Other UC campuses adopt OE model
Tuesday, April 26, 2011
Category: News > University > Academics and Administration
As the University of California struggles to absorb millions in state budget cuts, many campuses are using UC Berkeley's Operational Excellence initiative as a model for their own cost-cutting projects - from the launching of "Operational Effectiveness" at UC Santa Barbara to "Organizational Excellence" at UC Davis.
While other campuses work to streamline their operations in the same vein as Operational Excellence, none have worked with outside consulting firms to the extent that UC Berkeley has in its $7.5 million partnership with consulting firm Bain & Company.
The initiative - which aims to save $75 million annually - has been a source of controversy since UC Berkeley Chancellor Robert Birgeneau's October 2009 announcement of the campus partnership with the firm. Since then, opposition to the initiative has occurred repeatedly, including a seven-hour protest at the fourth-story ledge of Wheeler Hall on March 3.
Though other campuses have not seen controversy to such a degree, UC Berkeley is not alone in its efforts. Almost every UC campus is working on some form of restructuring through the systemwide "Working Smarter" initiative, launched in July 2009 to try to save $500 million over five years through projects such as consolidating payroll systems at all UC campuses.
But due to $500 million in state budget cuts, campuses are being forced to pursue additional cost-cutting projects to save money, according to UC spokesperson Steve Montiel.
"There is some admiration for the scope of efficiencies at (UC) Berkeley," he said. "But they are not the first ... With funding cuts from the state, each campus is looking to achieve efficiency."
Though a November 2010 "Operational Excellence and Higher Education" conference at UC Berkeley drew participation from several other UC campuses, Operational Excellence faculty program head Andrew Szeri has not discussed the project with other campuses since his January 2011 appointment and individual projects have been "fairly independent," according to Operational Excellence communications manager Bill Reichle.
In February 2010, UC San Francisco launched its own "Operational Excellence" initiative, aiming to save at least $50 million by June 2013. The effort is "in full swing," according to UCSF spokesperson Amy Pyle, with four groups planning to streamline areas, such as research administration and finance, by creating shared services centers.
But rather than hire a consulting firm, UCSF Chancellor Susan Desmond-Hellmann appointed a group of campus faculty and staff members to identify ways to reduce costs.
"UCSF felt it had the right combination of staff and faculty to identify opportunities to streamline," said John Plotts, senior vice chancellor of finance and administration in a statement. "We followed Bain's work with (UC) Berkeley and still are, and it has helped guide our thinking in some respects."
But hiring Bain & Company at UC Berkeley was a "standard managerial move" that avoided pitfalls from designing the project internally, according to Richard Walker, vice-chair of the Berkeley Faculty Association and professor of geography.
However, Walker said in an email that the project still has many challenges to address as it sets an example for other campuses.
"There is still a lot to criticize with Operational Excellence, such as the rush to lay off staff before the OE recommendations are finished, the modest accomplishments of improved IT ... the lack of any progress in chopping from the top," he said in the email.
In October 2009 - the same month that UC Berkeley's Operational Excellence began - UCLA hired the higher education branch of Huron Consulting Group for $240,000 to assist with its Budget Toolbox Project, which focused on academic and budgetary planning in the face of budget cuts.
As a result of the project, the campus's Restructuring Steering Committee was formed in February 2010 to plan cost-cutting projects in areas such as information technology, which could save over $20 million and are in various stages of implementation.
The campus entered into another $350,000 contract with the consulting company in March 2010 to help with carrying out the projects, according to UCLA spokesperson Phil Hampton.
"Identifying cost savings and efficiencies and implementing changes in large and complex organizations such as major research universities benefits from the involvement of external parties, who lend a different perspective on operational and structural issues," he said in the email.
In February 2010, UC Davis Chancellor Linda Katehi announced the launch of the "Organizational Excellence" initiative in her state of the campus address and said the campus would work on projects such as creating shared services centers and streamlining areas such as technology and human resources.
In addition to using recommendations from a Budget Advisory Committee formed in January 2009, the campus hired ScottMadden Management Consulting for $420,000 to help design shared services centers.
The centers are expected to save $25 million from this year through 2015-16 and $10 million annually starting in 2016-17, according to Dave Jones, associate editor for UC Davis' news center.
The newest of the initiatives, UC Santa Barbara's "Operational Effectiveness" began in August 2010 at the suggestion of a subcommittee of its Coordinating Committee on Budget Strategy. The campus is currently planning to cut costs in areas such as information technology and procurement to save between $7 million and $20 million, according to UC Santa Barbara Executive Vice Chancellor Gene Lucas.
The campus looked to UC Berkeley's Operational Excellence plans as well as other universities' projects for guidance and hired an individual consultant to aid in the planning process, Lucas said in an email.
Though campuses have followed UC Berkeley's model without the same cost, the "ambitious" nature of the project required Bain & Company's help, Reichle said.
"Given my sense of the size and complexity of all the Operational Excellence initiative is or is trying to be, I don't think it could have happened without an outside perspective coming in and organizing it - I think an outside investment was well worth it," he said.
Alisha Azevedo covers academics and administration. Contact her at email@example.com.
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