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Leveraging Size to Save Costs

9/26/2016

Bob Keasler

 

​The Higher Education Systems and Services (HESS) Consortium was created to better allow institutions to focus resources on those academic and student programs that are “differentiators” for them by forming strategic alliances.

The 73 institutions from 16 states that currently make up the consortium all share a commitment to openly and creatively seek out alliances within the consortium. The goal is to share the cost and also improve those services that are similar and vital to their institutions.

Many colleges and universities are finding it increasingly difficult to sustain their current operational model independently, but do not want to merge with another institution and lose their unique history, traditions, and programs. The HESS Consortium offers institutions a platform to engage in as many or as few of these strategic alliances as meets their needs. Participating in one alliance for a product or service does not require participation in any other alliance.

The consortium, to date, has been focused mainly on enterprise resource planning (ERP) systems and ancillary software on campuses in an effort to find common ground and platforms to facilitate these shared-service alliances. Therefore, chief information technology officers have been the most involved participants and chair numerous committees that carry out the work of the consortium.

However, the potential of these alliances will only be realized when presidents, provosts/chief academic officers, and chief business officers become more active. With the commitment of these individuals, the number of participating institutions will increase, and the breadth and depth of the services to be shared—and to be improved—will increase dramatically.

Maybe it’s logical that chief information officers (CIOs), who tend to embrace change as a day-to- day reality, have been eager to embrace these concepts of shared systems and services. A group of CIOs has created a standardized bid submittal process that each vendor must adhere to in order to present a consistent, comparable analysis of services and costs. These standards allow participating members to compare products regardless of their size or scope of use.

The CIO members were also instrumental in planning the most recent HESS Annual Conference. The result was a unique opportunity to compare and contrast ERP software providers.

Some CEOs and other senior executives from the progressive ERP software providers in the industry participated simultaneously in an open panel question-and-answer session. Members were able to hear each vendor discuss how they are addressing the future needs and concerns of various institutions. The participating members could then compare the solutions of vendors against other potential providers of the same services. The vendors later held concurrent sessions where participating member institutions could see firsthand how several of these solutions might address a particular campus activity or function.

While the early focus of the HESS Consortium has been related to ERP systems and other software, the true mission of the consortium is to provide a mechanism for colleges and universities to maintain their unique identities within an equally unique set of alliances.

As stated previously, the model is designed so that an institution can form an alliance with any other member institution or institutions to share the expense of any vital, but not distinctive function (e.g., accounts payable, financial reporting, or payroll) or services (e.g., sustainability coordinator, IT security, HVAC controls, or legal services) without having to commit to other alliances for other services.

A first step for all institutions to fully realize and monetize the advantages of these alliances is the acknowledgment that while their programs, culture, settings, students, faculty, staff, and alumni are unique, many of their common operational functions are not.

This concept of strategic alliances is certainly not new or exclusive to the HESS Consortium. There are many consortiums and alliances, normally in a single state or city, that have been operating successfully for years. Many people in the higher education industry have called for these types of alliances.

TIAA commissioned a white paper that speaks to many of these same issues. It points out that issues such as lack of standardization, prior budget commitments, and the fear of staff reductions have limited the effectiveness of consortia relationships in the past. These are not unsolvable issues, and—while they are certainly difficult within the culture of our communities—we must move past them. Finding that balance between distinctiveness and cooperation may be the key for many of our institutions to not only survive, but prosper.

HESS attempts to reach across state boundaries, ERP systems, lack of standardization, fear of change, and any other barriers to say that we can keep those attributes of our colleges and universities that are distinctive and cherished—if we are willing to change the operational model that supports them.

 

Bob Keasler is president of the Higher Education Systems and Services Consortium Board and vice president for finance and administration at Shenandoah University (VA).

 
 
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