It's good to share services, PwC assures sector

February 10, 2011

Most universities are struggling to find ways to save money through shared services and are battling "resistance to change" as they try to lift cost pressures, a study has found.

The survey of 38 university finance directors, including eight from Russell Group institutions, by PricewaterhouseCoopers (PwC) found that only 14 per cent had identified plans to share more services, reflecting "nervousness" about the idea.

A lack of resources, skills and enthusiasm are highlighted as the main barriers to progress in the area, with institutions looking elsewhere for cost savings first, the report says.

The possibility of sharing administrative "non-core" services such as payroll and human resources is often put forward as a way for the sector to notch up big savings - although there can be tax disincentives to doing so.

However, Rachel Taylor, director of higher education at PwC, said the tax problem was sometimes exaggerated.

Her impression was that institutions eventually would have no choice but to think seriously about shared services.

"Until the cuts really start happening...there is not enough pressure to make those sort of big changes," she said.

Ms Taylor added that universities had been slower in looking at shared services than public sector organisations such as the NHS.

This was partly because of universities' autonomy, she said, but also because institutions were worried about giving away information to their rivals. Ms Taylor suggested that this fear was unfounded, as universities would retain control of sensitive areas such as research.

She added that evidence from the private sector showed that competing companies did not harm their market presence by sharing some services.

The report, titled Juggling competing demands: the role and challenges of finance in the higher education sector, also states that two-thirds of the responding finance directors think resistance to change is a barrier to tackling costs.

In addition, it identifies an unwillingness in the academy to learn from external "best practice", with 85 per cent of respondents saying that they do not consider such advice to be of "high importance".

Ms Taylor said the report reflected some of the sector's organisational problems. For example, finance directors are sometimes left out of the decision-making loop because they report to a registrar or chief operating officer rather than to their vice-chancellor.

simon.baker@tsleducation.com.

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