The overwhelming majority of US higher education institutions are approaching a critical crossroads with their ERP platforms as deadlines near for them to begin planning for replacing their legacy finance and HCM systems.
Many are replacing these systems with SaaS products since their previous platform providers are likely to announce sunset dates for product support in the next few years—if they haven’t already. Consider that 80 percent of 3,316 US postsecondary institutions have yet to select a SaaS-architected finance or HCM platform, according to Tambellini Group’s 2023 Finance and HCM Market Share, Trends, and Leaders Report.
As technology leaders know all too well, planning for and making the switch to a new cloud-based system is a complex, disruptive, and expensive multiyear process. A successful implementation starts with selecting the best-fit system, and the stakes are high for both decision makers and the institutions they serve because of the cost and long-term impact their chosen platforms will have on operations and processes long into the future.
But the good news is that if an institution selects the right SaaS-architected finance and HCM platforms this time around, the system they choose will likely be the last one they’ll ever have to buy.
Why? Because cloud-based platforms are built to innovate. Instead of needing to be replaced wholesale, these systems can be updated to accommodate an institution’s evolving needs over time through configuration changes and each software vendor’s regular functionality additions. The leading platforms will bring the latest technology and business innovations to their customers without requiring a system upgrade.
The key to finding the ideal “forever ERP” is to evaluate potential platforms based on their functional fit and flexibility, as well as their vendor’s related commitment to innovation. Closely scrutinize prospective vendors and ask:
Tambellini’s StarCharts provide one resource for institutions to evaluate platforms based on these criteria. We’ve already published our student systems StarChartTM preview, and our finance and HCM StarCharts will be available in mid-October.
For the four out of five institutions that haven’t yet chosen cloud-architected finance and HCM platforms, their systems are likely to be at least 10 years old. Those on-premises (or hosted) platforms are customized by and for each institution and infrequently upgraded because of the significant disruptive cost, downtime, and effort required to make meaningful improvements.
Enterprise cloud-native and cloud-adapted systems work very differently, especially in the ERP realm.
Finance and HCM systems have converged around a fairly standard set of functional capabilities that are equally useful and beneficial to thousands of organizations across a variety of industries, including higher education. Standardized functionality across these two areas of core administrative systems is easier for vendors to extend to higher education because these systems don’t have to account for the same large variance in processes and operations as student systems, for instance.
Though there is some uniqueness for higher education, accounting and human resources requirements are based on a relatively consistent set of processes and measures across industries. This means that higher education can benefit from the continuous upgrades being made to enterprise cloud finance and HCM systems, which are designed to regularly deliver enhancements and new features to help improve processes in core functions and reduce complexity for their organizational users with low cost and minimal disruption.
With those advantages in mind, higher education finance and human resources leaders have changed their tune in recent years. In procurements, they are now explicitly asking for systems that are standardized and updated in alignment with higher education best practices, built on top of commercial best practices across many industries. They no longer want “something special and unique” for their institutions.
This is why it’s crucial that decision makers closely evaluate a vendor’s current and future commitment to investing in innovation. Bigger-enterprise vendors will have deeper pockets, and their research and development budgets vastly exceed those of smaller cloud providers. But at the same time, that innovation advantage comes with a bigger price tag, which may exceed the resources available to many price-sensitive institutions.
When considering affordability of a platform against the vendor’s capacity for innovation, it’s important to think long term about how much your institution will be able to leverage and support sophisticated new features that larger vendors roll out automatically and regularly. Less-complex institutions may not need numerous new tools and updates as frequently as large institutions—and shouldn’t pay a premium for them.
The higher education landscape is evolving faster than ever before, as market pressures have intensified in the post-pandemic era. With an enrollment cliff and economic uncertainty looming, institutions are using new approaches and technology tools to generate more tuition revenue, including:
All of these new strategies require core administrative systems (including finance and HCM) that are flexible and adjustable so that they can be easily reconfigured and grow to accommodate broadened definitions of enrollments, institutional mergers, and shared services combined across multiple campuses.
The systems that offer the most flexibility to meet the changing needs of higher education are going to come out on top, and the key to finding the right one for your institution is making sure it has sufficient adaptability to keep pace with how quickly your institution is evolving and innovating. Which type of vendor approach to building out their cloud ERP platforms will best suit your institution’s specific needs? Reach out to a Tambellini analyst to discuss the best path forward for evaluating your ERP options and watch our on-demand webinar, Get Ready for Your Last ERP for a deeper dive into this topic.
© Copyright 2024, The Tambellini Group. All Rights Reserved.
Higher Education Institutions
Solution Providers & Investors
Get exclusive access to higher education analysts, rich research, premium publications, and advisory services.
Weekly email featuring higher education blog articles, infographics or podcasts.