Shared Services: The Spaces in Between
- By Amy Milshtein
- December 1st, 2010
Who runs your school’s bookstore? The Follet Corporation? Barnes & Noble? Or do you run it yourself? The University of Missouri proposes a third option. They have successfully implemented a shared services model that brings profits to all parties while maintaining campus identity and independence. Other schools, like the University of Vermont, are successfully sharing server space for card reader systems. What are the benefits of such a partnership and how can your school avoid the pitfalls?
“Shared services are not the same as centralized services,” explained Dr. Jeffrey Zeilenga, assistant vice chancellor for student affairs, University of Missouri. “Shared services are a collaborative approach where functions are concentrated to improve customer satisfaction and perform like a business enterprise.”
By all measures, business is good for the University of Missouri and its four campus partners. In the last 12 years the group has achieved annual sales of $60M. It started in 2003 with an admittedly reluctant union between the University of Missouri bookstore and the Missouri University of Science & Technology. Despite both parties’ initial objections, “We increased our purchasing power, reduced operation expenses across the board, and delivered superior services,” recalled Dr. Zeilenga. Their success prompted the University of Missouri-Kansas City and Stephens College in Columbia, MO, to join the group. In March of this year the University of Missouri-St. Louis joined as well.
Other Schools, Other Stories
The University of Minnesota tells a similar story. “We operate six stores within the system,” said bookstore director Bob Crabb. “Not only has this increased everyone’s buying power and improved customer service, but it made compliance with this year’s Higher Education Opportunity Act much easier. All of our stores were up to speed immediately.”
The formula transcends bookstores. Fifteen years ago The University of Vermont (UVM) invested in a high-functionality campus card program. “Along with an ID and campus meal card, the program works in the library, vending machines, and laundry facilities. It also serves as a debit card with outside business partners,” said Patty Eldred, director of AFS Auxiliary Services, UVM. “In 2001-2002 nearby St. Michael’s College started a conversation about our system. They wanted something similar but didn’t have the infrastructure or IT workforce to make it happen. We had both, so we partitioned our server and brought them on board. Today we have three other schools sharing our hardware and services.”
Three similar situations with three very profitable outcomes: but how did these schools identify and avoid potential difficulties in their plans? “Trust is paramount between the partners,” said Dr. Zeilenga. “Our four universities are completely separate and independent. Each school has its own campus culture and identity. We didn’t want anyone to feel like this was a ‘hostile takeover’ of one campus by another.”
Custom Solutions in Shared Services
To address these concerns, University of Missouri staff did their homework, learning as much about each campus as possible. Product mix and daily operations reflect their findings. For instance, residential campus stores include basic necessities and convenience items on the shelves while commuter campus stores operate at different hours. And perhaps most importantly, customers are never confused as to which bookstore they are in.
“We were extremely sensitive to school spirit,” explained Dr. Zeilenga. “You will never see the University of Missouri school colors in the other bookstores. You won’t even see one of our vehicles in the neighborhood. You might call us hypersensitive.”
That overzealousness has paid off. While each store looks organic to its surroundings, management, marketing, e-commerce, network and technical support, human resources, student and staff development, fiscal operations, inventory management systems, and buying and distribution services are all cookie cutter. This has boosted profits markedly; in one case a campus saw a 100-percent increase. “And those dollars stay on that campus,” insisted Dr. Zeilenga. “Everything remains local.”
Pricing and service also benefit. “When you are part of a 1,000-store chain it’s hard to be heard,” said Crabb. “But we can be very responsive to our customers. We continually build strong relationships with student and alumni groups. Even though we are one of the largest bookstores in the country we’re still very nimble.”
The University of Vermont has found success sharing their campus card system with other schools. After St. Michael’s campus got on board with dedicated T1 lines, next-door-neighbor Champlain College lit up some dark fiber between the two campuses. A year later Norwich University, which is an hour away in Northfield, VT, joined, again using T1 lines.
“Each campus is responsible for their front-of-the-house operations,” said Eldred. “They take the student’s picture, receive deposits, troubleshoot, and provide customer service. Then a line brings that information to our central processor, and that’s where the technical magic happens.”
The new partners enter an instant relationship with all of the off-campus merchants and benefit from UVM’s experience and marketing know-how. But what’s in it for the University? “We get a small percentage of each transaction fee that the outside vendors collect, although the bulk of that money goes back to the cardholder’s school,” said Eldred. “We also charge our partners a yearly fee.”
Eldred didn’t need to add any extra staff or equipment to her bottom line to get here, either. “Any computer redundancy or staff people we brought on were needed anyway,” she said. But does her staff begrudge the extra work? “Actually, they love the challenge of a new project,” Eldred reported. “IT people get energized by challenges like this.”
Keep the Communication Flowing
To maintain successful relationships like these Dr. Zeilenga proposes keeping the lines of communication open with regular meetings; initially monthly, then moving to quarterly and biannually. “You should have a five-year agreement in place at least,” he insisted. “At the end of that time you should have met, or hopefully exceeded, expectations.”
Just like he did. Since its inception, bookstore operating expenses for the University of Missouri and its partners are 33 percent lower than industry standards, while 52 percent of positions have been eliminated (primarily through attrition and campus reassignment). Profits exceed lease contracts and are more than twice the national average. The University bookstores have experienced double-digit sales increases, making them among the most profitable in the nation.
“I never dreamed the benefits would be so good,” admits Zeilenga. “It’s got me thinking about other partnerships we could do around the state….”