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University of Michigan
News for Faculty and Staff

July 28, 2014

Annual savings from Shared Services are forecast at $5M-$6M

November 21, 2013

Annual savings from Shared Services are forecast at $5M-$6M

The University of Michigan expects recurring savings of $5 million-$6 million a year once the Shared Services Center is fully operational with about 275 employees.

That is part of the message being shared on campus this week to help address concerns about the cost-effectiveness of the center.

The Shared Services Center is being established in leased space at 1000 Victors Way, near the university’s Wolverine Tower facility. It is part of the university’s overall strategy to keep U-M affordable for students and to protect resources for the university’s core missions of teaching and research.

There also were these developments related to the Shared Services Center, which is a key component of the Administrative Services Transformation initiative:

• Timothy P. Slottow, executive vice president and chief financial officer, sent a message Wednesday to deans and associate deans correcting factual errors and misunderstandings in an ad-hoc committee report on the university’s relationship with the consulting firm Accenture.

• Many of the affected employees who participated in campus forums this week said they are excited about new opportunities that will be available to them as part of a larger organization of finance and human resources peers.

• LSA Interim Dean Susan Gelman reminded LSA faculty and staff in a message Tuesday that the goal of the shared services approach to some administrative work “is to help address a very real problem that the university faces: to maintain an affordable and high-quality education for our students in the face of dramatically declining support from the state.”

• New data on who will work at the center shows that overall demographics at the center will be similar to the general campus population of staff in similar jobs with no disparate impact.

Important savings

The executive sponsors for the Shared Services Center — Vice President for Student Life E. Royster Harper, Provost Martha E. Pollack and Slottow — said the center is an important next step in the university’s broader cost-containment efforts.

In meetings with faculty this week, Pollack said ongoing savings of $5 million-$6 million a year through the shared services effort were an important part of meeting the goal of avoiding an additional $120 million in recurring costs in the coming five years. Already the university has trimmed or reallocated $265 million in recurring costs since 2004.

She said that although recurring savings associated with the center have been lowered from $17 million to $5 million-$6 million as the number of employees moving to the new center was reduced and the savings were spread out over a longer period of time, the savings remain significant.

Slottow said the university would pay the consulting firm Accenture about $11.7 million over several years for consulting work related to AST.

Addressing Accenture concerns

In his email Wednesday to deans, Slottow corrected misinformation contained in a document circulated Nov. 18: “Report Regarding the University of Michigan’s Risk in Continuing the Contractual Relationship with Accenture, LLP and Any of its Past and Present Executives.” The document indicates that it was prepared by an ad-hoc group of U-M alumni and graduate students.

Slottow outlined the “rigorous process” for securing competitive bids and evaluating those bids for university consultants. He said, “That evaluation and selection process, managed by Procurement Services, serves the university well and allows us to be compliant with federal guidelines, purchase supplies and services that meet our quality specifications and achieve significant savings with annual purchases exceeding $1.6 billion.”

He also said Rowan Miranda, associate vice president for finance, recused himself from the evaluation process that led to the selection of Accenture “to eliminate any possibility of real or perceived bias, given his recent employment with one of the companies competing for the work.” Miranda worked for Accenture for several years in the company’s Chicago office, consulting with government agencies and nonprofit organizations. 

Slottow also said in his message that the report was wrong when it said Accenture was “taking over financial and IT management” at the university.

“I assure you that this is simply not true.  Well trained University of Michigan employees with deep expertise are managing our day-to-day finance and IT operations.”

Staff demographics

A University Human Resources analysis of the staff group moving to the new center shows similar overall demographics to the campus population of staff in similar jobs with no disparate impact.

There is a slightly higher percentage (by about 5 percentage points) of men in the service center population than in the comparison campus population. There also is a slightly higher percentage of minority staff in the center population by a margin of 5 percentage points.

The center population has, on average, greater length of service at the university, trends slightly older, and about 47 percent have a bachelor’s degree or higher compared to 59 percent in the campus comparison group.  The percentages of exempt versus non-exempt staff in both groups is nearly the same.

During three separate forums Tuesday and Wednesday, future Shared Services Center staff members were offered additional information about the center organization and career paths and details on the transition process. The forums were facilitated by Associate Vice President for Human Resources Laurita Thomas.

While there is a range of feelings among future Shared Services Center staff, many said they were eager for the possibilities that may come with being part of a larger organization. As many as 275 employees will work together in the center, once fully staffed. The current structure provides opportunities for six functional lead positions and about 20 team leader roles.

Addressing faculty concerns

In an email message to LSA faculty and staff, interim dean Gelman said she wanted to “continue a conversation” about how to best move forward in LSA.

“First, I hope that all of you have seen the message that Provost Martha Pollack and Executive Officers Tim Slottow and Royster Harper sent Thursday afternoon, notifying the university community that there will be no staff lay-offs in the move to the Shared Services Center.

“In my view, this was the most urgent of all the concerns that have been raised regarding AST, and it is tremendously reassuring that our staff will continue to have a place within the university.”

She said the LSA Dean’s Office was working closely with every affected unit in the college “to support those staff members who will be moving to the shared services center” and she said she reaffirmed her commitment to “consulting with and including you in decisions that affect your work and well-being at the university.” 

No layoffs

Last week, in a message to the university community, Pollack, Slottow and Harper said that because units have been planning for the Shared Services Center and have not filled at least 50 open finance and human resources positions on campus during the last several months, the university was able to accomplish the transition to the new center without layoffs.

“Also, it is important to note that we expect staff who accept a comparable position in the Shared Services Center will not see their base salaries decrease,” the message said.

“We are committed to ensure not only the fiscal success of the effort, but also excellent service and the best possible climate for our colleagues to thrive in their new positions,” the message said.

Throughout the years of planning for the Shared Service Center, an advisory committee that includes unit budget administrators, faculty and staff has helped to shape the project. Moving forward, a governance committee will be formed to ensure the Shared Service Center is meeting the expectations of the units it serves.

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