achieving operational excellence at university of california, berkeley interim report

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Achieving Operational Excellence at University of California, BerkeleyInterim Report

February 2010

DRAFT – FOR WORKING PURPOSES ONLY 2Achieving Operational Excellence (Interim report)-no footnotes

Agenda

• Why Operational Excellence?

• What is the process we are following?

• What have we learned so far?

• What comes next?


State educational appropriations have been falling

State Educational appropriations, inflation-adjusted, excluding ICR

$497m $475m $429m $399m $416m $454m $484m $390m $304m

$497m$452m

$394m$353m $350m $371m $377m

$297m

$232m

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 projected


State will continue to face significant funding challenges going forward

-30

-20

-10

$0B

2009-2010

-$6B

2010-2011

-$14B

2011-2012

-$21B

2012-2013

-$23B

2013-2014

-$20B

2014-2015

-$18B

State general funds (billions)


OE objective is to ensure as many resources as possible are dedicated to core mission

Financial sustainability Organizational effectiveness

World-class teaching and research supported by world-class operations

Internationally recognized researchers and dedicated teachers

Preeminent academic leadership

Public character maintained by continuing to expand access


We are four months into the first stage of Operational Excellence

What to do How to do it Do it!

•Identify and prioritize opportunities to improve efficiency and effectiveness

•Develop detailed implementation plans tocapture value

•Implement workstreams and drive change in organization

Detailedsolution designDiagnostic Implementation

We are here


Operational Excellence governance structure

• Frank Yeary (OE co-lead)• Phyllis Hoffman• Khira Griscavage • Claire Holmes (Communications)

Operational Excellence Steering Committee (OESC)

Project Leadership & Organizational Design

• Chancellor Birgeneau (chair)• George Breslauer• Nathan Brostrom• Carlos Bustamante• Catherine Wolfram

• Frank Yeary • Chris Kutz • Rod Park• Miguel Daal• Roia Ferrazares

• Arun Sarin• Judy Wade• Phyllis Hoffman (staff)• Will Smelko

• Chancellor’s Cabinet• Academic Senate Leaders• Council of Deans

Campus Leadership

• Chancellor Birgeneau (OE lead)Chancellor

• Users of campus services• Providers of campus services

Stakeholder groups

Internal working group

• Jeannine Raymond

• Erin Gore• John Ellis

• Shel Waggener

• Elizabeth Elliott

• Ron Coley

Point People • Rich Lau, Lila Mauro, Pamela Brown, Teresa Costantinidis, Jon Bain-Chekal, Nora Watanabe, Michael Mundrane, Liz Marsh, Ken

Schmitz, Moira Perez, Jodie Rouse, Kathleen Satz, others TBD

• Susanna Castillo-Robson

Functional Owners

HR Procurement Finance IT Change Management

Student Affairs

• Chris Christofferson

Facilities Services


The OE team has been examining seven key opportunity areas

Student Services

Organization simplification

IT Energy Space Mgmt

Admin(HR, Fin)

A

D EB C F

Procure-ment

G


~55% of supervisors (>1,000 people) have three or fewer direct reports

0

100

200

300

400

500

1

471

2

307

3

228

4

195

5

148

6

113

7

73

8

62

9

47

10

38

11

19

12

13

13

17

>13

90

26% 2% 1% 1% 1% 5%17% 13% 11% 8% 6% 4% 3% 3%

Number of direct reports

Number of Supervisors

Percent ofsupervisors

Implications• Increased

bureaucracy and slower decision making

• Many supervisors may not be challenged to fully utilize managerial skills

• Employees may not get an optimal level of managerial support

Organiz-ation

A

How to read this chart:

471 supervisors have 1 direct report; 307 supervisors have 2 direct reports;228 supervisors have 3 direct reports;

etc.


Majority of admin personnel are outside of their functional group

0

20

40

60

80

100%

UC Berkeley administrative FTEs(full-time equivalents)

IT

~885

Finance

~700

HR

Shadow

Distributed

Central

~280

72% 87% 88%

Observations

• Distributed functions evolved because of historical perception that central groups could not meet local needs

• Distributed and shadow personnel do not report up through functional areas and are fragmented in small units

• Lack of standardization, specialization and knowledge sharing contribute to lower productivity

• Distribution creates risk management issues% FTEs

outside functional groups:

Admin(HR, Fin)

B

Central: Functional staff reporting to central unit

Distributed:Functional staff reporting to distributed units

Shadow:Staff not classified to function, but perform function as part of their job


0

50

100

150

200

Education(75th percentile)

200

Education(Average)

127

Education(25th percetile)

83

UC Berkeley

58

Total FTEs/HR FTE(UC Berkeley vs. Education benchmarks)

Benchmarks suggest opportunity to improve productivity (HR example)

Increasing efficiency

Admin(HR, Fin)

B


Infrastructure is highly fragmented across campus

100+ Servers 20–100 Servers 10–20 Servers <10 ServersTop energy consuming buildings

• Highly decentralized: 900+ servers located in 50+ buildings

• Capacity underutilized: Digital storage utilization across campus servers is ~ 52%

• Increased risk: Some unmanaged servers with limited backup or disaster recovery

• High energy consumption: 95% of servers (by number) not in central data center, resulting in sub-optimal distributed HVAC systems

ITC

Observations


Energy consumption varies significantly across the campus

0

5

10

15

20

2008-2009 Energy consumption by building (kWh/GSF)20

1211

9 8 8

54 3 3

Teaching and office buildings

Average

Example: Teaching/Office Buildings

EnergyD


0

100

200

300

400

500

FY2008-09 office and supportspace per employee (Sq. Ft./FTE)

Average

Space usage also varies dramatically

Select UC Berkeley non-academic divisions

Space mgmt

E

Observations• Space is a very

large asset for the university that is currently not managed effectively

• No university-wide space allocation guidelines exist

• Space utilization is not tracked

• Units have no incentives to give up unused space


UC Berkeley spends >$215M on student services across 5 control units

0

20

40

60

80

100%

Residential and studentservices programs

Supplies & Expenses

Personnel

Debt service

$112M

Pers

onne

l

$14M

OtherPe

rson

nel

Other

$13M

VC Admin(UHS, rec

sports, ASUC)

Personnel

Supplies &Expenses

$42M

VCE&I

Pers

onne

l

S&EOther$14M

EVCP

Pers

onne

l

$20M

University spend on student services(FY2008-09)

Admission& Enrollment

VCRe

-se

arch

$1MTotal = $216M

VC Student Affairs

Student services

F


0

20

40

60

80

100%

Number of vendorsTop 10%

Remaining 90%

~18,000

Vendor spend

Top 10%

Remaining 90%$578M

UC Berkeley purchasing spend,FY2008-09

External benchmark: 6,000 vendors for ~$830M of

spend

Benchmark: ~$140K/vendorBerkeley: ~$32K/vendor

Procurement is fragmented across ~18,000 vendors

Procure-ment

G


Identical products are being bought at different prices

• 48-well deep well plate (case) $249.02 $206.22 $42.80 17%

• MaxyClear Snaplock microtubes (case) $127.57 $93.28 $34.29 27%

• Universal Fit pipette tips (case) $133.96 $195.73 $61.77 32%

• Axyrack microtube rack (case) $74.05 $115.38 $41.33 36%

• Graduated cylinder $10.85 $11.25 $0.40 4%

• Polypropylene beakers (case) $83.92 $104.55 $20.63 20%

• Economy wash bottles (case) $88.59 $68.05 $20.54 23%

• LDPE laboratory bottles (case) $43.31 $60.03 $16.72 28%

LAB EQUIPMENT EXAMPLE

Item Fisher price VWR price Difference

($)Difference

(%)

Axyg

en S

cien

tific

Nal

gene

Procure-ment

G


Our current operating environment hinders efficient procurement

Low leverage with vendors

Sub-optimal pricing in contracts

Users purchase

off-contract

Fragmented spend

Inefficientprocurement

spend

Procure-ment

G


Our commitment will be tested before wewill be able to see results Organizational Commitment

Earlyexcitement Success

Valley of death

Failure

“Maybe there is an easy answer”

“The Boss says this is important!”

“I have a day job, I don’t have time for

this!”

“This is hard and painful”

“I had better board the train”

“We need to act now”

“I will just have to back channel

my resource requests”

“Let’s evaluate this one more time”

“If I give up control, I can’t do

my job”

“I can see results”

We are here


Next steps

• Listen to feedback from campus community on this preliminary fact-base

• Estimate savings and implementation costs for opportunity areas

• Decide on opportunity areas to move forward with in next stage (detailed solution design)

For information and updates: http://berkeley.edu/oe

Please send ideas and suggestions to [email protected]

achieving operational excellence at university of california, berkeley interim report

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