Operational Efficiency Initiatives Summary Report

Transcription

1 Summary Report 1

2 EXECUTIVE SUMMARY The University of North Carolina (UNC) system takes pride in the effective stewardship of the resources entrusted to us. To that end, UNC has been increasing its efforts over the past several years to enhance operational performance and improve efficiency. There is a four-pronged approach to efficiency initiatives across the UNC System. Efforts towards increasing efficiency generally originate from one of four areas: PACE, UNCFIT, the OSBM/GA Efficiency Review, or campus-initiated efforts such as BAIN. The goal is to increase productivity and reduce costs system wide while managing the delicate balance of implementing system-wide efficiencies within the unique missions of 17 campuses. In the aggregate, UNC s innovation in the efficiency arena reduces the cost of the University by $66 million annually and has reduced the total operating costs by $321 million since inception in The purpose of this document is to respond to the North Carolina General Assembly Program Evaluation Division s request for information regarding the major operational efficiency efforts within UNC General Administration since This report describes the major past and current initiatives originating from three of the four efficiency areas: PACE, UNCFIT, and the OSBM Efficiency Study. Additional information regarding campus-initiated efforts will be submitted at a later date as an Addendum to this report. The initiatives included in this report highlight operational savings in payroll, process savings in data collection and purchasing, compliance savings and enhanced internal controls, and more effective use of resources system-wide. In many cases, the efforts have led to increased cost avoidance while other efforts highlight cost savings. Despite the focus on increased efficiency and operational performance, incentives for developing and implementing efficiencies at the campus level are often negated by the cyclical design of state budgeting. Data collection and analysis remains, in many cases, a fragmentary process. The information collected represents both General Administration savings and campus savings where applicable. The differences are noted within each initiative description. 2

3 President s Advisory Committee on Efficiency and Effectiveness (PACE) Established in 2006, The PACE Committee performed a comprehensive review of the UNC System, made recommendations for operating more efficiently, and established principles to promote the continuous identification and implementation of efficiency enhancing measures moving forward. Seven systemwide working groups collaboratively identified opportunities to cut costs, avoid costs and grow revenue. The working groups analyzed the following operational areas: academic administration and support, auxiliary services (bookstore/dining/vending operations), construction and leasing, facilities management, human resources, information technology, and other University operational efficiency areas. Since 2006, the UNC System has worked to implement the efficiencies identified in the report. The UNC General Administration Finance Division maintains a PACE status report to monitor continual progress, as a number of items require legislative change, policy or procedural change. The initiatives outlined in this report originating from PACE are: Payroll Shared Services, Energy Initiatives, Information Technology Initiatives, and the SciQuest e-procurement efficiencies. UNCFIT Payroll Shared Services When the Office of the State Controller migrated from Central Payroll to the BEACON system, the University needed a payroll system that was integrated with the Banner software used by most UNC campuses. Rather than implement individual payroll systems at each of the nine campuses that previously utilized central payroll, UNC established a shared services payroll center. All nine campuses are now operational on the payroll shared services platform with an estimated recurring cost avoidance of $1,052,351. The success of the project led to additional shared service initiatives such as interface development and maintenance and smart time development. Interface development and maintenance allows General Administration to develop and maintain shared service payroll interfaces with third party vendors at an estimated annual recurring cost avoidance of $448,000. Efficiencies are gained in developing and releasing vendor interface solutions using common procedures, version control, and system development lifecycle best practices. The purpose of the Time and Leave SmartTime Project is to provide a consistent, compliant set up of the Banner HR/Payroll system for the nine campuses that use the UNC Shared Service Payroll processing model. The application of standard business rules provides FLSA compliance for non-exempt employees as well as Office of State Personnel compliance in the following areas: hours worked, vacation leave, sick leave, shift differential, leave-offsetting, use of compensatory time, adverse weather accounting, university closing accounting, and holiday premium pay and compensatory accrual. The ability to develop the program logic at a macro level and implement it across the nine shared services payroll campuses provides an estimated one-time development cost avoidance of $1.1M. Human Resources Data Mart The HR Data Mart was established to manage UNC personnel information, eliminate redundancies, and allow for maximum use of limited IT resources. Starting in 2011 campuses were provided access to the HR Data Mart to monitor their own data using set and ad-hoc reporting tools. The Human Resources Data Mart provides an estimated recurring cost avoidance of $810,000 by acting as a single repository for timely and accurate human resource information to reporting agencies and eliminating the need for duplicate data entry into the North Carolina Personnel Management Information System (PMIS). In 3

4 addition, the HR Data Mart is scheduled to replace the annual personnel data file submission process for UNC in September Information Technology Initiatives The UNC General Administration Information Resources Division is continually working with campus chief information officers to leverage existing efficiencies and offer additional services reducing costs system-wide. Two specific services underway are the Shared Database Administrator (DBA) Pool and the Hosting Shared Services. The Shared Database Administrator Pool was designed to address the following issues: Create a predictable staffing model to help campuses address the low density, high risk skill sets needed to run the Banner ERP Eliminate the transition risk for business continuity Apply consistent best practices and change management processes across campuses Optimize support to provide high quality service, consistently with a low cost of ownership Share resources more effectively between campuses so an individual campus could have access to higher bursts of resources during particularly busy periods. Nine campuses use the DBA pool on a full or part-time basis providing a recurring cost avoidance of approximately $510,000. Similarly, the UNC Shared Services Alliance Hosting Service provides seven participating UNC campuses with a secure hosted database environment for their Banner systems. Services include installation, maintenance, upgrades, and problem resolution for Banner, Oracle Database, Banner Web and Application Servers. Estimated recurring cost avoidance is $888,000. Energy Efficiency Initiatives The use of Guaranteed Energy Savings Performance contracts is one mechanism UNC is using to finance and implement energy conservation measures. This process provides for future energy savings to be used to pay for the installation of energy-saving measures under contract with a competitively selected energy services company. These improvements generate cost savings sufficient to pay for the projects, replacing aging and inefficient equipment, and improving building system controls and infrastructure. Annual cost savings upon completing of all projects now approved and under construction is estimated at $10,351,000. Additional projects such as a system-wide lighting performance contract are anticipated due to the success of current contracting efforts. The Capital Projects System Initiative is intended to increase efficiency regarding information related to the State of North Carolina s capital projects. Currently, information resides in several different systems across numerous departments and agencies. Because of these diverse sources and systems, it is difficult to acquire and use capital project-related information effectively. In addition, duplicate data entry is required for some data elements making the systems, overall, inefficient and subject to significant opportunity for human error. A current system analysis will be completed by September 2013 for the project to move forward. Once implemented, the project is estimated to save $280,000 annually. 4

5 UNCFIT EAGLE Compliance Program Requirements of the State Governmental Accountability and Internal Control Act provided that state agencies (including any university) were to establish and maintain a strong and effective system of internal control within the agency or university. The Office of the State Controller responded by creating the Enhancing Accountability in Government through Leadership and Education (EAGLE) program and in October 2009 UNC FIT management presented a recommendation to the OSC to allow for efforts identified by the UNC FIT program to be unified and replace the EAGLE program. The first key business process areas developed in this initiative were General Accounting, Contracts and Grants, Financial Aid, Student Accounts, and Capital Assets. UNCFIT is a comprehensive program developed to ensure proper accountability and internal controls are addressed for the University system and represents approximately $1.1 million in cost avoidance annually for the System. UNCFIT e-procurement Efficiencies Thirteen UNC campuses have now implemented NC-based company SciQuest s e-procurement tool enabling fully integrated business-to-business electronic commerce for UNC. With the implementation and use of the application these campuses now have the ability to enable and utilize the same large consortia product catalogs to enable best pricing. This functionality centralizes spend and eliminates the use of multiple vendors with an estimated recurring cost savings of $1.3 million realized from consortia catalog enablement alone. The automated end-to-end procurement processing functionality removes the manual processing providing an additional $924,683 in procurement process savings. And, substantial improvements in the settlement (procure-to-payment) processes have allowed the System to automate electronic invoice settlement with vendors leading to approximately $1,232,911 in recurring payment processing savings. The investment in efficiency is leading to a total of $3.5 million cost savings annually using SciQuest. UNCFIT Strategic Sourcing UNC continues to take the necessary steps to approach purchasing from a new strategic perspective. Three main work streams highlight UNC s purchasing efforts: the UNC Combined Pricing Initiative (CPI), the UNC System Collaborative Sourcing Project, and the Statewide Collaborative Sourcing Project. Collectively, the Strategic Sourcing initiatives yield approximately $5,695,531 in savings each year. The purpose of the UNC-CPI is to save money on IT purchases and support, to take advantage of the combined purchasing power of the UNC System, and to meet the requirements of North Carolina legislation. With assistance from the Office of Information Technology Services, UNC institutions may choose to utilize ITS contracts or existing UNC bulk contracts that provide additional higher education pricing discounts. The UNC System Collaborative Sourcing Project works with the campus procurement officers and chief information officers to negotiate University-wide contracts with vendors for the most commonly used products and software maintenance agreements. The purchasing power provided by leveraging the strength of all 17 UNC Institutions together is far greater than one individual campus. Similarly, the Statewide Collaborative Sourcing Project is an effort started with General Administration and the Department of Administration (DOA) to discuss a strategic sourcing collaboration. Although there are state term contracts that all state entities can purchase from, a collaborative approach with the Department of Administration and UNC in contract negotiations with a vendor will yield better pricing, address all levers for potential savings and result in the best product/service at the best value. 5

6 The first three commodities to be sourced collaboratively are 1) Maintenance/Repair and Operation Items, 2) Laboratory Supplies and Equipment, and 3) Audio/Visual Equipment and Supplies. Other Shared Services In February 2012, UNC General Administration requested the Office of State Budget and Management (OSBM) collaborate on analyzing identified program areas for potential efficiencies. The program areas included Residency Verification, Financial Aid Verification, Internal Audit, Advancement, E-journals, and Ground Transportation. The final report identified potential efficiencies and recommendations for moving forward in each program area. Based on UNC priorities and resource availability, General Administration moved forward with each program area differently. Financial Aid Verification is currently piloting a shared services concept, Residency Verification and Internal Audit are in planning stages, and Advancement and E-Journals will begin subject to resource availability. 6

7 REF# UNC Initiative Cost Savings Cost Avoidance Cost Savings Cost Avoidance Estimated Savings Reflects 1.0 President's Advisory Committee on Efficiency and Effectiveness (PACE) Systemwide Academic Administration and Support $1,100,000 $6,600,000 Systemwide Auxiliary Services (Bookstores/Dining/Vending) $50,000 $300,000 Systemwide Facilities Management $8,348,400 $55,024,400 Systemwide Energy Efficiency Initiatives: Energy Savings Performance Contracts $10,351,600 $24,025,600 9 campuses Capital Projects System $280,000 $280,000 Systemwide General Administration $9,987,137 $59,922,822 Systemwide Human Resources Systemwide UNCFIT Payroll Shared Services: Operations $1,052,351 $2,104,702 9 campuses Interface Development and Maintenance $448,000 $2,424,003 9 campuses Smart Time Development 1 $1,120,000 $1,120,000 9 campuses Information Technology $9,633,641 $4,399,997 $32,838,320 $23,903,320 Systemwide DBA Shared Services $510,000 $3,360,000 9 campuses Hosting Shared Services $888,003 $3,946,680 7 campuses UNCFIT SciQuest e-procurement Efficiencies: Electronic Catalog Enablement $1,373,365 $7,859,478 Systemwide Procurement Processing $924,683 $5,291,765 Systemwide Payment Processing $1,232,911 $7,055,687 Systemwide Other University Operational Efficiency Areas $6,044,399 $688,000 $35,575,750 $4,816,000 Systemwide PACE TOTAL $29,246,137 $29,186,351 $148,843,822 $127,604,705 Systemwide 2.0 HR Data Mart $810,360 $1,620,720 Systemwide 3.0 UNCFIT EAGLE Compliance $1,198,080 $3,594,240 Systemwide 4.0 UNC Strategic Sourcing Initiatives $5,695,531 $39,868,720 Systemwide 5.0 Other Shared Services: Financial Aid Verification $108,614 $108,614 2 campuses Internal Audit $121,000 $121,000 2 campuses TOTAL 1 Represents one-time cost avoidance figure - non recurring. Recurring LTD $35,050,282 $31,315,791 $188,821,156 $132,940,665 7

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