Beyond ASP: Shared Services

For schools that are leery of entrusting mission-critical applications to an ASP, shared services can provide more control.

• By David Raths
• 04/28/11

When it comes to mission-critical applications such as an LMS, small schools face a dilemma: They can host the services themselves, while recognizing that technical issues might stretch their limited resources, or they can contract with an application service provider (ASP), which often means a loss of control. Two schools in Ohio have decided to chart a middle course that, they hope, will resolve some of these issues.

The University of Akron and Lorain County Community College have a vision of creating a shared-services environment that will not only generate efficiencies in software hosting, but will also combine business processes and, ultimately, establish a stand-alone entity to serve both schools.

UA considered a similar shared-services project with Cleveland State (OH) and Kent State University (OH) in 2005, but the effort fizzled, in part because the three schools didn't develop a sufficient level of trust, says David Wasik, assistant to the vice president and CIO for strategic initiatives at UA.

Nevertheless, two years ago UA decided to revisit the idea of combining administrative functions, this time with Lorain, a community college with an enrollment of approximately 4,500 full-time students.

"We needed a new ERP system and were putting out an RFP," recalls Andy Dovci, director of information systems and services at Lorain." We decided to evaluate the option of shared services between the two schools."

Stage one of the three-stage plan developed by the schools was a combined implementation of Oracle PeopleSoft enterprise resource planning (ERP) software, as well as database and middleware tools from Oracle.

The process involved a year's worth of planning, including drafting a memorandum of understanding, service-level agreements, and governance bylaws between the two schools. A governance committee was established, with three members from each school. Both institutions have an equal vote regardless of the fact that UA is more than four times the size of Lorain.

An objective of stage one was to avoid additional staffing costs. Typically, supporting a PeopleSoft implementation requires several new staff members. In this case, UA IT staffers, who have eight years of experience with PeopleSoft Campus Solutions and Financials and 15 years with Human Capital Management, acted as a resource for LCCC, which went live with PeopleSoft in January 2010.

"The Akron people have helped us navigate issues in a timely way," says Dovci. "We are pleased with the level of support they have provided."

Even though the PeopleSoft software is currently housed at UA, Wasik notes that Oracle was very flexible about Lorain's licensing requests. "Lorain wanted a different type of licensing agreement that was server-based rather than an institution-wide license like the one Akron has," he explains. "Oracle was very accommodating and came up with a unique contractual arrangement."

Consulting firms told the schools to expect a 5 to 7 percent savings from the stage one software-hosting arrangement, Wasik says. But savings in the 30 percent range are possible through administrative shared services that involve five to seven schools, he believes.

With the software implementation accomplished, UA and Lorain are now poised for stage two: creating business units that provide services across both organizations, such as IT, purchasing, HR, and payroll. Stage three will be to create a separate, independent business services organization.

"We decided it wouldn't work to have this located on one campus because it would give that campus undue influence over priorities," notes Wasik. "We wanted to form an independent center so it would be seen as a collaboration and not a takeover."

Although the shared ERP project has gone well, Dovci says there is still a lot of work to do on the larger project. "We aren't out of the woods yet," he cautions, adding that the institutions need to ensure that governance remains in the hands of peers "who recognize the different needs of the two schools."

When two organizations are merging like this, he says, you are looking for the strengths of each to optimize processes on both campuses: "You can't dwell on what isn't working yet. You have to roll up your sleeves and focus on how you're going to make it work."