Where are we now? Strategic sourcing and universities

Where are we now? Strategic Sourcing in UK HEIs

Dr Wendy PhillipsDr Dharm Kapletia

Outsourcing/Insourcing versus Strategic Sourcing

“A fact-based and analytical process for optimising the supply base, to ensure the achievement of the Higher Education Institute's (HEIs) strategic objectives. This involves the appraisal of a full spectrum of internal and external business models, and strategic choices as to how HEIs can best realise economic, efficiency and effectiveness benefits.”

Where are we now?

Guidance and Recommendations to the HE sector• Final report designed to support senior managers involved in Strategic Sourcing

– Includes the results of our 2013 survey (participation 44% of UK HEIs)– Insights from 31 interviews with experts from HE, public and private sectors – Findings from workshops– Exemplars of good practice

• Strategic Sourcing toolkit on the www.EfficiencyExchange.ac.ukFreely available online, and contains:– A life-cycle process model tailored for use in HEIs and tools that can be applied

at key stages– An Intelligent Customer Function (ICF) Capability Audit to assess an

institution’s maturity and gaps

http://www.efficiencyexchange.ac.uk/

Survey Highlights• 44% response rate to survey (target population 131 HEIs)

HEI participation by mission group– 67% Russell Group– 36% 1994 Group– 38% UKADIA– 11% Million +– 46% University Alliance– 48% Identified Non-Aligned

• Total HE sector findings– 75% stated they already outsource to some form of service provider, with sector average of 4 services

contracted out– Identified 53 types of outsourced services, almost entirely ‘support services’ based activities– 73% service provider, 14% shared service, 13% under market testing– Services identified, 61% fully outsource to private sector, 29% within public/not for profit, 10% co-

source with private sector– Just over two thirds involved ‘fully outsourcing to private sector’, just under a third within the

public/not for profit, and very few co-sourcing with private sector– In terms of strategic benefits sought, requirements appear to focus fairly evenly across efficiency

(38%), effectiveness (33%) and economic (29%) type benefits. – Benefits expectations focused on: improved productivity (33%), risk reduction (28%), student

satisfaction (25%), academic delivery (8%) and revenue generation (6%)

Respondents by profession- 41% in Finance- 30% in Procurement- 17% in the Executive function (Vice

Chancellors, their Deputies, PVCs, etc)- 12% in other senior roles

Support Services Academic Delivery

LEADERSHIP & PLANNING (5%)

PROFESSIONAL SERVICES (34%)

OPERATIONAL SUPPORT SERVICES (58%)

KNOWLEDGE CREATION

KNOWLEDGE SHARING (3%)

KNOWLEDGE UTILISATION

Inputs

PEOPLE (36%)

International student recruitment

UK Undergrad applicationsCareers services

CounsellingData Analysis

Pension administrationMarketing - photography

Parts of HR

CleaningHospitality Catering &

Platters Catering

Student supportFire Risk Mgt

Payroll Health and safety

Pathway centre for overseas students

International teaching delivery

Some teaching

INFRASTRUCTURE(26%)

Project mgt of major builds

Shared campus FM and academic services

Maintenance managementFacilities Management

Estates / Building Maintenance2 PFI buildings

Halls / Student Accommodation

Grounds maintenance or landscaping

Library servicesHeating and Cooling

ContractLift maintenance

Sports facility

EQUIPMENT(13%) Website Development

Data CentresDesktop provision

IT and AV

Print managementInvoice receipt and

scanningStudent email/ calendarOut of hours IT helpdesk

ENABLERS(25%)

Internal Audit

Finance - Tax Advice Electrical ContractorsEnergy procurementReal estate advisory

Rating servicesLegal Services

UCASInsurance

Nursery servicesStudent transport

SecurityRecycling

OC / Health ServiceRetail

UK HEI Sourcing Maturity Framework

Modified from DIS (2005) UK Government White Paper

Interview data – HEIs and the Outsourcing Learning Curve

Time/Value

Clie

nt B

ehav

iour

Phase one:Hype and Fear

Phase two:Early Adopters, Best & Worst Practices Emerge

Phase three:Market matures,Richer Practices Emerge

Phase four:InstitutionalizedFocus on Value-added

Modified from Willcocks, LP; Cullen, S; and Craig, A. (2011) The Outsourcing Enterprise. New York: Pallgrave Macmillan

Survey Questions on Policies & Processes (1/7)

Disagree completely Disagree slightly Neither agree or disagree

Agree slightly Agree completely0

5

10

15

20

25

30

My institution has benefitted in the past from outsourcing or shared services, working with external or partner organisations

NOT ALIGNEDUNIVERSITY ALLIANCEMILLION+UKADIA1994 GROUPRUSSELL GROUP

Num

ber o

f res

pond

ents

7%

10%

42%

37%

5%

Survey Questions - Policies & Processes (2/7)



5

10

15

20

25

My institution is not under pressure to reform ‘academic delivery’ (teaching, research, knowledge transfer, etc)


Num

ber o

f res

pond

ents

37%

30%

20%

10%

3%




5

10

15

20

25

My institution is not under pressure to reform ‘support services’ (HR, Finance, ICT, FM, etc)


Num

ber o

f res

pond

ents

35%

38%

10%

12%

5%




5

10

15

20

25

30

35

My institution is actively assessing the potential of different sourcing models to realise economic, efficiency and effectiveness benefits


Num

ber o

f res

pond

ents

8% 7%

12%

50%

23%




5

10

15

20

25

My institution prioritises internal improvement and transformation above external outsourcing and shared services


Num

ber o

f res

pond

ents

3% 5%

28%

34%

30%




2

4

6

8

10

12

14

16

18

20

My institution has the skills, tools and resources in place to make end-to-end sector-leading sourcing decisions


Num

ber o

f res

pond

ents

8%

32%

17%

25%

18%


Russell Group HEI comments:“I am unsure the true meaning of "strategic sourcing" happens anywhere across the sector”



2

4

6

8

10

12

14

16

18

20

Strategic sourcing is fully considered and appropriately represented at the highest level in my institution


Num

ber o

f res

pond

ents

5%

23%

15%

32%

25%

Survey Questions – Strategy & Environment (1/8)

Russell Group HEI – “Social Responsibility is 3rd core goal” Non-aligned – (HEI 1) “Support to local enterprise and community issues” and (HEI 2, comment on survey question) “We have a commercialisation strategy, under which we actively seek out opportunities for generating revenues and value from our skills, expertise, facilities and resources”



10

20

30

40

50

60

The core business of my institution is research and teaching


Num

ber o

f res

pond

ents

87%

7%2%

5%




5

10

15

20

25

30

Internally provided services deliver best value for money at this time


Num

ber o

f res

pond

ents

3%

13%

42%

32%

10%




2

4

6

8

10

12

14

16

18

The market is not mature enough to offer competitive sourcing op-tions for our internally run services


Num

ber o

f res

pond

ents

17%

27%

20%

28%

8%




5

10

15

20

25

The VAT consideration is the most significant barrier in outsourcing to the private sector


Num

ber o

f res

pond

ents

17%15%

25%

37%

7%




2

4

6

8

10

12

14

16

18

Pressure from trade unions prevents my institution from exploring the full range of sourcing options


Num

ber o

f res

pond

ents

20%

28%

27% 25%




2

4

6

8

10

12

14

16

18

20

My institution’s sourcing decisions are centralised and have visibility over all major procurement life cycle activities, across Departments


Num

ber o

f res

pond

ents

7%

22%

17%

30%

25%




5

10

15

20

25

30

Shared services with other Universities presents a superior sourcing op-tion when compared to outsourcing to the private sector


Num

ber o

f res

pond

ents

8%

17%

47%

22%

7%




5

10

15

20

25

30

Outsourcing aspects of teaching provision is likely to take place in the short to medium term for my institution


Num

ber o

f res

pond

ents

40%

22%25%

8%

5%

5%

34%

58%

3%

Leadership & Planning

Professional Services

Operational Support Services

Knowledge Sharing

In terms of academic service delivery, what are the top 1-3 challenges your institution will face in the next 10 years?

HE Sector Response1. Improving teaching delivery, 2. Improving student engagement and satisfaction, 3. Enhancing ICT (includes innovation in teaching and learning)

These priorities are common priorities across Mission Groups, although University Alliance managers also gave importance to issues around 'General operational performance and quality', and Non-Aligned were also concerned about ‘national and international competition’

Impact on future direction of Strategic Sourcing?

Academic Service DeliveryKnowledge creation (Research) 0%Knowledge sharing (Teaching) 3%Knowledge utilisation (Tech Transfer) 0%

Support ServicesLeadership & Planning 5%Professional Services 34%Operational Support Services 58%

Summary of findings• Some HEIs are now recruiting experienced procurement professionals from the private

sector, however the sector needs to invest in skills, training and capability to develop robust business cases and strengthen contract management

• Despite the need to establish sound governance arrangements, many HEIs fail to integrate such arrangements into their contracts, undermining the ability to maintain the level of relationship required to leverage benefits.

• Strong programme management is needed from the centre to ensure procurement is aligned to strategic objectives and expected benefits are realised

• Academic delivery and revenue generation not commonly identified as areas benefiting from strategic sourcing - HEIs could prioritise these benefits to offset the reduction in central government funding, improving their ability to differentiate themselves both nationally and internationally.

• Where there is potential for growth, collaborative sourcing models such as joint ventures may present new strategic options and help improve HEI competitiveness.