The shared service center: A model for university efficiency?

Many institutions of higher education have an administrative structure that reflects the highly decentralized nature of academic departments. In an era of cost-reductions, many universities are asking the fundamental question “Must the administrative side of the house mirror the academic structure with its many layers and fragmented organization”? While the autonomous and highly decentralized academic structure is a primary driver of the world-class strength of the American research university, the structure does not necessarily support the efficient delivery of routine administrative functions. By conducting administrative work at every level of the institution, many universities are finding their administrative structure is redundant, inefficient and expensive. Today\u27s universities are being challenged to cut costs and focus limited resources on core mission activities of teaching, research and public service. Many are looking to realize these cost reductions in administration functions. The advantage of reducing expenses in administration is that the fundamental strength and nature of the institution can be protected while improving efficiency in the “non-value added” functions. This study examines the applicability to higher education of an organizational model found in many corporations facing similar challenges—the shared service center. The shared service center model consolidates administrative functions into a structure that considers the groups that use the center as “customers”. It is performance and market-driven. This study examines three organizations that have attempted to implement the shared service model. In each case, the impetus for change, the change process itself, and the ability of the model to achieve stated objectives are described and assessed. The study concludes that the shared service model could well be an appropriate administrative structure for higher education, but that the implementation strategy and results may differ from those observed in other industries