Shared Services at UT Austin: The actual issues

Smarter Systems and Shared Services

On the 29th of January 2013 President Powers gave a speech called “Smarter Systems for a Greater UT” which inaugurated a report written by 13 business leaders about how to increase revenue. The recommendations ranged from increasing food and parking costs, to layoffs and down-sizing by attrition, meaning staff that quit would not be replaced.

One part of the Smarter Systems plan was recently released in a document entitled “UT Shared Services Plan”. UT, in collaboration with the management consulting firm Accenture, plans to spend 160-180 million dollars of UT’s money to eliminate 500 jobs in IT, HR and finance procurement over the next five years with a projected net benefit of $120-140 million.

Accenture was paid $960,000 to help the Committee on Business Productivity to produce a report that relies on research that has not been released to the public [1]. The committee was chaired by Steven Rohdeler, who is a member of the executive of Accenture, the same company that has been tasked with implementing the plan. A bidding process for private-public partnerships should be transparent, but Accenture seems to have been handed a contract with the University. No information about how much money Accenture takes as its cut is available.

The credibility of Accenture

We should review Accenture’s credentials. In 2005, Texas awarded the company $899,000,000 to operate the state’s food stamp authorization system. The secretary of Food, Services and Consumer services found that this failed privatization scheme resulted in a “five-year slide” in processing food stamp applicants. With a massive cost to tax payers, the state had to then take over the processing of food-stamp applicants. The scheme left thousands of people without benefits.[2] In 2011, Accenture was sued for false claims in providing the federal government with technology services wasting millions of tax payer dollars in the process.[3] In 2000, Accenture was sued in a joint venture for “purposely underestimat[ing] the cost of [its] enterprise resource planning (ERP) software system”.[4]

Enterprise Resource Planning

The Shared Services Plan for UT requires a $160-180 million investment to implement a cloud-based enterprise resource planning (ERP) system over ten years with Accenture. The plan expects to start paying back after 6 years, with a net increase of $120-140 million over 10 years. The Shared Services draft presents no confidence intervals, no significance scores, and no estimations of probability of success. A review of literature on ERP systems reveals that their implementation is a risky endeavor and that vendors often fail to properly account for indirect costs.[5, 6] A transparent and earnest discussion of these the risks involved in the implementation of the ERP on UT is desperately needed.

What happened at Yale

A minimum requirement for credibility would be to assess the implementation of Shared Services at another University. Accenture recently helped implement Shared Services at Yale and what we know does not paint a pretty picture. The Yale Daily News reported one professor as saying that “Everything takes about two times as long. We resent the down-skilling of departmental administrative personnel”. The chair of the classics department, Christina Kraus, reported that one of the results of the plan was a doubling in her administrative work. It seems that cost saving has been achieved through down-grading and deskilling, while non-department administration spending has increased [7, 8].

Kevin Hegarty and the Daily Texan misrepresent the issues

In a Q&A with Kevin Hegarty published by the Daily Texan, Mr. Hegarty claimed that the Union’s  problem with the Shared Services plan was that it simply implies that less people will be doing more work when the Shared Services plan will attempt to alleviate this problem [9]. The critique is much broader than this. UT administration has refused to release the data that justify their claims from the Committee on Business Productivity concerning Shared Services or anything else from the report. They have implicated a company (Accenture) in the process that has a history of lying and botching projects at great public expense. UT has also not seriously considered reducing costs in other areas such as upper administration salaries. Furthermore, implementation of Shared Services at another University was problematic. One should not be convinced that Accenture’s Shared Services Plan will reduce costs, let alone reducing costs justifiably in relation to services.

James Woodsworth

[1] http://www.utexas.edu/president/speeches/smarter_systems_powers_efficiency_01292013.html

[2] Rahamatulla, Altaf. Texas Again Demonstrates the Pitfalls of Privatization. Progressive States Network, March 18, 2010, http://www.progressivestates.org/news/dispatch/texas-again-demonstrates-the-pitfalls-privatization

[3] Department of Justice, Office of Public Affairs. Accenture Pays U.S. $63.675 Million to Settle False Claims Act Allegations. September 12, 2011. http://www.justice.gov/opa/pr/2011/September/11-civ-1167.html

[4] http://spectrum.ieee.org/riskfactor/computing/it/another-year-another-erp-lawsuit-accenturemicrosoft-jointventure-sued-for-baitandswitch-tactics

[5] Elragal, A. & Haddara, M. The Future of ERP Systems: look backward before moving forward. Procedia Technology 5. 26.

[6] Faker, Parwiz & Fesak, Alexander. 2012. Benefits and Drawbacks of Cloud-based versus traditional ERP systems. Proceedings of the 2012-2013, course on Advanced Resource Planning. W.J.H. van Groenendaal, ed.

[7] Gideon, Gavin & Antonia Woodford. Shared Services under fire. Yale Daily News February 8, 2012. http://yaledailynews.com/blog/2012/02/08/shared-services-under-fire/

[8] Gideon, Gavan. Shared services creates conflicts. Yale Daily News. February 24th 2012.

http://yaledailynews.com/blog/2012/02/24/shared-services-creates-conflict/

[9] Op-ed. Q&A: Kevin Hegarty on Shared Services and UT’s declining funding. The Daily Texan, October 21, 2013.

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