Developing, Managing and Monitoring Service Centers

1. Developing, Managing and Monitoring Service Centers Presenters Herbert Lewis, MBA, CPA Director, Service Center Administration Boston University Glen Itzkowitz, MA, MBA Assoc. Dean, Scientific Operations & Research Facilities Stony Brook Medicine

2. Definition of a Service Center • Service Centers are departments or functional units which perform specific technical or administrative services primarily for the benefit of other units within a reporting unit. Service Centers include “recharge centers” and “specialized service facilities” defined in section J.47 of Circular A-21 • (Source – CASB DS-2 Section 3.2.0)

3. Proposed service center – how does it transform from concept to operation? • Possible origins of a service center: - Dean, VP of Research et al determines there is a need for a new research service to be financed by user fees - Department or PI has equipment which can be shared with colleagues and supported by user fees - Start up funding for new faculty

4. Possible origins of a service center (cont’d) - Shared instrumentation or high end instrumentation grant - Other sources?

5. What is the process to create a new service center? - Develop a Business Plan - Scientific / Administrative Review - Implementation - Managing - Monitoring

6. Prepare a formal business plan • Use a template so all submissions have information required for review • Identify instrument(s) and service(s) to be offered • Identify proposed location of facility – are renovations required? Special requirements e.g. shielding, power, BSL3 space etc.

7. Identify scientific director, technical personnel • Administrative support – ordering supplies, billing • Service agreements, license fees • Equipment depreciation (non-federal only) • Who are the proposed customers? • Will services be provided to external clients? • If an active grant, program income considerations • If a SSF, factor F/A into cost

8. Perform a detailed cost and pricing analysis • Create a multi year projection of revenue and expense • Create best case and worst case scenarios • Will the center need to be subsidized – for start up only? Always? • Other factors or considerations?

9. What is your institutional review process? • Is there a scientific review committee or does VP Research or Provost review? • Who has final approval?

10. Managing Service Centers • Does your institution have a policy / procedure manual? • Does each center have its own administrative personnel or is there central billing? • Are utilization statistics available and reported? • Are annual operational and financial reports required? • Do user and/or review committees exist?

11. Contemporary approaches / issues • Use of Service Center Cores to Advance Mission • Survey Centers • Specialized Research Laboratories Proteomics Imaging Biorepositories • Service Centers (aka, cores) have become a staple in faculty recruitment • Linkages between institutions & mechanisms • Facilities driven approach (ABSL3 rates vs. Standard Vivaria)

12. Contemporary approaches / issues (cont’d) • Creating economies of scale through scope of services (conceptual) • Vertical integration of services / units • Standardization of commodities • Supply chain management – Strategic Sourcing Opportunities • Broadening of scope does not necessarily mean creation of new cost centers • Multiple entry points for clients

13. Contemporary approaches / issues (cont’d) • Synergistic approaches to business • Strive to develop a portfolio of services with duplication (don’t compete with yourself) • Creation of Service Navigators • Standardization of commodities • Gateways for expertise of clientele (project design) • Seminars and seed grants • Empowered technical staff(s) • Sole supply (tank gas contracts, GeneChip) • Risk Managed Service Plans • Asset Amortization Scheduling (GAAP)

14. Contemporary approaches / issues (cont’d)

15. Contemporary approaches / issues (cont’d) • Continuous Process of Data Interrogation • Where there is smoke, there is fire • Analysis of demand curves • Consideration of supply/service reduction (shorting vs. JIT) • Outsourcing and subcontracting • Termination vs. Platform Integration Valuation of Facilities and Technology Programs

16. Contemporary approaches / issues (cont’d)Auditing Activity How Fraudsters Exploit Complex Systems Typically, fraudsters detect or stumble upon areas with weak cross departmental or cross-organizational controls, often the site of the interfaces between two or more computer applications or systems. confident that there is very little regular cross-system validation, given the challenges inherent in accessing and analyzing frequently incompatible data formats. • Internal Controls Weaknesses The KPMG Fraud Survey 2006 reported that of the factors contributing to fraud in the organization, “poor internal controls” rated as the highest at 33 percent, and “override of internal controls” rated second at 24 percent.6 Continuous review of internal controls is required to ensure that the controls that have been established remain in place and remain effective.

17. Contemporary approaches / issues (cont’d) • Strategize Your Fraud Detection Program • more effective to use strong internal controls and data analysis technologies to detect and, more importantly, prevent fraud from ever occurring in the first place. • Profile of potential frauds. This profile includes a list of the many different areas in which fraud may occur and the types of fraud that are possible in that area. This can be developed as part of a risk assessment. • Test transactional data for possible indicators of fraud (pre-invoicing). A complete testing program should include ad hoc or random testing in addition to more formalized and regular/repetitive tests. • Improve controls by implementing continuous auditing and monitoring over transaction authorizations. • Investigate patterns and fraud indicators that emerge from the fraud detection tests and continuous auditing and monitoring. 2008, ACL Services

18. Contemporary approaches / issues (cont’d) 2004 - OSA implemented a family of software products in the industry of Laboratory Management which allowed for the Increase of business productivity Tracking of work flows Validation of authentication of financial transactions All systems reside on SOM hardware “…. We’re not Microsoft…..” 2012 SOM & University Project 50 Forward SOM Cores to integrate a high reliability common platform for shared research facilities Committee charged to evaluate multiple vendors Execution date March 2013

19. Tools for Go / No Go Strategies Analysis Tools to Scale Barriers of Entry for Potential Clients

20. Tools for Go / No Go Strategies (cont’d) • User Demands • Platform specific • Advisory Committees • Evaluate barriers for entry • Technology adaptation • Spurring demand (vouchering) • Foster next generation methods & platforms • Meeting the market / segments demand (4 P’s) • Demand is a moving target • Life Cycle predictors • Finances

21. Tools for Go / No Go Strategies (cont’d) Data Interrogation • Qualitative vs. Quantitative • User feedback • Publication Acknowledgments • Surveys • Usage • Return to the technology, is use cyclical? • Recurrent clientele, where have the users gone?

22. Tools for Go / No Go Strategies (cont’d) Competitive Gap Analysis

23. Tools for Go / No Go Strategies (cont’d) Service Reduction on the basis of Demand Analysis • Considerations for service reduction • Utilization • Shifting needs of research enterprise in platform technologies / methods • Cost – Benefits Analysis • Augmentation of declining research demand • Clinical Enterprise Opportunities • Industry (potential overheads… really) • Regional Consortia

24. Tools for Go / No Go Strategies (cont’d) Consideration for Termination vs. Integration of Service Centers • Integration • Must be plausible - Can be an expansion of service line or product extension • Advisor Perspective • Economies and diseconomies of scale and scope • Financial Systems • Termination - In business, nothing is forever - Establishment of new service center or closeout? - Consider the data, (utilization based) - Political realities and institutional reputation

25. Best Business Practices – Internal Clients Utilize a registration and scheduling system. Core users must be authorized and have valid accounts (grants, department funds,…). Encumber funds if system has capability. Do we block non-payers? For hourly / test based charges, invoice monthly. For project based, invoice at milestones or other criteria.

26. Best Business Practices – Internal Clients (cont’d) How do you manage and/or account for unused scheduled reservations and under utilization of scheduled reservation time? Do you have peak and off-peak pricing for instruments available 24/7?

27. External Use Policies Service Centers exist primarily to serve internal clients What is your institution’s policy for external use of service centers? Capacity considerations – do you need external use to breakeven? Who manages the business process?

28. External Use Policies (cont’d) Do you have different rates for external academic use vs. commercial use? Do you charge full (unsubsidized) cost plus F/A for commercial? Do you use “uncapped” F/A? Are there premiums and/or administrative fees? Are formal contracts used? Tax issues – UBIT, Sales Taxes

29. Questions and comments Open discussion