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2010 National University Finance and Procurement Conference 26 - 28 July 2010. Shared Services Outsourcing Delivering More than Cost Savings. Presented by: Matt Easdown, Chief Financial Officer University of Canberra. UC’s Story Our drivers for change Outsourcing at UC The process
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2010 National University Finance and Procurement Conference 26 - 28 July 2010 Shared Services Outsourcing Delivering More than Cost Savings Presented by: Matt Easdown, Chief Financial Officer University of Canberra
UC’s Story • Our drivers for change • Outsourcing at UC • The process • Outcomes • Sector opportunities?
UC facts • One of the nation’s smaller Universities placed in the lower third in size based on student numbers and revenues. Recognised need to grow to a more optimal size. • One of the nation’s fastest growing universities with 15% increase in student numbers in 2009 and 2010. • Can’t allow growth to consume all additional revenues generated - need to rebuild capital and retained earnings • The University of Canberra or “UC” is Australia’s Capital University. • Established in 1969 as a CAE to service the Capital Region. • Is the only CAE to have been converted to a full University. • Total student population of around 12,000 (10,000 EFTSL) with around 1300 resident on campus.
Financial Stress • In 2006-2007 following a period of falling student numbers and rising costs, UC faced a financial crisis. For FY2007, UC booked a financial deficit of $16m on a small revenue base of $123m • A new VC initiated a period of substantial reform built around a new Strategic Plan “The 39 Steps”. • “Step 4: Streamline our procedures and cost structures, making full use of information technologies and eliminating paper transactions wherever possible.” • Focus on developing a strong platform that will support growth but relatively inelastic impact on service unit costs
The Capital Region Population:549,135 Area:58,700 sq km Major cities and towns: Canberra, Bega, Cooma, Goulburn, Queanbeyan & Young Region overview: • Higher Education is a key employer and generator of economic growth with around 20,000 EFTSL and around 2000 staff • Contains the nation’s capital with the majority of federal government and national institutions located within the ACT • ACT has one of the nation’s lowest rates of unemployment and the highest average weekly earnings (source: ABS)
Competitive context • The region is rich with Higher Educational opportunities • ANU & UC educate around 90% of the HE students in the region • Five Universities service a local population around the same size of Newcastle, NSW with one University.
Drivers for Change UC identified outsourcing as one of its main change delivery tools
Why outsource? Source: www.theoutsourcerzone.com
UC’s Journey to India • Started as Process Simplification Project which developed into an Outsourcing Initiative • AT Kearney engaged in to advise on process improvement options/streamlining. • They found: • Admin processes are tangled and create significant frustration • There are a large number of fragmented processes which are thinly resourced or which lack access to specialist skills • Process inefficiency plus a lack of scale of economies pushes up internal costs
UC’s Journey to India • Why India? Why not? • Global leaders in ITO & BPO • Highly educated and ambitious workforce • Very cost competitive • Program goals: • Cost savings • Capacity • Expertise “India outsources the education of it’s best and brightest, so why can’t we return the favour?”
UC’s Journey to India • A political sensitive decision • DEEWR consulted & Unions engaged • Passionate debate at all levels including Council • “I thought you said Bungendore?”
Recommendations & actions • ATK recommended: • Outsource some IT and general admin business processes offshore • Consider both onshore and offshore providers • July 08 - Commenced a detailed RFP process inviting local and offshore providers to participate. • 3 responses received – all from Indian providers • Detailed assessment process commenced • 2 trips to India by assessment team in 6 months • January 09 - WIPRO short listed and detailed negotiations commenced • TPI and Gilbert & Tobin engaged as negotiation and legal advisors
Due diligence and execution • UC Council approved deal in February 09 • WIPRO’s Due Diligence March 09 • 2 weeks on site at UC • Agreed on phasing on functions • Contract signed June 09 for 5 years • Includes on-site account manager • Detailed and regular KPI review processes
Due diligence and execution • What we have implemented: • BPO - Core transactional processes • Finance (AP, AR, reconciliations, expense management) • HR (payroll, super, benefits) • Student Admissions (applications, qualification checking etc) • ITO - core ITC support processes • Helpdesk & desktop support, • Server & infrastructure support, and • Applications development & support • Approach was generally “lift, drop and develop”
Transition to steady state • Transition • June 09 - WIPRO team on site for knowledge acquisition and transition management. • WIPRO staff then returned to Chennai and trained colleagues • UC staff visited Chennai to further train and validate processes. • Some UC processes were more complex and transition period extended.
Transition to steady state • Stabilisation • Wipro responsible for all work, but could seek advice/assistance from UC as needed. • In some cases (Service Desk) stabilisation process was delayed and extra knowledge acquisition required. • Stabilisation achieved from August 2009 to February 2010. • Steady State • Steady State achieved by March 2010. • Wipro now have full responsibility for delivery. • First Year anniversary achieved in June 2010
Why WIPRO? • An account like UC is normally too small for a major outsourcing provider like WIPRO • But WIPRO identified a UC account as a stepping stone to more University and Government accounts • Were prepared to invest and develop their products to match our needs • Intelligent Outsourcing – NOT “My Mess for Less”
About WIPRO • Global turnover USD 6 billion • One of the top 3 India ITO/BPO providers • Over 100,000 staff comprising 70 nationalities • 72 plus global delivery centres in over 55 countries • Services span financial services, retail, transportation, manufacturing, healthcare services, energy and utilities, technology, telecom and media. • More than 800 active clients that include governments, educational institutes, utility services, and over 150 of the Global Fortune 500
Lessons learnt • In some areas the work was more complex work expected, so additional learning time required. • Careful selection of staff to interface – seasoned business people – commercial focus is essential • Context of the UC environment is essential for success. Campus visits essential – particularly service desk. • Return regular visits by UC functional managers is also essential – maintain contact in addition to weekly status calls • Language/cultural differences can’t be ignored and need regular attention
Lessons learnt • Scope of Work documents need to be comprehensive and updated regularly • Generic processes transition well (eg: Finance), with more University specialist processes taking longer (Student Admissions) • ICT took longer due to the University IT environment and expectation gaps – a university is not the same as a large Corporate • Expect some offshore staff turnover – experienced BPO staff are in high demand • Process improvement focus now underway
Non financial benefits achieved • Tangible improvements in • Processes • Internal Control & • Accountability • Larger and better educated team • Dedicated to UC work • Able to work to our changing requirements • Extended hours of coverage • Educational and other partnership opportunities
Sector opportunities • Australian universities are more alike than different • Common financial and performance reporting • Similar employment arrangements • Sector wide Shared Services opportunities • Already run shared services and cooperative arrangements • Student applications (UAC, QTAC etc) • Procurement (AUPN) • Expansion options include transaction processing for.. • Finance • Payroll/ Hr • Student admin
Sector opportunities • Cost and effort sharing • Common interfaces • Base requirements (data centre operations etc) • Enabling power of a single Vendor ERP • Common chart of accounts and hierarchy • Consistent processes • Outsource, alliance or controlled entity? • Advantages & risks?
Conclusion • Outsourcing is critical in the delivery of UC’s Strategic Plan • Working well • Needs consistent and focused management • Our future is looking strong