How to Design a Shared Services Target Operating Model in a University

Recently we undertook a very interesting assignment for a leading Russell Group university. The UK university market is wrestling with a number of challenges and opportunities in an increasingly competitive environment, most notably:

• Digital transformation - Advances in automation, AI, and data analytics offer new tools to enhance shared service delivery. Universities leveraging these technologies can improve service efficiency and reduce costs.

• Financial constraints - Increasing budget pressures are driving universities to explore shared services to achieve cost savings and maintain service quality despite funding challenges.

• Remote and hybrid learning models - The shift to online learning due to COVID-19 accelerated the need for digital services, making remote-friendly shared services models more attractive and practical.

Universities are, by nature, complex institutions with diverse functions supporting academic, administrative, and student services. As higher education institutions face increasing pressure to optimise resources and improve service efficiency, many are turning to shared services as a solution. A Target Operating Model (TOM) provides a strategic blueprint for implementing shared services, aligning organisational goals, streamlining processes, and enhancing service delivery.

In designing a TOM tailored to the university’s unique environment, we followed a 5 step process as outlined below:

Step 1 - Understand the need for Shared Services

Universities handle a wide range of operational functions, including finance, HR, IT, facilities management, and student services. These departments often operate in silos, leading to inefficiencies and duplication of efforts. Shared services can reduce redundancy, optimise resource allocation, and deliver consistent service standards across campuses.

A Shared Services Model can benefit universities in 3 key areas:

• Cost Savings - Consolidation reduces operational costs by eliminating duplicated functions

• Service Quality - A unified approach ensures consistency and quality of service across departments

• Agility - Centralised services allow faster decision-making and improved responsiveness to institutional needs

Step 2 - Define the objectives and scope of the Shared Services TOM

A successful TOM begins with clear objectives and a defined scope, aligned with the university's strategic vision. Of course, these need to take into account the university’s unique challenges and oppoirtunities, but should broadly cover the following areas:

Key objectives of a TOM should include:

• Enhanced efficiency and quality - Improve service delivery and standardise processes across departments

• Cost optimisation - Achieve cost savings through streamlined operations and economies of scale

• Focus on core academic activities - Free up academic staff from administrative burdens, allowing a focus on education and research

Scoping the services is critical:

Determine which services (e.g., HR, IT, finance) will be centralised. Each function should be assessed for its suitability to be part of a shared services model, based on factors like process similarity, cost-effectiveness, and ease of implementation.

Step 3 - Prepare Key Components of the Target Operating Model

Once you have clarity on objectives and scope you can set to work to define the key elements of the TOM, as follows:

Organisational Structure

Establish a structure that defines roles, responsibilities, and reporting lines within the shared services framework. Universities can often benefit from a hybrid model, with centralised services complemented by department-specific support as needed.

Governance and Leadership

Effective governance ensures alignment between shared services and the university’s strategic priorities. A governance board, typically including representatives from key departments, can provide oversight, set performance standards, and resolve conflicts. We recommend including representatives from academic and administrative departments on the governance board to ensure diverse needs are met.

Service Delivery Model

Define how services will be delivered, including self-service options, automated workflows, and dedicated support for high-demand services. The delivery model should balance efficiency with a user-friendly experience for students, faculty, and staff.

Technology Infrastructure

Technology plays a central role in shared services, enabling automation, tracking, and streamlined service delivery. Universities should invest in systems that support integration and allow for seamless data sharing across departments. We

Step 5 - Building and Implementing the TOM

In our experience this is the most challenging aspect of transitioning to new ways of working. It is fraught with risks and challenges, requires strong leadership and commitment from all interested parties and stakeholders. It isn’t easy!!

Process Mapping and Standardisation

Spend quality time to map out existing processes to identify process failures and standardise workflows. Standardising processes is crucial for consistent service delivery and achieving economies of scale.

Change Management

Transitioning to a shared services model requires strong change management to address resistance, especially from staff used to department-specific processes. Engage staff early in the planning stages and offer training to ease the transition. Open communication and addressing staff concerns are key to gaining buy-in.

Performance Measurement and Continuous Improvement

Define key performance indicators (KPIs) to monitor and evaluate the success of the shared services model. Regular reviews and adjustments will ensure the TOM remains aligned with the university’s evolving needs. Focus on key metrics covering: Service response time, user satisfaction, cost savings, and service accuracy. Use feedback mechanisms, such as surveys or performance audits, to refine processes and address service gaps.

Designing a Target Operating Model for shared services in a university setting requires a strategic approach that aligns with institutional goals, supports academic missions, and enhances service quality. While shared services offer numerous benefitsthey also require careful planning, strong governance, and effective change management. With the right framework in place, universities can leverage shared services to build a resilient, future-ready operational model that maximises resources and supports growth in an evolving educational landscape.