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’.”