‘Shared Services’ No Laughing Matter

George Carlin’s word skits made me laugh…and think. The one about “shell shock” morphing to “battle fatigue” then to “post-traumatic stress disorder” lampoons how we have come to use less disturbing, more benign words to camouflage reality. (http://www.youtube.com/watch?v=xNxCWQkWQ5c)

It came to mind when the Governor made his budget proposal. Not much camouflage there! But he did say ‘shared services’ and I thought, “Gosh, that sounds so much less disturbing and more benign than ‘consolidation’ or ‘merger.’”

Still, public CEOs did not smile when Haley Barbour said, “There is no reason for each of the 15 community and junior colleges to have its own ‘back room’ operation, such as payroll, insurance, and purchasing. A single such administration operation should be set up, preferably combined with the same functions for IHL universities. ‘Shared services’ saves money.”

NASA and commercial banks appear to agree.

As a deputy director of the Mississippi Development Authority, I was part of the team that competed to locate the NASA Shared Services Center at Stennis Space Center. In 2001, NASA began to study the benefits and costs of forming a Consolidated Business Services Organization to serve its 10 facilities across the country. By April 2003, NASA concluded that such consolidation could improve efficiency and save money. NASA decided to use public-private competition to implement its plan, a process it called “competitive sourcing.”

Mississippi and Louisiana joined with Stennis Space Center to compete. Computer Sciences Corp. (CSC), an eminent information technology (IT) and business process outsourcing company, became our private partner. In 2005, this partnership won the competition based on both the best price and CSC’s strong performance record. To NASA, who was to do the work was as important as price.

Today, NASA still has 10 facilities performing numerous tasks, but its one shared services center in South Mississippi is saving taxpayers millions of dollars annually.

What services were consolidated? Accounts payables and receivables, payroll, travel reimbursements, HR services and training support, IT services, and procurement.

Commercial banks figured this out long ago. There are still banks and bank presidents galore, but very few back room operations. Central operations centers provide back room services to multiple banks, sometimes in multiple states…consolidation that has saved banks millions in overhead costs without reducing market presence.

These examples (there are others) indicate there are no operating or financial reasons for eight universities and 15 colleges – or 142 state agencies, 152 school districts, 82 counties, and 200 plus municipalities for that matter – to maintain separate back room operations. The obvious lesson is that public CEOs could save lots of money through ‘shared services’ with no harm to teaching or service functions.

A no-brainer, right?

On the contrary, my College Board/Legislature/Agency experience is that public CEOs like to control their own stuff. Since ‘sharing’ lessons control, don’t expect them to smile at any of this.

“You wouldn’t want somebody to come by and take some of your stuff?” smirked George Carlin to get a laugh. (http://www.youtube.com/watch?v=MvgN5gCuLac)

No one laughed or smiled at the Governor’s disturbing budget proposals. Shell shocked legislators, unable to camouflage reality, are looking hard for solutions more benign than ‘consolidation’ and ‘merger.’ In this environment, ‘shared’ services may get the last laugh.

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