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Shared service model equals ‘world-class service’
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The National Research Foundation (NRF), the government agency that manages SAEON has seven corporate core values that, together, embody what it seeks to represent and be best known for. These are passion for excellence, world-class service, integrity, respect, people-orientation and accountability.
SAEON, as an integral unit of the NRF has to go about its business in a manner that resonates with these values. In this article, an attempt is made to sketch out how SAEON is striving to advance the ‘world-class service’ core value of the NRF.
Robert Johnston and Graham Clark, in their 2008 book, Service Operations Management: Improving Service Delivery, assert that the quality of services that an organisation delivers internally and externally is a source of competitive advantage, and that world-class service organisations seek to gain this advantage and achieve best performance results by adopting best-practices in service management, including superior process management, people management, financial and non-financial resource management and management of networks, technology and information.
World-class service organisations have a clear vision and model for providing internal and external services; they continuously strive to develop and improve on their processes; they deliver outstanding service routinely and consistently; they are always ready to respond to reasonable request for services at all times; and their service staff routinely pay attention to detail.
Pragmatic start
With the establishment of SAEON a conscious decision was taken to ‘outsource’ the network’s business to the stakeholder organisations that had signed agreements to host the nodes, the operational units of SAEON.
Under the ‘outsourced’ model of operation, the host organisations employed staff and ran the day-to-day activities of the nodes on behalf of SAEON. This was a pragmatic arrangement that gave true meaning to the network nature of SAEON, but also made it possible to start at the bottom with the operational phase without necessarily having own requisite business and administrative support machinery to provide internal services to the nodes.
It worked, and within seven years of the establishment of SAEON, four nodes were fully functional, with the host organisations providing the essential services to the nodes, such as information technology (IT) support, finance, procurement and human resource management.
Paradigm shift
In 2009, the NRF Executive, on recommendation of the SAEON Advisory Board, took a decision to restructure SAEON by moving it away from the ‘outsourced’ model. This necessitated due consideration on the appropriate model for provisioning the required business and administrative support services to the nodes.
One option was to establish a full complement of these services, including finance, procurement, communication, human resources and corporate services, at each node. This would have enabled each node to function as a self-contained business unit, and would have made SAEON fully devolved in the ideal sense of organisational devolution. This route was less appealing because, beside the cost implications, it would have made it extremely difficult to create a common purpose and identity among the nodes.
The other option considered, and one which won the day, was the adoption of the shared services model. This model is popular as a framework for reducing administrative support costs and adding value to the core activities of an organisation.
Shared services model
Wikipedia defines shared service model as "the provision of a service by one part of an organisation or group where that service had previously been found in more than one part of the organisation or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organisation or group".
An organisation that adopts the shared services model establishes and operates a separate unit within the organisation. The mandate of such a unit is to deliver a suite of strategic and functional business support services to both the operating units and the corporate. The shared service unit enables resources to be leveraged across the entire organisation, and has the modus operandi of a business, which therefore views the rest of the organisation as its customers. The model is built on three capability levers, namely people, processes and technology.
In their 1998 treatise, Shared Services: Management Fad or Real Value?, DeAnne Agiirre, Chris Disher, Vinay Couto and Gary Neilson observed that the shared services model was rapidly becoming the model of choice for high-performance organisations and institutions when it comes to organising and provisioning support services. They predicted that the model would remain appealing to high-performance organisations because it combines the advantages of centralisation as well as decentralisation, without their disadvantages.
Many other analysts have similarly attached the ‘best of both’ label to the shared services framework. Among the many advantages of the model often cited in literature are economies of scale, concentration of complementary competencies at one location, improved service levels, standardisation of processes, use of common technology and other platforms, quick decision-making and turn-around times, and freeing up of operating units to focus on their operational activities.
SAEON’s experience
Convinced by the merits of the shared services model, SAEON went ahead and established a unit, based on a location that is neutral to each of the nodes, and which hosts reasonable levels of capacity and competence in vital support functions such as human resource management, finance, registry, procurement, research administration, communication and stakeholder relations, compliance enforcement and monitoring, events coordination and management, contract management and corporate reporting, among others. The SAEON shared services unit serves all six SAEON nodes from its base at the National Office in Pretoria.
Modern communication technologies including video-conferencing facilities, electronic mail system, scanning systems, telephone, fax machines and courier post have made it possible for the services to be rendered to all six SAEON nodes in a relatively efficient manner. The unit is a hive of activity, often likened to Johannesburg’s busy Gillooly’s interchange, constantly interacting with the nodes, suppliers, debtors and funders, banks and other stakeholder institutions.
As the shared services model is being implemented, there is continuous monitoring and evaluation of its strengths and opportunities, challenges and deficiencies. This allows timely interventions to be thought through and implemented. So far, the evidence on the ground suggests that the model is serving SAEON well. Among the indicators that the model is assisting SAEON to advance the ‘world-class service’ core value are the following:
1. Cost effectiveness: A relatively small number of support service staff are able to provide the required services from one central location to the six nodes, which are distributed across the country. The alternative would have been to duplicate the same staff complement at each node, which would have multiplied the personnel costs six times, and would still have required ‘central staff’ to pull everything together to give a complete SAEON picture on finances, human resources and other functions.
2. Productivity: The model ensures that the support service staff members are fully occupied at all times attending to the diverse service requirements of the nodes, which seem to have their peak demands for services at different times. Turn-around times are steadily improving, and complaints are addressed based on the principle of ‘just in time’. Consequently, the productivity level of staff is higher than it would have been with other different models of operation.
3. Standardised processes: Processes have been standardised, thereby eliminating any issues that would otherwise have arisen if non-standardised processes were being followed at the different nodes. The standardisation has also made it easier to analyse, understand and report trends of issues throughout the organisation. This, in turn, has made it easier to identify the steps necessary to make further improvements in the processes, with a view to better our service to the nodes.
4. Better compliance management: Having all transactions processed at one location has facilitated the process of monitoring compliance with the required statutory requirements and regulations, as well as compliance with internal policies and procedures. Problem areas in compliance are identified and addressed in time, thereby assisting to attain higher levels of compliance than would have been the case with other models of operation.
5. Visibility/transparency: Having standardised processes and delivering services from one central site, allows the organisation to achieve a level of transparency which would be difficult to achieve with dispersed systems. This provides management with a complete view of the support services functions. As a result, bottlenecks and inefficiencies are easier to spot and remove, which in turn assists in improving the quality of support rendered to the nodes.
6. Elimination of silos: Implementation of a shared services model is one of the main tools for eliminating process and information silos. By consolidating processes at, and delivering internal services from one site, service information is made available throughout the organisation, which can improve issue resolution times and the level of service rendered.
Conclusion
The gamble that was taken in adopting the shared service model for SAEON seems to be paying off. It is assisting SAEON to advance the ‘world-class service’ core value of the NRF.
So far, the recipe for getting things on the right tract so soon after adopting the model in 2010, include clear vision and strategy for internal service provisioning, a strong service culture among the staff in the shared service unit, a willingness to listen to the scientific and technical staff members that constitute the clientele, and the quest for continuous improvement at all times.
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