Viability of shared services and centralised procurement for fee-paying schools in South Africa

Abstract

ABSTRACT The major challenge that we are currently facing in the public and private basic education sector in South Africa is the rising cost of education. As the cost of education has increased above the inflation rate year on year, parents have had to start sharing the cost of education with the state resulting in education being a major component of the household’s budget. While the rising cost of education is a concern to students and parents, it is also a concern for the educational institutions providing the service. Innovative methods are needed by using business principles and methods to address the situation. Methods like shared services and centralised procurement which are techniques that have been employed for many years in the private and public sectors and have been growing rapidly due to its proven ability to reduce costs (Eggers, Snell, Wavra, & Moore, 2005). Shared services in this context will therefore mean schools working together to reduce expenditures by the joint purchasing of supplies, sharing of services, facilities and personnel for the purpose of adding value at a reduced cost (Kopatich, 2008). The purpose of this research was therefore to explore the viability of implementing shared services and centralised procurement for the basic education sector in South Africa in order to achieve efficiencies and cost savings. This report aims to establish what processes can be adopted centrally in this sector and what are the benefits and challenges of adopting this model. The data for this research was collected using a semi-structured open-ended interview methodology and analysed using content analysis. The key finding of the study is that it is viable to have centralised procurement and shared services for schools in South Africa. However, centralised procurement will be easier to implement then a shared service centre, as schools will not be handing over any of their independence and control to another organisation which is a major challenge to implementing shared services. There can be one centralised procurement structure for all schools but there needs to be various shared service centres for different groupings of schools. The challenges need to be addressed while setting up the structures and the value proposition needs to be strong when rolling this out to the schools