OFFICE OF THE VICE CHANCELLOR FINANCE UNT System

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Shared Services Update TASSCUBO Primary Members October 17, 2011 Presented By Terry Pankratz Vice Chancellor for Finance

OFFICE OF THE VICE CHANCELLOR FINANCE Agenda • • • Overview UNT System Business Service Center (BSC) UNT System Information Technology Shared Services (ITSS) CFO Discussions Questions UNT System Shared Services Update October 17, 2011 2

OFFICE OF THE VICE CHANCELLOR FINANCE Current Trends • According to Shared Services & Outsourcing Network Ø In 2004, 24% of executives worldwide thought shared services was ‘strategic’ for their business. Ø In 2011, 89% think it is… • According to the Deloitte – 2011 Global Shared Services Survey Results Ø 13% of respondents in 2011 are from the Public Sector (up from 7% in 2009) Ø 85% of shared service centers are less than 10 years old (A young and growing trend) Ø Top three areas implementing shared services: — Finance (93%) — Human Resources (60%) — IT (48%) UNT System Shared Services Update October 17, 2011 View the entire survey results at http: //www. deloitte. com/assets/ Dcom. United. States/Local%20 Assets/Do cuments/IMOs/Shared%20 Servic es/us_sdt_2011 Global. Shared. Serv ices. Survey. Executive. Summary. pdf 3

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Shared Services Goals • • • Improve efficiency by eliminating unnecessary duplication of services across the UNT System Manage business services strategically Promote the buying power of the UNT System and increase the ability to leverage resources Improve quality by continually monitoring customer expectations and satisfaction and continuous process evaluation and improvement Facilitate long-term financial savings by providing more efficient (cost effective) services UNT System Shared Services Update October 17, 2011 4

OFFICE OF THE VICE CHANCELLOR FINANCE Guiding Principles 1. 2. 3. 4. 5. Standardize Automate Co-locate (where advantageous) Take care of our employees Exceed customer expectations UNT System Shared Services Update October 17, 2011 5

OFFICE OF THE VICE CHANCELLOR FINANCE Shared Services Evolutionary Stages Objective Implement FY 2011 -2012 Basic FY 2012 -2013 Marketplace Advanced Marketplace Centralize services, standardize processes Reduce costs, automate processes, implement CI Provide choice of most effective supplier Generate revenue and profits Consolidation of: • Trans. /admin services • Professional/advisory services Charging for services Possible external sales? Separation of governance function? Services mandated? • Trans. /admin services • Professional/advisory services Entity UNT System Shared Services Update October 17, 2011 Department Separate entity Adapted from Shared Services: Mining for Corporate Gold” – Barbara Quinn, Robert Cooke, and Andrew Kris 6

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Shared Services Framework Shared Services UNT System Shared Services Update October 17, 2011 Payroll Human Resources Payments Purchasing AVC for Business Services (UNT System Business Service Center) Campus IT Services AVC / CIO (UNT System IT Services) IT Strategy and Governance Business Services Enterprise Systems Information Technology 7

OFFICE OF THE VICE CHANCELLOR FINANCE Two Interdependent Positions • Associate Vice Chancellor and Chief Information Officer Ø Develop a System-wide IT Governance process Ø Develop and implement short and long term plans to leverage technology Ø Improve service quality Ø Reduce costs • Associate Vice Chancellor for Business Services Ø Ø Start-up the Business Service Center Deliver transaction based services to the campuses Improve service quality Reduce costs UNT System Shared Services Update October 17, 2011 8

OFFICE OF THE VICE CHANCELLOR FINANCE How did we get here? March 2008 ü UNT System Board authorized study of shared services November 2009 ü Alvarez & Marsal provided initial recommendations ü UNT System Board authorized HR and IT implementations January 2010 ü UNT System Shared Services Council (SSC) met for the first time June 2010 ü Development of Shared Services Framework began (Accenture) August 2010 ü Board authorized evaluation beyond HR and IT ü Campus leaders notified of the role and scope of the new System CIO position September 2010 ü Accenture study completed ü Business Service Center (BSC) recommended by Accenture ü Shared Services expanded to include purchasing, payments and payroll November 2010 ü BSC Project Implementation Team formed December 2010 ü The Implementation Team began collecting service and effort data from departments January 2011 ü The Implementation Team submitted service recommendations to the SSC ü Campus leaders notified of role and scope of new AVC for Business Services February 2011 ü The SSC and Chancellor approved BSC initial services ü Lean Six Sigma training began UNT System Shared Services Update October 17, 2011 March 2011 ü BSC roster compiled from existing campus positions ü SSC approved soft launch for June 1, 2011 April 2011 ü AVC/System CIO started ü IT leadership began developing new service delivery model ü BSC roster finalized -136 campus employees notified May 2011 ü Welcome Meetings for BSC employees conducted ü Transition Workshops for BSC employees conducted June 2011 ü Soft launch of BSC operations June 1, 2011 ü AVC for Business Services started ü BSC organizational development began ü FY 12 BSC budget presented to stakeholders ü Proposed shared IT Organization Structure introduced ü IT Service Delivery Framework introduced July/August 2011 ü BSC employee onboarding sessions conducted ü BSC budget finalized ü Continuous improvement projects initiated September 2011 ü IT governance design finalized ü Performance scorecards were developed for BSC and IT ü BSC goes live ü IT conducts soft launch for shared services October 2011 ü BSC Operations Committee formed 9

OFFICE OF THE VICE CHANCELLOR FINANCE BSC Strategy Map CUSTOMER PERSPECTIVE FINANCIAL PERSPECTIVE Deliver Exceptional Customer Service Improve Cost Effectiveness Leverage Information Technology Leverage Our Size IT Strategy Map CUSTOMER PERSPECTIVE Deliver Exceptional Customer Service Improve Cost Effectiveness Consolidate Services &Facilities Continually Improve Key Processes LEARNING AND GROWTH UNT System Shared Services Update October 17, 2011 Leverage Shared Licensing Leverage Current Technology Continually Improve Key Processes INTERNAL PROCESSES Improve Employee Skills FINANCIAL PERSPECTIVE INTERNAL PROCESSES Maintain a Motivated Workforce Improve Employee Skills Maintain a Motivated Workforce LEARNING AND GROWTH 10

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Business Service Center (BSC) UNT System Shared Services Update October 17, 2011 11

OFFICE OF THE VICE CHANCELLOR FINANCE BSC – Services Before BSC Transition Payroll Human Resources Purchasing and Payments Services Total UNT System Shared Services Update October 17, 2011 After BSC Transition Current Campus BSC 49 74 93 216 0 27 11 38 49 47 82 178 12

OFFICE OF THE VICE CHANCELLOR FINANCE BSC – Employees Before BSC Transition After BSC Transition Current Campus BSC Payroll HR PPS 8 19 37 0 11 13 8 8 24 Payroll HR Provost-HR PPS 11 36 8 66 185 0 12 6 7 49 11 24 2 59 136 UNTHSC UNT Totals UNT System Shared Services Update October 17, 2011 13

OFFICE OF THE VICE CHANCELLOR FINANCE BSC FY 2012 Operating Budget Before BSC Transition Institution UNT System Administration Administrative PPS Building Costs UNT at Dallas Total UNT System Shared Services Update October 17, 2011 BSC Subtotal $0 $0 $214, 840 $60, 528 $450, 000 $725, 368 Subtotal $2, 260, 600 $705, 838 $612, 118 $3, 281, 133 $6, 859, 688 $959, 734 $0 $512, 234 $288, 518 $1, 760, 486 $1, 300, 865 $705, 838 $99, 884 $2, 992, 615 $5, 099, 202 $1, 618, 010 $518, 910 $2, 027, 913 $4, 164, 833 $1, 123, 203 $0 $882, 303 $2, 005, 506 $494, 807 $518, 910 $1, 050, 818 $2, 159, 327 $0 $0 $0 $11, 749, 890 $3, 765, 993 $7, 889, 105 UNT Health Science Center Human Resources Payroll PPS Campus $214, 840 $60, 528 $450, 000 $725, 368 UNT Human Resources Payroll Provost – HR PPS Current After BSC Transition Subtotal 14

OFFICE OF THE VICE CHANCELLOR FINANCE Facilitate Long. Term Financial Savings Focus on Customer Needs Nurture an Employee-centric Culture LEARNING & GROWTH Improve Quality of Services FINANCIAL Deliver Exceptional Customer Service INTERNAL PROCESS Improve Cost Effectiveness CUSTOMER BSC Scorecard Strategic Objectives Persp. Goal Leverage Information Technology Leverage Our Size Continually Improve Key Processes Improve Employee Skills Maintain a Motivated Workforce UNT System Shared Services Update October 17, 2011 Strategic Measures Freq. Type BSC Operating Budget to Actual Q Lag BSC Operating Cost per System-wide Total FTE A Lag BSC Operating Budget as a Percentage of UNT System Operating Budget A Lag BSC Operating Cost per BSC FTE A Lag % Satisfied with Knowledgebase Content Q Lead Customer Satisfaction Rate A Lag Number of Self-Service Applications Q Lead Knowledgebase Volume Q Lag Contract Spend as a Percentage of Total Spend Q Lead Savings Through Contract Negotiations Q Lag Number of Projects Completed Q Lead Percent of Employees Involved in Process Improvement Teams Savings Through Process Improvement Projects Q Lead Q Lag Training Hours Per Employee Q Lead Number of Employees Leading Project Teams Q Lead Personal Development Plan Completion % A Lag Employee Retention Rate Q Lead Average Employee Tenure A Lag Employee Satisfaction Rate A Lag 15

OFFICE OF THE VICE CHANCELLOR FINANCE BSC Operating Budget and 5 Year Pro Forma Operating Revenues: Transfers-Institutional Assessments: Total Operating Revenues Operating Expenditures: Employee Related Expenses Staff Salaries & Wages Employee Merit/Bonus Pool M&O + Employee Allowances Employee Benefits Total Employee Related Expenses Net Operating Income (Loss) Building Related Expenses Lease of Building Utilities Relocation Expenses Continuous Improvement Software Total Building Related Expenses Total Expenditures Net Income (Loss) Net Assets: FY 2012 Reserves- Beginning Balance Change in Fund Balance Ending Net Assets UNT System Shared Services Update October 17, 2011 Planning YR $0 $0 FY 2012 Year 1 $7, 889, 105 FY 2013 Year 2 $7, 889, 105 FY 2014 Year 3 $7, 889, 105 FY 2015 Year 4 $7, 889, 105 FY 2016 Year 5 $7, 889, 105 $435, 749 $0 $502, 091 $0 $5, 550, 708 $55, 507 $333, 519 $1, 642, 864 $4, 805, 526 $4, 661, 360 $144, 166 $139, 841 $313, 508 $294, 698 $1, 429, 520 $1, 386, 633. 99 $4, 521, 519 $135, 646 $277, 016 $1, 345, 035 $4, 385, 874 $131, 576 $260, 395 $1, 304, 684 $937, 840 ($937, 840) $7, 582, 598 $306, 507 $6, 692, 719 $1, 196, 386 $6, 482, 533 $1, 406, 573 $6, 279, 216 $1, 609, 890 $6, 082, 529 $1, 806, 577 $0 $0 $0 $450, 000 $60, 000 $710, 000 $100, 000 $1, 320, 000 $459, 000 $61, 200 $0 $100, 000 $620, 200 $468, 180 $62, 424 $0 $100, 000 $630, 604 $477, 544 $63, 672 $0 $100, 000 $641, 216 $487, 094 $64, 946 $0 $100, 000 $652, 040 $937, 840 $8, 902, 598 $7, 312, 919 $7, 113, 137 $6, 920, 432 $6, 734, 569 ($937, 840) ($1, 013, 493) $576, 186 $775, 969 $968, 674 $1, 154, 536 $2, 000 ($937, 840) $1, 062, 160 ($1, 013, 493) $48, 667 $576, 186 $624, 853 $775, 969 $1, 400, 822 $968, 674 $2, 369, 496 $1, 154, 536 $3, 524, 032 16

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Information Technology Shared Services (ITSS) UNT System Shared Services Update October 17, 2011 17

OFFICE OF THE VICE CHANCELLOR FINANCE ITSS Major Initiatives 2011 -2012 MAY JUN JUL AUG SEP OCT NOV DEC JAN Organizational Splits FEB MAR APR Towers Watson Marketing, Communications, Change Management & Training FY 2012 Budget & Allocations Activity Based Costing Analysis Governance Structures Services Catalog Update Allocation Methods Ongoing Management of Governance Maintain & Update Services Catalog Customer Service Metrics Ongoing Measurement & Reporting Internal Baseline Metrics & First SLA Additional SLAs Updated Strategic IT Plan Process Design and Implementation (ongoing) Measures (ongoing) Continuous Improvement (ongoing) UNT System Shared Services Update October 17, 2011 18

OFFICE OF THE VICE CHANCELLOR FINANCE IT Services – Organizational Chart (before ITSS) 19

OFFICE OF THE VICE CHANCELLOR FINANCE IT Services – Functional Chart Centralized Campus Specific 20

OFFICE OF THE VICE CHANCELLOR FINANCE ITSS Catalog Example Business Facing Services Internal Services UNT System Shared Services Update October 17, 2011 21

OFFICE OF THE VICE CHANCELLOR FINANCE Goal Strategic Objectives Strategic Measures Improve Cost Effectiveness IT Operating Budget to Actual IT Operating Cost per System-wide Total FTE IT Operating Budget as a Percentage of UNT System Operating Budget IT Operating Cost per IT FTE Q A A A Lag Lag Helpdesk Inquiries Resolved Satisfactorily Q Lead Customer Satisfaction Rate Q Lag Shared Licensing as a Percentage of Total Possible Savings Generated Through Shared Licensing Number of Supported Software Environments Number of Repetitive Tasks Automated with a Tool Virtualized Environments as a Percentage of Total Possible Virtualized Storage as a Percentage of Total Possible Facilities Consolidated as a Percentage of Total Possible Savings Generated through Facility Consolidation Savings Through Process Improvement Projects Percent of Projects Completed on Time on Budget Percent of Employees Involved in Process Improvement Teams Q A Q Q Q Lead Lag Lag Lead Q Q A A Lead Lag INTERNAL PROCESS Improve Quality of Services Focus on Customer Needs Facilitate Long-Term Financial Savings IT Scorecard CUSTOMER FINANCIAL Persp. Deliver Exceptional Customer Service Leverage Shared Licensing Leverage Current Technology Consolidate Facilities Continually Improve Key Processes Nurture an Employee-centric Culture LEARNING & GROWTH Training Hours Per Employee Improve Employee Skills Number of Employees Leading Project Teams Personal Development Plan Completion % Employee Retention Rate Maintain a Motivated Workforce Average Employee Tenure Employee Satisfaction Rate UNT System Shared Services Update October 17, 2011 Freq Type 22

OFFICE OF THE VICE CHANCELLOR FINANCE ITSS Budget • Under development UNT System Shared Services Update October 17, 2011 23

OFFICE OF THE VICE CHANCELLOR FINANCE UNT System Shared Services Campus Perspectives Benefits, Challenges, Disruptions, Expectations Jean Bush, University of North Texas Michael Mueller, UNT Health Science Center Wayne Usry, UNT at Dallas UNT System Shared Services Update October 17, 2011 24

OFFICE OF THE VICE CHANCELLOR FINANCE Questions? UNT System Shared Services Update October 17, 2011 25