfed in the details of adopting shared services, creating a team, and ensuring the appropriate systems and processes were in place that we didn’t communicate much to areas indirectly affected until implementation had already begun. 

Our staff wanted input prior to the change and felt shocked, confused and reluctant because they did not get that input. This created some waves you can be sure to avoid.

The good news is that once our campus community better understood shared services, they began to embrace the change and realize the positive impacts. 

Communicate early and strategically, informing employees of what to expect, how it affects them specifically and how your team will ensure they are taken care of without downtime. 

Overcoming the challenges: preparation is key

If you’re reading this and considering adopting shared services or are already in the beginning stages, you’ve still got some time to prepare. Preparation is key, so take advantage of any time you have to do it.

To help you prepare, here are some challenges we encountered along the way, with suggestions on how to avoid them. 

  • Many shades of gray. There were a lot of gray areas. Where do we begin? What should we expect? How should we handle the transition? After all, this was Duquesne’s first time implementing a program like shared services. Find a benchmark institution or two that has already gone through the implementation and ask them questions. Most of us are eager to share our knowledge and expertise. You can also utilize resources from the Shared Service Outsourcing Network (SSON).
  • Doubled workloads are not double the fun. As we transitioned employees into their new shared services roles, there were growing pains in separating from old responsibilities. Be sure to create a transition plan for your team. 
  • Make sure the right systems are in place: If your processes are all manual and paper-based, there may be solutions to consider, like eProcurement, to truly make the most of a shared services model.
  • Communication is crucial. I mentioned this already, but communicate early and often to everyone who will be directly or indirectly impacted by this change. This will help for a smoother adoption. 
  • Shared services needs leadership: If you’re going to be leading the shared services area of your institution, you’ll probably also take somewhat of an ongoing project manager role in addition to what you’re already doing. Is the program doing what it’s intended to do? How can you improve? What are the weaknesses? Are you living up to your mission and vision? These are things that good KPIs and SLAs can help to answer. 

eProcurement and shared services: a perfect combination

When I reflect on what made and continues to make shared services such a tremendous success for us, I credit our Unimarket eProcurement solution and supplier partnership with much of it. We often call eProcurement a “best friend” of shared services. 

eProcurement proves its value to our shared services team daily. We went from cumbersome, paper-based procurement and payables processes to clean, streamlined automation using an easy and intuitive solution for all users. 

Key features like requisition reassignment and automatic reports allow us to be a true liaison within the institution. Additionally, the partnership we’ve established with the Unimarket team is exactly what value-added is all about.

No one knows an eProcurement solution like the eProcurement supplier. Being able to rely on the Unimarket team as a steadfast resource for enhancing processes, scalability, and innovation has greatly contributed to our shared service success. 

eProcurement and shared services are a perfect combination for Duquesne. With the right eProcurement solution and supplier and a successful shared services adoption, they will be for your organization, too.