Administrative System Customizations: A Hidden (and Avoidable) Cost of ERPs
The 2011 survey of college and university presidents conducted by Kenneth C. Green, founder of the Campus Computing Project, and Inside Higher Education found that fewer than half of college presidents reported that institutional investments in their administrative systems were “very effective.” In the 2014 Campus Computing Survey, Green reports that “data suggest that CIOs and senior campus IT officers assess the effectiveness of IT investments at their institutions and ‘okay to good,’ but not great.”
These results should not be surprising. In 2002, Bill Graves, senior vice president at Ellucian, spoke at Seton Hall University and reported that boards, presidents and provosts frequently expressed dissatisfaction with the return on investment in Information Technology. His response to them was blunt: “It’s your own fault!” Graves noted that college and university IT departments were constantly being asked to support more systems and services without the option of eliminating older software or systems.
Why are higher education leaders not viewing their Enterprise Resource Planning (ERP) systems and the data therein as strategic assets to their institutions? Why aren’t more of these expensive systems enabling business processes that reduce the friction that many students and faculty perceive in administrative processes? Why aren’t more delivering the kind of academic and financial analytics that executives say are needed for the effective management of their campus? Why do many financial officers view the campus ERP as a budget hole? Often the answer lies with decisions made during the ERP implementation, especially decisions to modify the baseline ERP system to adapt it to campus processes rather than using the baseline system as delivered and adapting campus processes to the “best practices” built into most current ERP systems.
Modifications to the campus ERP system represent a hidden cost to the institution. Michael Phillips of the Huron Consulting Group notes that most colleges and universities do not have a solid understanding of how many modifications they’ve made to their ERP system and how much the development and maintenance of those modifications cost. As a result, many institutions underestimate the cost of making and maintaining modifications to their baseline ERP systems. College and university leaders need to ask how much each modification to their system is going to cost and to carefully consider the business case for each proposed modification. In some cases, the operational efficiencies planned for modifications aren’t resulting in net savings for the institution. They are just shifting operational costs from the functional area to IT. A modification that saves an academic or business unit a few hours a week may sound attractive to the functional area, but if it results in a few hours a month of additional work for IT, the net benefit to the campus may be small, especially if the IT cost is consuming the time of relatively expensive programming staff.
In addition to the direct cost to the institution of developing and maintaining its own code, colleges and universities that modify their ERPs can lose opportunities to streamline and standardize their business processes and data and to collaborate with other institutions to develop mutual support of standard business processes. Brian D. Voss, EDUCAUSE Presidential Fellow, notes that with modifications “our common challenges end up not being solved by the same solutions. … We frequently shrug off common solutions because they just don’t fit our ‘specialness.’ … When it comes to administrative systems, we should be asking: ‘Are we all really special snowflakes.’” There are other unseen costs to modifications. As one example, many institutions receive a flurry of tax and financial aid updates from their ERP vendor in December and January, with pressing business needs to get those updates installed in test, tested, and moved into production. Re-applying campus modifications is often the most time consuming part of this recurring upgrade cycle, but one that can be invisible to academic and business leaders.
Recognizing these issues, NACUBO and EDUCAUSE convened a joint working group in 2013 to determine how colleges and universities can increase the value of their ERP systems. The final report noted that, “while such services and systems are critical to effective institutional leadership and management, they do not function as market differentiators.” The report goes on to say “Institutional customization of what should be ‘industry standard’ practices often frustrates efforts to achieve cost effective administrative services and systems.” The strong recommendation of the working group was that colleges and universities should strictly limit the number of modifications to their ERP systems. They suggest that investing in business process redesign (BPR), business intelligence (BI) and analytics offers a much better prospect for colleges and universities than spending their limited funds on modifications to their ERP systems. The NACUBO/EDUCAUSE working group recognizes the challenges these recommendations present to the CIO. Such efforts require “sustained commitment and active involvement by the full leadership team. The CIO alone cannot drive such efforts.”
Fortunately, ERP vendors are developing the next generation of administrative systems that will be more configurable than most current higher education systems. Vendors are actively working to create systems that are highly configurable—not customizable—and introducing mechanisms that support (and even encourage!) more integration of other systems and tools into the main ERP. Longer term, all ERP providers are moving to a Software-as-a-Service (SaaS) architecture and business model. Some have already made this switch. This represents a radical shift in how colleges and universities will manage their administrative systems and services that will require campuses to confront their current reliance on system modifications to support their business.
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 Green, K. C., Jaschik, S., and Lederman, D. Presidential Perspectives: The 2011 Inside Higher Ed Survey of College and University Presidents. Inside Higher Ed, 2011.
 Green, K.C. The 2014 National Survey of Information technology in U.S. Higher Education. Campus Computing Project, October 2014.
 Graves, William H., Presentation to the Strategic Planning Roundtable, Seton Hall University, March 3, 2003.
 Phillips, Michael K., Presentations to the Seton Hall University Workforce Planning Task Force, April 30, 2010.
 Voss, Brian D., Special Snowflakes? EDUCAUSE Blogs, September 6, 2013. http://www.educause.edu/blogs/bdvoss/special-snowflakes
 The Final Report of the NACUBO/EDUCAUSE Working Group on Administrative Services and Systems, February 2014, NACUBO and EDUCAUSE
Author Perspective: Administrator