UT cuts ties to Accenture after coalition’s organizing and mobilizing efforts; AG ups the ante on his Accenture contract

As a result of pressure from the University of Texas Save Our Community Coalition, the UT administration announced that it will be  scaling down its Shared Services project and cutting ties with Accenture, the global consulting firm that designed Shared Services.

Accenture’s plan would have eliminated 500 jobs.

In addition to cutting staff, Accenture’s plan would have funneled many requests for administrative services to a centralized call center, reducing direct contact between staff and those they serve.

The cost of implementing Shared Services would have been at least $54 million, and as the Save Our Community Coalition has demonstrated, Accenture overestimated the savings that its plan would generate.

In a related development, the Associated Press reports that another Accenture project with a Texas government agency is $64 million over budget and is in danger of not being completed on time.

At UT, the Save Our Community Coalition, a broad-based campus coalition organized by United Students Against Sweatshops (USAS) and the Texas State Employees Union CWA Local 6186 (TSEU), waged a 14-month long campaign aimed saving the 500 jobs slated for elimination.

The campaign included mobilizations, building a wide base of opposition to Shared Services, and confronting the administration about inconsistencies and errors in the Shared Services plan whenever possible.

At an April 23 rally, one of several rallies against Shared Services held on campus, students, faculty, and staff spoke out against Shared Services. The rally was held on the steps of the offices occupied by top UT executives.

After the rally, students walked to the office of UT President William Powers and asked to speak to him about their concerns about Shared Services.

When he refused, the students conducted a peaceful sit-in at his office, and 18 were arrested.

The announcement that UT was cutting its ties to Accenture and scaling back its Shared Services plan came about two weeks after the rally and the arrests.

In addition to the rallies, the members of the coalition succeeded in getting 100 faculty members to sign a letter to Powers expressing their opposition to Shared Services. Members of the coalition also got the Graduate Student Assembly to pass a resolution opposing implementation.

While Shared Services has been scaled back, it has not been eliminated.

UT will pilot Shared Services in the Provost’s Office and the College of Education.

After the results of the pilot have been assessed, UT will decide whether it will expand Shared Services.

Save Our Community wants to make sure that the assessment is fair and called on the administration to involve staff affected by the outcome in the planning process. It also wants qualified experts to create the metrics that will be used to evaluate results and mutually agreed on benchmarks that the pilots must meet in order to continue.

A bigger concern of the coalition is the way that UT’s search for cost savings is always limited to measures that result in layoffs, pay freezes, or benefits cuts for employees.

“The UT administration tells us we need to save money by laying off staff and eliminating positions, yet all around me I see UT expanding and investing in new construction projects,” said Sarahi Soto-Talavera, a UT student and TSEU member. “We need to stop balancing the budget on the backs of staff, and start prioritizing the people who make our campus run.”

Not far from the UT campus is the office of Texas Attorney General Greg Abbott, who agreed to a $210 contract with Accenture to design a new computer system for his Child Support Division.

In 2011, the State Auditor’s Office issued a report saying that the new computer system known as TXCSES 2.0, or T2, would be implemented in three phases. Full implementation would be complete by 2017. The first phase was on track to be completed by October 2013.

But more than six months after its scheduled implementation, the first phase has yet to be completed.

The Associated Press reports that earlier this year, a report by UT faculty members hired to monitor the project said that the T2 completion date was overly optimistic. According to the AP, it also “raised warning about substandard work that could escalate costs down the road.”

To address this problem Abbott agreed to a contract amendment that raised the cost of the project by $64 million.

UT rallies against Shared Services; 18 arrested

At an April 23 rally, employees, faculty, and students at the University of Texas at Austin slammed a business consultant’s proposal to centralize, privatize, and eliminate staff jobs at UT and called the job-cutting proposal an attack on the whole UT community.

After the rally, students went to the office of UT President William Powers to meet with him and express their concerns about the consultant’s proposal. Instead of meeting with the students, Powers had 18 of them arrested.

In 2012, UT administrators hired Accenture, a global consulting firm based in Ireland, to develop plans for making UT operate more like a business.

Accenture in 2013 produced a long-term plan that would restructure the way that UT provides administrative and other services.

The initial phase of Accenture’s plan, called Shared Services, centralizes administrative services at call centers and eliminates at least 500 jobs.

Austin City Council member Mike Martinez was one of the speakers opposing Accenture’s Shared Services plan.

“I’m proud to voice my opposition to what I see as a dangerous, slippery slope that we’re heading toward with Shared Services,” said Martinez, who said that he would ask other City Council members to join him in opposing the plan.

Because of the fight waged against Shared Services by the UT Save Our Community Coalition, which organized the rally, UT’s executive leadership has backtracked on its implementation plan.

Now, the administration is saying that Shared Services will be implemented on a pilot basis and that full implementation will come only after the results of these pilot programs have been analyzed.

The McCombs School of Business is one department that for two years has implemented the centralization principles of Shared Services.

Roanna Flowers, a staff member at the School of Business, described how Shared Services works in practice.

“I can tell you what it’s resulted in,” said Flowers, a member of the Texas State Employees Union CWA 6186, the UT workers’ union. “Poor working conditions, a loss of community, bottlenecks, higher costs, and extremely low morale.”

UT’s Chief Financial Officer Kevin Hegarty has said that the Shared Services job cuts will come about through attrition and that no one will lose their job.

But the College of Liberal Arts after consulting with Accenture’s Shared Services Steering Committee, centralized its business services office.

As a result, Victoria Vlatch, a course scheduler, lost her job.

Speaking at the rally, Vlatch, a TSEU member, said that when UT starts acting like a business, it devalues the work that she and others do.

“Faculty and staff members are no longer seen as assets essential to the mission of the university,” said Vlatch. “We become instead expenses.”

President Powers argues that eliminating jobs is necessary because state funding for UT has not kept up with growth causing budget shortfalls.

But Adam Tallman, a member of the Graduate Student Workers Union TSEU, told the audience that UT executives’ salaries are partially responsible for the shortfall.

“Why are we broke?” asked Tallman. “There’s another interesting dynamic going on here. In 2008, the overall salary of administrators making $200,000 or more a year was $18 million. Guess what it is now–$44 million.

“As a percentage of state appropriations, the top administrators’ salaries went from 4 percent (in 2008) to what it is now, which is 14 percent.”

In a recent letter to authors of a faculty letter urging Powers to reconsider the Shared Services plan, Powers said that the challenges facing UT require it to become more efficient.

But at the rally, Dr. Mia Carter, a professor in the English Department and one of the authors of the faculty letter, asked, “Why does the zeal for efficiency and restructuring start at the expense of the staff?”

Carter said that the faculty letter to Powers offers a better solution for dealing with the challenges facing UT.

“What makes a public university great? What sustains its values? . . . Who and what are worth paying for and investing in?” asked Carter. “The faculty letter expressed the hope we will collectively ask these questions for they concern us all and are inseparable from discussions about the quality and value of public education.”

If the administration was really concerned about efficiencies, said Bert Herigstad, office manager in the Radio Television Film Department and winner of UT’s 2011 Outstanding Staff Award,  “one of the first things (they) can do is ask the staff, what are your ideas to improve efficiency,” but the administration has failed to do so.

The Save Our Community Coalition has emphasized that the staff job cuts proposed by Shared Services are an attack not only against staff but to the whole community.

Tarel Patel, a UT Student Government representative, explained why standing up for the UT community is important to him.

“When we’re asked to stand to fight for our community, we stand together; when we’re asked to stand together to save jobs, we stand together; and when we’re fighting for our education and our community, we continue to stand together. That’s inspiring to me and future generations of students who will be coming to UT.”

After the rally, a group of students went to the UT Tower, the administration building overlooking the campus, and asked to meet with Powers to explain their opposition to Shared Services.

“We are here to have our voices heard, and they are not being heard by this university so we took our voices to the Tower,” said Sophia Portier, a UT student to KVUE television.

Instead of meeting with the students, Powers stayed in his office.

The students responed with a peaceful sit-in.

The campus police were subsequently called in and arrested those participating in the protest.

After the arrests, UT professor Snehal Shingavi posted on his blog an open letter of support for those arrested and urged faculty members to sign it.

The letter concludes:

We think that it is time for this pattern of responding to protest with police to stop in favor of a policy of active engagement with student concerns. We encourage the University of Texas and the Travis County Attorney to drop the charges against the students arrested yesterday. We encourage the University to revise its policies in dealing with student protesters. But most importantly, we encourage the University of Texas to rethink its commitment to the staff who work tirelessly to make UT Austin the flagship university of Texas and to reconsider its implementation of Shared Services.

Accenture helps private sector eliminate jobs too

Some public universities like the University of Texas at Austin have contracted with Accenture, a global consulting firm based in Ireland, to find ways to make  universities operate more efficiently.

Last year, Accenture produced the first part of its plan to make UT more efficient. The plan, called Shared Services, would eliminate 500 jobs.

Accenture also contracts with private corporations for the same purpose. The company’s recent partnership with private equity firms that bought H.J. Heinz Co., the ketchup and other food products manufacturer, demonstrates that Accenture has a one-size-fits-all formula for creating efficiencies–eliminate jobs.

The Brazilian private equity firm 3G Capital and Warren Buffett’s Berkshire Hathaway in 2013 paid $23.3 billion to buy Heinz. The deal paid shareholders $72.50 per share, so that the new owners could take the company private.

After the two private equity companies bought Heinz, Accenture was called in to study the company’s cost structure.

In August, Heinz announced that it was eliminating 600 office jobs, including 350 in Pittsburg, the company’s headquarters, and in November, the company announced that over the next six to eight months, it would be closing three plants in North America, eliminating nearly 900 jobs.

The lost jobs are about 10 percent of the company’s workforce.

According to Heinz the job cuts and plant closures were regrettable but necessary because they would “enable faster decision-making, increase accountability, and accelerate growth.”

The company’s statement makes it sound like Heinz was bloated with job redundancies.

But Fortune reports that before the 3G-Berkshire takeover, “Heinz was already viewed by analysts and competitors as a relatively lean, hard-working enterprise.”

The company’s assertion that the plant closures and job cuts would lead to greater efficiency puzzled the leader of the economic development corporation in one town where Heinz closed a plant.

John Regetz, executive director of the Bannock Development Corporation in Pocatello, Idaho, where the Heinz is closing its plant, told the Idaho State Journal that in 2011, the Pocatello plant was recognized as being the most productive facility in the entire Heinz operation.

IUF’s Private Equity Buyout Watch argues that the Heinz job cuts are less about creating efficiencies and more about shedding labor costs, so that when the new owners decide to sell Heinz, as they will surely do, the company will fetch substantially more than the investors paid.

Shedding labor costs also helps 3G and Berkshire enhance their short-term rate of return.

The Heinz acquisition isn’t the first time that 3G and Accenture have worked together.

According to the Financial Times, 3G hired Accenture to help it trim costs after 3G bought AB InBev, an international brewing company that owns more than 200 brands including Budweiser and Stella Artois, and Burger King.

In both instances, 3G implemented aggressive cost cutting measures that included significant job cuts.

The Wall Street Journal reports that shortly after 3G acquired Burger King in 2010, 300 employees at the company’s headquarters were let go and layoffs continued for months after that.

According to the South Florida Business Journal, by 2011 40 percent of the employees at Burger King corporate headquarters had been laid off. Some were top executives, but plenty of middle-class people working as administrative assistants, analysts, quality control supervisors, and others lost their jobs.

Low-wage workers at Burger King restaurants weren’t affected because most of them work for franchise owners.

Private Equity Watch reports that by shedding labor costs, 3G “achieved the seemingly impossible by squeezing even more cash out of Burger King when they took over from earlier rounds of private equity investors who effectively vacuumed out large quantities of cash.”

After the mass sackings at Burger King, 3G cashed out. In 2012, it took Burger King public again in a $1.4 billion deal with Justice Holdings Limited, a UK investment firm.

Accenture’s work has caught the eye of other private equity investors in the food production industry.

Mondelez, the maker of such snack foods as Oreos and Cadbury chocolates, recently announced that it had hired Accenture to help it slash costs.

“We’ve watched the work that 3G has done with AB InBev and Heinz – Accenture was the partner with them, and we believe they can be of great help to us,” said Irene Rosenfeld, chief executive of Mondelez to the Financial Times.

“(Accenture) has managed more synergy than anticipated in the merger between AB Inbev and Interbrew, while it also shut down 3 Heinz factories with 2,000 jobs lost,” added Johan Van Geyte writing for retaildetail.

Accenture’s shared services plan at the University of Michigan put on hold

The University of Michigan (UM) on December 2 announced that it is delaying implementation of a plan to eliminate 50 jobs and consolidate and centralize administrative services. The Shared Services plan was developed for UM by Accenture, one of the world’s leading privatization consulting companies.

UM’s announcement of the delay came after 1,152 UM faculty members signed a petition urging UM to stop the Shared Services project and severe its relationship with Accenture.

The University of Texas at Austin (UT) has proposed implementing a Shared Services plan similar to the one that drew the ire of UM faculty.

“The Shared Services plan at Michigan is similar to the one being proposed at UT. . . and it comes from the same source–Accenture,” said a media statement released by the UT Save Our Community Coalition (SOCC) that includes the Texas State Employees Union CWA Local 6186, United Students Against Sweatshops, Workers Defense Project, Education Austin, the International Socialist Organization, and ULI.

The SOCC statement also said that UT’s Shared Services proposal would eliminate 500 jobs, ten times more than the University of Michigan’s, and noted that Accenture currently has “executives working in key positions within the administration of both universities” and “stands to make millions of dollars at both campuses if the plan is implemented.”

State funding for public higher education has not kept up with the growing demand for it. As a result, universities are looking for ways to stretch dollars. Consulting firms like Accenture have marketed Shared Services, which centralizes, consolidates, and eliminates administrative services jobs, as a way do so.

But what often gets lost in the sales pitch is the fact that converting to Shared Services opens new business opportunities worth tens of millions of dollars to companies like Accenture that promote themselves as experts in the managing the conversion process.

Unfortunately, the promised savings can be illusory while the cost of the so-called expertise is real.

Inside Higher Ed reports that UM paid Accenture $11.7 million to help the university implement Shared Services, which would have consolidated and centralized 275 administrative jobs and eliminated 50 more.

Six months ago, Accenture estimated that the consolidation, centralization, and elimination of administrative jobs would save UM $17 million.

By November, Shared Services estimated savings had been reduced by half and even that estimate may have been too high because it didn’t account for the millions of dollars that UM will have to spend for upgrades to and rent for the building that will house the consolidated services.

Critics of Accenture’s Shared Services plan objected to the secrecy surrounding its development. As the plan was being developed,  UM’s administration enforced a gag order that prevented department heads from discussing it with the wider university community.

There were also concerns about the close ties between Accenture and UM administrators, most notably Rowan Miranda, UM’s associate vice president for
finance who before his UM appointment led Accenture’s state and local government and higher education consulting business.

UM faculty members also argued that Shared Services would diminish their productivity.  Fawwaz Ulaby, an engineering professor who led the faculty petition drive, estimated that consolidating services would reduce faculty productivity by 10 percent to 20 percent because faculty would have to perform work previously done by support staff.

According to Ulaby, lost productivity would cause a reduction in research funding, which would cost the university more than the estimated savings.

Ulaby was also concerned that face-to-face interaction between faculty and support staff would be replaced by e-mail and phone calls.

Finally, faculty who opposed Shared Services feared that the interests of Accenture and other private consulting firms didn’t align with those of UM’s students, faculty, and staff.

“The University is not a corporation; it’s an academic institution,” said Ulaby to the Michigan Daily. “Trying to convert it to a corporation is detrimental to its mission.”

Those who signed the petition opposing Shared Services included former UM President James Duderstadt and several former deans and department heads.

UM administrators also received what the Daily calls “a slew of letters” from UM departments objecting to Accenture’s Shared Services plan.

Implementation of the plan was due to begin in April, but the depth and breadth of opposition caused UM’s administration to put implementation on hold indefinitely.

The opposition also caused the administration to rethink its relationship with Accenture.

The Daily reports that before the Shared Services delay was announced, Timothy Slottow, UM’s executive vice president and chief financial officer, told those attending a faculty meeting that, “the firm (Accenture) has not performed at the level administrators had hoped it would and (we) are ‘looking at ways to reduce (Accenture’s involvement’.”

Accenture’s track record: a brief history lesson

The Texas State Employees Union CWA Local 6186 in a recent broadcast to members said that it obtained a draft of the University of Texas at Austin’s Shared Services Plan, which the union describes as a blueprint for consolidating and privatizing campus services.

Among other things, the plan calls for the consolidation of IT, human resources, and financial services that would eliminate 500 of the 2,500 jobs in these departments.

The Shared Services Plan is part of larger plan entitled Smarter Systems for a Greater UT, drafted by the Committee on Business Productivity.

The committee is composed of 13 business executives and led by Steve Rohleder of Accenture.

The Shared Services Plan estimates that the proposed consolidation will save $30 million to $40 million a year over the next ten years, but in order to realize these savings, UT will need to invest $160 million to $180 million to build new services and reporting capabilities, redesign processes and jobs, provide training, and enhance technologies.

According to Seth Hutchinson, TSEU’s organizing coordinator, Accenture and some of the other corporations represented on the committee will likely bid on the multi-million contracts needed to implement the Shared Services Plan.

A brief history lesson might be in order before UT commits millions of dollars in public funds to a plan drafted by Accenture and its cohorts.

Back in the mid 1980s, the Texas Attorney General’s child support program was not meeting its goals.

Then Attorney General Jim Mattox called in Arthur Andersen, one the US’ big five accounting firms, to conduct a review of the program and recommend improvements.

The review was conducted by Arthur Andersen’s consulting division, which eventually renamed itself Andersen Consulting and established itself as an independent company. In the early aughts, Andersen Consulting rebranded itself as Accenture.

Among other things, Andersen/Accenture recommended that the Child Support Division build a new computer system.

Since the child support system was antiquated and the federal government was requiring all states to build new systems anyway, the attorney general decided to follow the Andersen/Accenture recommendation.

Coincidentally, Andersen/Accenture bid on and won the contract for the design and development of the new system that would come to be called TXCSES.

Work on TXCSES began in 1991 and was supposed to be completed by 1993.

But the project took four years longer than planned. The Texas State Auditor’s Office reported in 1997 before implementation of TXCSES that the delay was partially due to “problems with design of the system and unresolved issues between (Andersen/Accenture) and the Office of the Attorney General.”

The Texas Sunset Commission in a 1998 report said that the cost of TXCSES was originally estimated to be $24 million but ballooned to $75 million.

The commission also reported that “TXCSES is a major source of problems associated with delays in (child support) payments to the families” and that “one year after implementation there were 865 outstanding requests (by users) to change TXCSES.”

One of TXCSES’ design flaws was that it had to be taken off line for up to 30 hours at the end of the month for periodic batch runs. The shutdowns delayed payments going to families at the end and beginning of months.

In another report, the commission noted that after the Andersen/Accenture-designed system was implemented, the child support program failed to meet five of the program’s six key productivity measures.

After TXCSES came online, only a handful of Andersen/Accenture staff remained on the job. Nearly all of the work it took to fix TXCSES was done by state employees, who the commission said were underpaid and worked in a department that was understaffed.

It took state workers three years to fix TXCSES, but finally in 2000, the child support program was able to meet or exceed its productivity measures.

Five years later, another state agency decided to contract with Accenture to redesign the way that Texas provided health and human services.

In 2003, the state legislature passed HB 2292, which among other things called for the consolidation and privatization of Texas’ health and human services.

Rep. Arlene Wohlgemuth sponsored HB 2292, and she had help from a former staffer named Chris Britton drafting the bill.

After HB 2292 passed, Britton went to work for Accenture.

In 2005, the Texas Department of Health and Human Services (DHHS) awarded to Accenture an $899 million contract to redesign its services as required by HB 2292.

In 2007, DHHS fired Accenture because wrote State Senator Eddie Lucio, Jr in an op-ed piece that appeared in the Harlingen Valley Morning Star., “it failed miserably to provide services or save money.”

After the firing was announced, the Corpus Christi Times ran an editorial describing some the redesign failures:

The promised $646 million in savings never materialized from the deal that would have transferred the job of determining eligibility for social services to private call centers. Instead, thousands of families complained of abandoned phone calls, long waits, lost records, abruptly canceled coverage for children’s health insurance, and faxed applications that disappeared.

Accenture’s work took a farcical turn when hundreds of faxed applications for services ended up in a Seattle warehouse.

Accenture’s farce descended into tragedy with the death of 14-year old Devonte Johnson, who died of stomach cancer. His mother’s application for insurance from the Children’s Health Insurance Program was inexplicably mishandled by an Accenture call center causing a delay in his treatment.

After Accenture’s contract was terminated, DHHS’ then Executive Director Albert Hawkins told legislators that the cost of the redesign project was $500 million and that the agency had paid Accenture $186 million. When asked whether the state had realized any savings, Hawkins could not identify any.

According to Sen. Lucio, “the Accenture contract . . . cost the state $100 million more than budgeted, while fewer children and families received the needed benefits.”

Once again, state workers had to step in and clean up Accenture’s mess.

Hutchinson said, TSEU wants to ensure that state employees at UT won’t have to do the same.

“Silence and lack of involvement does no good,” said Hutchinson to UT workers. “The only response that has any chance of stopping this is plan is to stand up and fight back in defense of our jobs, our livelihoods and our future. It is time to get involved. Join the union!”