Uninformed Student Senate President urges “informed discussion” on Shared Services at UT

Andrew Clark, the senate of college councils president, recently wrote an op-ed arguing that the debate on shared services has been “one-sided”. Clark makes the obvious point that a discussion of shared services should be “informed” [1]. Ironically, in spite of his argument, Clark’s article is riddled with factual inaccuracies and blatant mischaracterizations of the arguments from people who have raised concerns about the plan- a group of people Clark derides as “detractors”, without qualification.

Where is the evidence?

A case in point is the issue on the data for the Shared Services plan. Clark argues that the “detractors” are wrong to demand that the administration give data supporting the plan, because the data have not yet been produced, the whole point of the now in progress pilots. This mischaracterizes the position of the “detractors”. What has been demanded for the past year is the data referenced on page 19 of the Smarter Systems report from 2013 that were used in support of a Shared Services model by the Committee on Business Productivity [2]. This is completely separate from the data on the Shared Services that is supposed to be produced from the pilots. In the former case the data have been available, in contrast to what Clark states, they just had not been released to the public until a few weeks ago.

The data are now being analyzed by concerned students, faculty and staff. According to Mr. Hegarty, the actual data backing up the recommendation were of no concern to him. On October 30th he stated “I didn’t want the committee’s information, the committee didn’t offer it and we didn’t want it.” [3] He was asked the same question at the Graduate Student Assembly the same day and maintained that the administration had no interest in the data backing up the Shared Services recommendation [4]. In other words, they had no interest in assessing whether the CBP’s argument for Shared Services followed in any way from the data they gathered. The recommendation was accepted uncritically.

Clark’s narrative on Shared Services

Clark then constructs a paragraph long narrative on Shared Services in which nearly every sentence is false. He claims;

“Using professional expertise and information on UT, they made the determination that the University could save up to $30 million annually by centralizing operations like human resources, payroll, IT and procurement. Vice President and Chief Financial Officer Kevin Hegarty then assembled multiple committees made up of UT staff and faculty to examine the claim and verify its validity.”

This last sentence is completely false. The committees were not made to assess the claims of the Smarter Systems report regarding Shared Services. In fact the data from this report had not even been released. Even the cash-flow charts from the October Shared Services plan had not been produced when the aforementioned campus based committees were meeting. These were simply superficial information sessions, the primary purpose of which was to argue that Shared Services was not a form of “outsourcing”. Clark seems to have not even bothered interviewing a single staff, student or faculty member who went to the meetings he discusses (I was one). In fact the committee members were the same people who Clark derides for asking that data from the CBP on Shared Services be released. Clark then absurdly claims;

“It was determined that the figures were accurate, and so Hegarty spent the better part of the fall semester attending meetings and hosting town hall forums to engage as many people as possible on the project and solicit feedback from the campus.”

This statement is incorrect on multiple levels. Which “figures” were determined to be accurate? When these committees were meeting there were no “figures”, let alone the Accenture data to even back up the Shared Services plan. When the basic figures were released in the October 30th report it was found that the numbers from the cash-flow chart were off by $80 million and assumed that 423 staff members magically disappeared by December 2014. When the actual investment cost is put in the Shared Services plan does not apparently break even until year 10, if then. Graphs comparing the cash-flow chart from the October 30th plan and the adjusted cash-flow chart based on real investment are presented below [5, 6].

sharedservicesgraph1
sharedservicesgraph2

Clark then states;

“The data people seek is [sic] forthcoming, but it will not be here until units such as the College of Liberal Arts and the McCombs School of Business, both of which are part of a pilot Shared Services program designed to see how much the model could actually save, have completed their trial runs of the program.”

But Shared Services is not supposed to save anything until year 10, and that’s when its implemented at a campus-wide level. Clark’s statement is barely even coherent. The goal of Shared Services cannot just be to save money, it should be to save money in relation to the services provided, an issue that Clark does not even address (we could save a lot of money by eliminating the University of Texas). Furthermore, claiming that the sharing of employees between faculties in COLA and McCombs is anything like the massive over-haul that is recommended by the Committee on Business Productivity, with an off-campus call center, drastically reduced staff and the loss of department specific knowledge on a mass scale is a questionable position to say the least. That said, critical assessment of the Shared Services plan requires that the administration detail what evidence would actually cause them to not implement Shared Services after data have been gathered from the pilot. Until then the pilot is testing nothing.

Clark, who never attended a single town hall meeting or campus based committee on Shared Services, then concludes from his completely fabricated history that “The process has been reasoned, public and cautious.” I remind the reader at this point that the Committee on Business Productivity was composed of 13 business leaders, not a single one with teaching or research experience. Accenture was paid consulting fees up to $4.1 million to help produce the draft plan with obviously incorrect profit projections [7]. The Shared Services project team was composed mostly of Accenture consultants and not a single student or professor or non-managerial staff member. This committee decided to buy the ERP Workday during the summer of 2013 with no one around and no campus dialogue. At the second town hall meeting on November 13th Mr. Hegarty refused to allow follow up questions- all questions had to be submitted on a piece of paper beforehand and vetted. When an open question period was allowed there was not a single positive comment concerning Shared Services from the audience which included students, faculty and staff.

“Don’t throw the baby out with the bath-water” (Accenture=baby)

Clark argues that the critique of Accenture’s involvement is misguided. He argues that

“Just because some of Accenture’s employees may have made mistakes in the past does not mean the entire company is full of people who cannot be trusted to deliver on their contract.”

The issue is not that the company made some “mistakes”, but rather their poor performance in the public sector is almost systematic. When Accenture tanked food-stamp procurement in Texas, costing tax-payers $243 million, leaving 81,504 people (including children) uninsured and resulting in a five year backlog in the processing of food stamps [8] their profit margins did not suffer significantly. From the perspective of the company the botching of the food stamps was not a mistake, because there was no clear structure of accountability built into the plan. The actual worry is that UT’s intimate relationship with Accenture (head of IT Brad Englert, a former Accenture COO is on the project for one example), dramatically reduces the ability of UT administrators to act independently and in the best interest of the University. Systems of accountability both for Accenture and for UT central administration have not been spelt out, and the company was granted two contracts with the University without competitive bidding. The fact that Accenture helped draw up a plan that underrepresents costs in the order of $60-80 million should cause particular concern. Continued cost overrun in the public sector is endemic when public officials do not scrutinize claims made by consultants on the private sector [9].

Shared Services and the Cult of Efficiency

Clark then argues in favor of Shared Services by pointing out that it has been applied at other Universities. He argues that is has been implemented “[b]ecause it increases efficiency and thus lowers overall costs.” A noncontroversial definition of efficiency would be the quality of some service in relation to the cost. Efficiency is not necessarily increased through cost-cutting if the quality of service declines as well. Administrative staff at UT perform a number of non-identical and department specific functions. It is entirely possible that one of these services is adversely affected by Shared Services while another is not or one department is affected more than another. The Shared Services issue is not just a narrow question about saving money but touches on questions about the functions of a public institution of Higher Education. An assessment of University wide efficiency implicitly involves a weighting of the these different functions. Close attention needs to be paid to how efficiency is actually measured rather than narrowly focusing on how much money is saved. Questions such as “efficiency of what?, efficiency for whom?” need to be assessed [10].

To a certain extent we can assess the efficiency of Shared Services at the institutions that Clark mentions. While at both Berkeley and Yale there was a significant amount of disapproval of the plan, Michigan is the most important case since according to Hegarty “They’re probably the closest institution to us of any out there. They’re about the same size, the same scope, everything. And so we think: That’s really a good test case to look at, watch and monitor …. They look very, very much like we look when you look at how they’re organized” [11].

At Michigan faculty have complained that Shared Services dramatically decreased efficiency resulting in increased administrative work for faculty. The faculty council passed a resolution against the plan charging the following

“1. Reduction in faculty productivity by 10-20%.
2. Less faculty access to students and diminished quality of teaching for undergraduate students and supervision for grad students.
3.Loss of research funding to the tune of several tens of millions of dollars.
4. Increased frustration and consternation by the faculty because a significant fraction of their effort is diverted into secretarial-like tasks.
5. No cost savings; on the contrary, a great deal of loss in revenue.
6. Dehumanization of some 300 staff members.” [12]

The implementation of Shared Services at the University of Michigan was so controversial that the leader of the project and CFO, Rowan Miranda, had to step down as the leader of the Shared Services initiative [13]. A month later, the Michigan Daily reports that Miranda left his job at the University of Michigan [14].

At Michigan, Shared Services was predicated on cutting 50 jobs. The plan at UT is based on downsizing to an unprecedented degree, ten times as much as Michigan (with the elimination of 500 jobs) with a huge investment cost of at least $160 million. Any argument about “efficiency” needs to take into account the global consequences of such a plan, rather than hand waving about the amount of money saved through cuts.

“The University’s hard-working staff”

The most disingenuous argument that Clark makes is about the need for the implementation of Shared Services to be run by “the University’s hard-working staff members”. He derides the Texas State Employees Union “orchestrated” protest against Accenture’s involvement as an example of the “one-sided dialogue”. TSEU is composed partly of staff workers who have bravely been speaking out against the plan. Clark’s entire article is dismissive of these people. At a minimum he should have pointed out that there are disagreements between staff.

The comment is not just disingenuous because of the fact that it brushes over real conflict, it is also completely at odds with what is required of a Shared Services plan. In a section titled “Don’t Forget the Lawyers”, Bergeron in his book, Essentials of Shared Services explains

“Given the likely resistance to the shared services model by some employees, the Human Resources and Legal Services divisions of the corporation are likely to be hard hit with new work especially initially” [15]

Bergeron goes on to clearly articulate the attitude that management must have towards its employees in the implementation of Shared Services;

“As virtual pawns in the shared services implementation game, employees of both the parent corporation and those on the payroll of the shared business unit typically experience a high degree of volatility. This upheaval in normal operations is greatest early on, when employees associated with the back-end services are destined to be moved to a shared business unit and either downsized or retained in a new highly competitive environment.” [16].

Clark points out that “most” of the downsizing will be due to “natural attrition”, which implies that some percentage will be laid off (he has no idea how much). He believes that Shared Services will save jobs, but is unable to articulate why. Staff who raise concerns about the plan risk being terminated and Clark’s patronizing attitude does nothing to address the concerns of those staff he derides as “detractors”.

One-sidedness?

In addition to writing a breathtaking amount of falsehoods in his article Clark argues that the dialogue on Shared Services has been “one-sided”. Why? Because some people disagree with the administration. We should stop using “charged rhetoric” about “data and Accenture”, and engage in “informed discussion”. One wonders how informed discussion is supposed to take place without data, and when “student leaders” such as Clark refuse to do basic homework on the issue. Clark mysteriously does not cite any of his sources so it is unclear where he got his story on Shared Services from …. but I have a pretty good guess.

'We pride ourselves on being open to any new ideas the boss has.'

[1] Andrew Clark “Shared Services dialogue has been one-sided”, The Daily Texan February
http://www.dailytexanonline.com/opinion/2014/02/25/shared-services-dialogue-has-been-one-sided

[2] Committee on Business Productivity, “Smarter Systems for a Greater UT,” Jan. 2013.

For more detail see Villarreal and Tallman SS Draft 11

[3] Podcast of the Townhall meeting; Hegarty makes that exact statement at approximately 39:00
http://mediasite.aces.utexas.edu/UTMediasite/Play/b906091f708f416db977e79d79e4957d1d
[4] For the GSA podcast please the following link. Look for the meeting on October 30th
http://www.livestream.com/utgsa
[5] Alberto Martinez, “Should we centralize staff at UT?” Presentation before the UT Graduate Student Assembly, December 13, 2013.

[6] Villarreal and Tallman SS Draft 11

[7] http://www.utexas.edu/transforming-ut/committees/administrative-services/shared-services-committee

[8] Martinez “UT’s relationship with Accenture should raise questions” http://www.dailytexanonline.com/opinion/2014/01/20/uts-relationship-with-accenture-should-raise-questions

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

[9] Cited in Alberto Martinez’s “UT’s relationship with Accenture should raise questions” The Daily Texan
http://www.dailytexanonline.com/opinion/2014/01/20/uts-relationship-with-accenture-should-raise-question. These statements were made at the townhall meetings available here; http://www.utexas.edu/transforming-ut/news-events

[10] A detailed critique of notions of efficiency used in higher education can be found in Welch, A. R. 1999. “The Cult of Efficiency in Education: Comparative reflections on the reality and rhetoric.” Comparative Education 11:47.

[11] http://um-openletter.eecs.umich.edu/

[12] Villarreal and Tallman SS Draft 11

[13] “University chooses new leader for shared services initiative”, The Michigan Daily, December 11, 2013.
http://www.michigandaily.com/news/university-chooses-new-leader-head-ast-initiative

[14] “Finance VP and former shared services leader will return to Chicago”, The Michigan Daily, Jan. 21 2014.
https://www.michigandaily.com/news/rowan-miranda-leaves-university-chicago

[15] Bryan Bergeron, Essentials of Shared Services (Hoboken, NJ: John Wiley & Sons, Inc., 2003), 23.

[16] ibid: 190-191.

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