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Campus leaders this week laid out much of the groundwork for the development of a shared service center for six administrative units, and estimated that its efficiencies will save $39 million between now and 2015-16.

At an Oct. 11 town hall meeting, the leadership expressed its commitment to directing the savings to the academic mission, student services and programs, high priority administrative initiatives, and staff development and training.

Other details from the town hall likely held more interest for the affected employees — nearly 400 of whom filled the Conference Center Ballroom. A nearly identical number clicked open the webcast.

Associate Chancellor Karen Hull, chief of Human Resources and leader of the shared service center project, answered two key questions:

• How many jobs may be shed? — From 136 to 194 full-time-equivalent positions from among the 650 FTEs assigned to finance, human resources or information technology in Administrative and Resource Management, the Offices of the Chancellor and Provost, Information and Educational Technology, the Office of Research, Student Affairs, and University Relations.

The university does not expect that all of the job losses will translate to layoffs. Natural attrition will create opportunities elsewhere on the Davis and Sacramento campuses, Hull said. The transition, she added, also will include strategic transfers and redeployment of staff.

In addition, the university hopes to implement a more flexible voluntary separation program (details yet to come, pending Office of the President approval).

• How will the university fill the shared service center jobs? — An earlier announced plan, as recommended by the consulting company ScottMadden, called for starting from zero — a scenario in which even existing employees would submit applications.

But, at the town hall, Hull revealed “a significant change” to the overall approach. The new model starts with consolidation of work, whereby, for each common task — payroll or desktop computer support, for example — the university will bring together some but not all of the existing employees with expertise or capabilities in that functional area.

This work force will then serve as the foundation for the shared service center and support the next steps in the process: standardize business processes, redesign the processes and automate the processes.

Hull said the hiring strategy is yet to be determined. But, “I do not envision that we will have staff applying for positions at this time.”

Later during the town hall, she said: “We want to create a process and approach that is principled, (and) takes into account the needs and strengths of each of the administrative divisions.”

Running on fumes

Chancellor Linda Katehi also addressed the town hall, expressing her appreciation for staff, especially during these last few years of financial difficulty — years that she described as “very hard, specifically on you.”

Indeed, as Vice Chancellor John Meyer said, “I think we’re in a situation … where in many units, we have staff operating on fumes. We’re asking for a level of production that is unrealistic, given the support in some of the units.”

And this, along with cost savings and maintenance of service quality, is one of the major reasons behind the shared service center initiative — to help compensate for 425 layoffs and 650 other lost positions (due to attrition and voluntary separation) since 2008-09.

The downsizing corresponded with state funding cuts totaling $228 million, or 30 percent of the campus’s core operating budget.

Katehi, whose initiative includes the shared service center project, said: “We have a choice today. The choice is either to continue the way we have, waiting for the next cut to come and praying that it’s not going to take our jobs away, or become proactive and control the process and control the way that our future is going to develop for us.

“We have cut our staff substantially, yet the work for the university has remained the same,” she said. Actually, she added, the workload has increased — due to the largest freshman class ever.

“By staying the way we are, it’s going to become impossible for you to be able to do the things you have to do with the quality that you are used to.”

The proactive choice, the shared service center, offers a way to manage the workload and build a stronger university in the long run, the chancellor said.

Best practices around campus

The transition to the shared service center is scheduled to begin in January with Phase 1 in human resources and Phase 1 in information technology — both due for completion in fall quarter 2011. Payroll also is slated for consolidation over the coming year, but the specific timing is still under discussion.

The implementation plan comprises three phases for IT, two each for finance and HR, and one for payroll — with each phase lasting six to 15 months. The shared service center is scheduled to be fully functional by the summer of 2013.

In starting with work consolidation, the implementation team must first decide how many people to assign to the shared service center. For example, how big of a payroll staff is needed to process X number of transactions?

To determine this, Hull said, the implementation team will evaluate transaction volumes and identify best practices in existing units.

Meyer joined Hull and Katehi in urging everyone’s participation. Campus leadership has provided the framework, Meyer said, but “a lot of the details are going to be addressed during our journey to launch.”

“And the only way this is going to work successfully, is if we successfully engage you in helping guide the institution to the best ideas.”

Standardize, redesign, automate

The shared service center’s implementation strategy, after work consolidation, continues with:

• Standardize business functions.
• Redesign business processes to reduce redundancies, streamline work and remove work from the system.
• Automate business processes.

The university has budgeted $18.6 million for the transition — to cover the costs of technology and software licensing, severance pay and the implementation team leaders.

The budget office will devise a funding model to cover the center’s operating costs, and, according to Associate Vice Chancellor Kelly Ratliff, the model may not necessarily rely on the practice of recharging. “We should not be in the business of charging each other unless it makes sense, unless there are incentives, unless people can control their costs,” she said.

Campus leaders know one thing: The shared service center will provide equal or higher quality service at lower cost. “We would not be going through all of this activity if we were just going to be moving deck chairs around,” Hull said.

From 2010-11 through 2015-16, the center is expected to generate a savings of $58 million. After subtracting the transition costs, the university is left with a net savings of $39.4 million over the first six years.

Then, starting in 2016-17, with the transition costs out of the way, the university is estimating annual savings of $9 million to $13 million.

Easing the transition

Katehi acknowledged that the shared service center project may sound “very frightening and threatening” — which is something that Hull addressed later when noting that the campus stands ready to ease the trepidation, by way of resources such as the following:

• Training programs to help employees make the transition to shared service center work, or to make other transitions.
• Career counseling and the Career Management Academy, in which employees can assess their skills, interests and goals.
• Academic and Staff Assistance Program, for personal support.

“This is not just about the university making a change,” Hull said. “This is about what you want to do with your career.”

In fact, she said, shared service center work may not be everyone’s cup of tea — and this will be something that employees can decide during the transition.

Hull said the shared service project will affect the vast majority of employees who handle finance, HR or IT tasks in the six affected units — regardless of whether the employees move to the shared service center. For those who do not, they may find their job descriptions revised.

Others may be laid off — but, Hull emphasized, other �ٺ���Ƶ job opportunities are bound to present themselves, if the past is any indication.

Hull’s PowerPoint showed how many openings there might be in the three categories that will be most affected by the shared service center project: In 2009-10, the university (health system included) recruited 109 administrative assistants, 44 analysts (1-3) and 33 computer resource specialists-programmers.

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