Published on 2014/05/07

Unification over Integration: Making the Case for True Cloud ERP

Unification over Integration: Making the Case for True Cloud ERP
Given the resource limitations facing most higher education administrators, the ease of complete integration gives ERP the advantage over the best-in-breed approach to institutional management systems.
Today’s students are a savvy bunch. They behave as consumers and enjoy (and expect) 24/7 access to just about anything they need to manage their personal, social and academic environments.

The problem is that most of the higher education administrative systems in use and on the market today were built long before the demand for personal mobility and instant self-service. These legacy systems were designed as form following function — based on a brick-and-mortar framework — with little thought for the future. Flexible terms, non-traditional teaching models, targeted recruitment: these and other innovations are difficult at best to manage in a legacy system.

Simply put, many higher education institutions lack the technology infrastructure to keep up with the needs of today’s students.

Since Gartner, Inc. first coined the term “enterprise resource planning” (ERP) in 1990, there have been a significant number of gaps in the functionality of higher education management systems. Those gaps have traditionally required product extensions and/or integrations with third-party solutions, opening the door to best-of-breed and bolt-on solutions.

By the early 2000s, application integration was among the top IT issues facing American organizations; an indication that best-of-breed was giving the enterprise suite model a run for its money.

Best-of-breed technology ecosystems are composed of individual administrative applications ideally tied together using middleware and integrations. I use the word “ideally” because, in many instances, maintaining the integration points of multiple systems — if the integration indeed exists — is a costly, time-consuming endeavor. These applications are often siloed in their own business units at the institution, making it difficult to share information, report on a single source of truth and minimize the errors associated with duplicated data entry. On top of all this, each application has its own unique user interface and login requirements.

The integrations for these disparate systems are highly complex and require significant IT resources to maintain and update. Upgrades need to be carefully synchronized to ensure a seamless flow of information. Furthermore, the ability to accommodate the rapidly growing trend toward consumerization and bring-your-own-device (BYOD) into that complex technology framework is a near impossibility.

While the best-of-breed model slowly made its way into the higher education space, the leading ERP vendors were simultaneously trying to extend their products to fill those previously-mentioned gaps. Many organizations that adopted the best-of-breed approach found it challenging to incorporate new requirements, business processes or initiatives into their web of applications. Instead, they opted to deploy a fully integrated, single source suite of applications for core functionality, with a few ancillary best-of-breed solutions for specialized needs.

According to the 2013 Survey of Chief Information Officers given by the Leadership Board for CIOs (LBCIO), 83 percent of respondents “use ERP vendor-supplied solutions today for their core administrative applications,” defined as financials, student systems, human resources and advancement. Only 13 percent use best-of-breed, homegrown, open-source or a hybrid combination. It appears that ERP has held its ground — and for good reason.

Truly effective ERP systems consist of a broad set of functional capabilities, all tightly unified for easier data sharing, reporting, navigation, maintenance and upgrades. Rather than an amalgam of acquired and afterthought functionality, the ideal system has fewer integration points to ensure consistency, flexibility, usability and ease of maintenance. The vast majority of higher education IT leaders to whom I’ve spoken say their role is (or should be) changing as they’re becoming more involved in strategic discussions around institutional effectiveness and student success. Quite simply, they don’t have time to manage disparate systems, and they’re starting to question the value of their technology investments.

To take it a step further, institutions of all types and sizes are starting to think about cloud technologies and shared services. Gartner projects software-as-a-service, or SaaS-based ERP revenues to grow from 12 percent worldwide in 2013 to 17 percent in 2017.[1] Michael Zastrocky, who led the LBCIO survey, also notes the shift: “Many CIOs are cautiously optimistic about the use of shared services and collaboration to improve life and budgets on some campuses, and movement to the cloud continues to grow, but with caution on the application side.”[2]

True cloud applications have been proven in all markets to be a more efficient and less expensive delivery model for administrative systems; there’s no hardware, software, middleware or database to buy, install or maintain. By leveraging cloud computing, organizations can realign their IT resources from the administration, maintenance and operation of applications to more strategic initiatives.

Upgrades, patches, integrations, data security, backup, disaster recovery, performance tuning — all are managed by the vendor through a subscription model.

With significant limitations in mobility, configurability and accountability, the systems of yesterday — both ERP and best-of-breed — simply aren’t meeting the needs of colleges and universities anymore. Higher education is calling out for a new solution, and most of the major ERP vendors have already started looking into how they can answer that call. In the best-case scenario, they will be able to start with a blank sheet of paper in order to address the unique contemporary needs of higher education. More likely, however, we’ll see a shift of legacy ERP to some version of the cloud.

It’s an exciting time as we watch a new self-service-based user experience unfold for students, faculty and staff.

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References

[1] Louis Columbus, “2013 ERP Market Share Update: SAP Solidifies Market Leadership,” Forbes Magazine, May 12, 2013. Accessed at http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-update-sap-solidifies-market-leadership/

[2] Michael Zastrocky, “Information Technology in Higher Education: 2013 Survey of Chief Information Officers (Executive Summary),” Leadership Board for CIOs, 2013. Accessed at http://lbcio.org/wp-content/uploads/2011/01/CHE_LBCIO2013SurveyExecutiveSummary-Final.pdf

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Readers Comments

James Branden 2014/05/07 at 10:41 am

In terms of long-term planning, I would still choose the best-of-breed approach. With an ERP, there’s the potential for functionality gaps between what your organization does and what the software allows. Those are costs that would crop up down the road.

For me, the only difference in the two approaches is whether you want to assume the costs upfront or later. If this were the case, I would choose best of breed for its ability to allow specific functionalities every time.

    Ian Hollis 2014/05/07 at 5:04 pm

    I see what you’re saying, but the cost of best-of-breed is prohibitive for many smaller-sized institutions. The key is to take a hard look at your institution and determine if the best-of-breed approach would have a significant impact on your competitive advantage. If not, choosing the less complex IT footprint with quicker integration could be wise. More likely, we’ll see what Dietz says, which is a migration of integrated ERP to some sort of cloud. If this is the direction higher ed is moving in, we could see some interesting challenges crop up on the best-of-breed side very soon.

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