University shared services stumbles —- again

The University of Texas at Austin (UT) pulled the plug on the most important component of its Shared Services experiment, a consolidation of support services that was supposed to save UT hundreds of millions of dollars but would have eliminated hundreds of jobs on the university’s campus.

In a message to staff, UT’s Senior Vice President and Chief Financial Officer Darrell Bazzell announced the phase out of the Central Business Office (CBO) pilot program.

The CBO pilot consolidated support services such as procurement, accounting, inventory, human resources, and payment and revenue collection for a select number colleges, schools, and support units at UT.

If the pilot had been successful, all support services at UT would have been transferred to the CBO.

When the Shared Services plan was first proposed three years ago, it was estimated that as many as 500 jobs would be eliminated.

The proposal sparked an organized opposition campaign of employees worried that they might lose their jobs, faculty concerned that centralizing services would interfere with their teaching and research, and students angry that a centralized distant bureaucracy would create a barrier to vital services.

Opponents of Shared Services argued that centralizing support services would destroy the sense of community cultivated for decades among staff, faculty, and students and that it was yet another step toward the corporatization and privatization of public higher education.

Bazzell said that CBO was being phased out because it “has not produced the savings and efficiencies initially anticipated when it was launched.”

Instead of saving money, the CBO was costing an additional $600,000 per year. According to a Frequently Asked Question page about the CBO phase out, “this lack of efficiency is the principal reason we are ending the pilot.”

CBO was one of the two main components of UT’s Shared Services plan. The other was the consolidation of information technology services, which has not changed.

Shared Services was the vision of a select group of business grandees appointed by then UT President William Powers. The group’s purpose was to recommend changes that would transform UT into a more businesslike operation.

The group was composed of eminences from private equity companies, consulting firms, energy corporations, and the furniture trade.

The chair of the group was a top executive for Accenture, a well-known outsourcing and consulting firm.

In 2004, Accenture was awarded an $899 million contract to privatize Texas’ health and human services.

The state Health and Human Services Commission in 2007 fired Accenture because it failed to produce the cost savings it promised and because service deteriorated quickly once the company began implementing its plan.

“It failed miserably to provide services or save money,” wrote state senator Eddie Lucio in a 2007 op ed piece for the Valley Morning Star.

That failure didn’t dissuade the Texas attorney general from hiring Accenture to redesign the state’s child support computer system. Nearly ten years after the project began, the new system, called T2, is still being developed and cost overruns have reached $200 million dollars.

At UT, the group of business leaders tasked with transforming the university was led by Steve Rohleder, one of Accenture’s top executives. The group issued a report in 2013 entitled “Smarter Systems for a Greater UT.”

The report estimates that by implementing the CBO and consolidating information technology services, UT would save between $150 million and $200 million over ten years.

The report also contained other recommendations for making UT greater such as increasing parking fees, privatizing UT’s dining facilities, and increasing student food costs.

“Smarter Systems for a Greater UT” alarmed a large segment of the UT community, who formed the Save Our Community Coalition (SOCC), a united front that included the Texas State Employees Union CWA Local 6186 and a number of student and community groups.

The coalition led a grassroots movement opposing Shared Services and other recommendations in the report.

SOCC succeeded in stopping the privatization of food services and got the university to scale back Shared Services to a pilot program.

Now that CBO is being phased out there is some concern about its employees.

Bazzell said that 30 positions in the CBO may be eliminated, but he added that the university would try to place them in other jobs on the UT campus.

Anne Lewis, a senior lecturer at UT, a documentary film maker, and an executive board member of the Texas State Employees Union, expressed concern for those whose jobs may be eliminated

On the union’s University Caucus Facebook page, Lewis urged the administration to place those facing layoffs “in departments within our community and with control over their work and creativity, a  way that worked better for all.”

“So much for in sourcing and shared services — a lousy model for public universities,” she added.

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.

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’.”

Shared Services at UT: Disconnect between assurances and reality

The administration at the University of Texas at Austin on November 15 held a public relations event on campus to hear concerns about the proposed Shared Services plan that if adopted would consolidate administrative services and eliminate 500 jobs at the university.

The questions that people asked expressed a deep sense of anxiety about the changes that the administration is proposing.

UT’s Chief Financial Officer Kevin Hegarty did his best to allay fears about Shared Services, one piece of a larger transformation project aimed at making UT operate more like a business.

Details of the transformation project were made public in January when a committee of 13 private business executives appointed by UT President William Powers issued a report entitled Smarter Systems for a Greater UT.

Among other things, Smarter Systems called for UT to privatize and consolidate a wide range of services provided by UT staff.

Just prior to the November 15 event, Hegarty took another step to tamp down fears about the overall transformation project and Shared Services by announcing that for the time being UT would not be privatizing student food services or raising student fees, which had been recommended by the Smarter Systems authors.

The Texas State Employees Union CWA Local 6186 called the announcement a “huge victory.”

The union and its partners from the Save Our Community Coalition have been organizing and mobilizing students and staff to protect UT, one of the state’s most valuable public assets, from private encroachment.

In a message to members, the union said that the victory was the result of ten months of organizing and mobilizing at UT.

The union also warned that the threat of privatization and downsizing isn’t over and cited the Shared Services plan, which would consolidate IT, human resources, and financial services through the implementation of a cloud-based enterprise resource planning (ERP) system.

During the recent Shared Services public relations event, Hegarty responded to pre-screened written questions.

Among other things, people wanted to know if Shared Services would cause their jobs to be deskilled and their pay cut, if UT would give them sufficient warning in the event of layoffs, if their jobs would be privatized, if there would be more than 500 jobs eliminated; and if Shared Services would break down well established relationships between faculty, students and the administrative staff who serve them.

People also wanted to know what metrics would be used to evaluate Shared Services pilot projects on campus.

Hegarty replied that jobs would not be deskilled; that new career paths would be opened that could improve pay; that probably nobody would lose their jobs because the cuts would be accomplished through attrition; that no current jobs would be outsourced; that Shared Services would strengthen relationships between all members of the UT community; and that proper metrics would be developed when Shared Services was piloted.

Hegarty, dressed casually in jeans and a burnt orange sport shirt, set a reassuring tone.

But there was a disconnect between Hegarty’s reassurances and the realities of Shared Services.

Hegarty said that Shared Services has been implemented at other universities and that people were pleased with the results.

But the Yale Daily News in 2012 reported that faculty members unhappy with Yale’s Shared Service project said that it “does not meet the needs of individual departments.”

The paper quoted Shauna King, Yale’s vice president for finance and business operations, as saying that faculty had protested “most strongly” the fact that Shared Services caused “the reductions in and restructuring of departmental staff over the past few years.”

Yale began implementing Shared Services in 2010.

The Michigan Daily News more recently reported that 16 department heads in a letter to UM’s Provost said that UM’s version of Shared Services lacked transparency and accountability.

They were especially concerned that “faculty and staff will  have to reapply for their positions.”

The Daily News went on to report that the department heads questioned “the validity of the (Shared Services) campaign, citing similar efforts at
other institutions — including Yale University and University of California, Berkeley — that didn’t yield desired results.”

Hegarty said that Shared Services is the best and least painful alternative for cutting costs at UT.

But Dr. Alberto Martinez, a UT history professor, asked during the 15-minute live audience question period, if the projected Shared Services savings were realistic.

In a recent op-ed piece in the Daily Texan, Martinez said that to achieve the projected savings, 433 jobs will have to be eliminated by December 2014 and even more in subsequent years.

Martinez also wrote that the oft cited Shared Services implementation cost of $160 million to $180 million is too low. “The online plan ‘for campus discussion’ includes a cash flow graph that specifies that Shared Services and the ERP will cost even more: $213.5 million,” said Martinez.

Hegarty said that everything is being done to make the decision on whether to adopt Shared Services as transparent as possible.

But during the brief live question period that limited questions to one per person, Burt Hertigstad, who works in UT’s Department of Radio-Television-Film, said that staff with whom he has spoken weren’t satisfied with the information that they have received about Shared Services and called the meager attempts to publicize the transformation project little more than “smoke and mirrors.”

“Thanks for giving me the chance to ask one question,” said Hertigstad. “But I really have about 50.”

Ovetz critiques UT’s Shared Services plan at union sponsored speech

Speaking before a standing room only crowd at the University of Texas at Austin, Dr. Robert Ovetz described a proposal to transform UT into a more businesslike institution as another in a long line of endeavors to convert public resources into private revenue streams.

These endeavors began 400 years ago at the dawn of capitalism when land owners enclosed public lands known as the commons to take advantage of new market opportunities–selling food to the rapidly growing population of new urban dwellers many of whom were forced off their land by enclosures.

Ovetz was speaking at an event called Shared Services and Other Bad Ideas organized by the Texas State Employees Union CWA Local 6186 and co-sponsored by the UT Graduate Assembly, the Save Our Community Coalition, and UT Young Democrats.

Ovetz attended UT during the late 1980s and 1990s and received his PhD there. His dissertation “Adversarial Research for Resisting the  Entrepreneurialization of the University” describes how a public resource–UT–was being transformed into a private asset.

Shared Services, a proposal from a committee of  business executives appointed by UT President William Powers, if adopted would consolidate UT’s human resources, IT, and financial services through the implementation of a cloud-based enterprise resource planning (ERP) system and eliminate 500 jobs.

Other services would eventually be privatized.

The proposal calls for UT to spend between $160 million to $180 million to design, develop, and implement Shared Services. Most of this money would be paid to private contractors.

Critics of the Shared Services proposal argue that UT would be spending nearly $200 million to eliminate 500 jobs; that the proposal’s estimated cost savings are illusory; and that UT students and workers will pay most of the costs for its implementation.

Shared Services is only one feature of a much broader transformation of UT envisioned by President Powers and his Committee on Business Productivity, composed of 13 “distinguished” business executives who Powers commissioned to “offer advice on aspects of the University’s business operations and processes that could be improved, streamlined, and leveraged to better effect.”

This particular transformation, according to Ovetz, is the latest in series of transformations at UT that “is part of the enclosure of higher education” and the privatization of human knowledge acquired through collective effort.

These transformations got underway in the 1980s when patent regulations and laws were changed to allow businesses to commercialize and profit from research done at public universities.

The commercialization and privatization of public knowledge at UT was not without costs.

UT, according to Ovetz, could have offset these costs by charging a fair royalty for products originating from UT research. It chose to charge only modest royalties.

At the same time, more students were enrolling at UT, which also drove up costs.

The state Legislature could  have helped UT to keep up with higher costs by taxing those who benefitted most from commercialization. It chose not to.

Instead UT and state officials looked to students and employees to pay for the rising costs.

In 1983, UT tuition was $4 per semester hour. By 1999,  it increased to $52 an hour.

Workers at UT were also squeezed.

At one time, university workers received the same raises as other state employees.

But UT and other higher education officials convinced the Legislature to decouple university worker raises from those received by other state employees. Consequently, salaries at UT lagged behind.

To save money during this period, UT radically transformed the way it delivered education. More courses were taught by graduate assistants and adjunct instructors, a low-paid, low-benefit workforce with almost no job security.

Ovetz witnessed this transformation and wrote about it in his dissertation.

He called this era of commercialization and privatization, “the first wave” of the enclosure of public knowledge at UT.

The Shared Services proposal, he said, is the first ripple in the second wave.

Shared Services, according to Ovetz, would be the first step toward transforming UT administrative services into profit oriented businesses.

Each administrative function would be judged on how well it pays for itself, not on how well it serves the university community or the public. Some services will likely be privatized.

Work will be deskilled and made interchangeable.

Those who keep their jobs will work longer and harder for less money.

Before all this takes place, UT, according to the Shared Services proposal, will need to spend money up front to design and implement the plan.

But money is tight at UT, so where does this up front money come from?

Students will pay a hefty share. Parking fees will increase 7.5 percent annually for 15 years, food services will increase by 5 percent, and housing costs will increase by $184.2 million.

Higher costs for students, harder work and lower pay for employers, layoffs, and more public resources siphoned off to private interests sounds similar to the austerity measures being imposed in Europe–and they are.

In Europe austerity was justified by the continent’s economic crisis.

UT’s austerity measures are also justified by an economic crisis–state funding has not kept up with the growing need at UT. The only way to deal with this shortfall is, according to President Powers, to make UT run more like a business.

But Ovetz called UT’s budget crisis a self-imposed crisis.

In addition to deciding not to seek higher royalty payments, UT has chosen not to spend available money.

When he was researching his dissertation in the early 1990s, Ovetz found that UT was earning $1.3 billion in short-term investments from money being held rather than spent in the university’s discretionary and unrestricted funds.

Ovetz argued that the Shared Services proposal is deeply problematic.

  • The cost savings envisioned by the Shared Services proposal can’t be justified even by its own math.
  • It sets up an  administrative hierarchy that skirts existing university governance and will put much decision-making authority in the hands of private contractors.
  • It creates a huge conflict of interests. Several members of the Committee on Business Productivity work for Accenture, a government outsourcing company with a spotty record.

“Shared Services “should be resisted by students, staff, and the local community,” said Ovetz. “It’s a highly questionable plan from a highly questionable source.”