One of the questions higher education institutions most often ask Tambellini is “how much will it cost to move our legacy finance, HR, payroll, and student systems to the cloud?”
If your institution is struggling to estimate what it might cost to migrate from legacy finance, HR, payroll and SIS solutions to a modern, cloud solution, you are in good company. Hundreds of institutions are planning to migrate on-premises administrative solutions to the cloud over the next several years.
When clients ask Tambellini to provide budgetary estimates for cloud implementations, analysts spend considerable time gathering critical information. And even with the best information, assumptions have to be made.
Estimating budgetary requirements to replace legacy finance, HR, payroll, and student systems is a difficult task when institutions begin thinking about new, modern cloud or Software as a Service (SaaS) solutions. Costs such as annual recurring subscription fees and implementation expenses are commonly recognized as items to consider in a budgetary estimate.
And while annual recurring subscription fees may be significant, the cost to implement and operate a new finance, HR, payroll, and student system in higher education includes expense categories that are easy to overlook in the planning process.
Estimating the cost of a system replacement is complex, and when moving to a cloud system, some of those costs are different from previous on-premises implementations institutions may have performed. Often, vendors provide incomplete cost estimates and fail to include critical information even for their solutions. For example, it is common to see budgetary allocations for SaaS solutions with minimal or no training considerations for project teams and end users. It is also common for institutions to overlook or undersize a budget for change management.
Institutions need to consider the answers to many questions to estimate budget requirements to replace legacy solutions. The experience of any given institution will vary depending on many factors. A partial list of questions to consider is listed below to offer institutions an idea of the complexity of developing budgetary estimates.
The options for creating estimates are varied. There are also just as many questions to ask about ongoing operational costs of maintaining the new solution, which we may cover in a later Top of Mind blog.
Vendors offering new, modern, cloud solutions have a single goal in mind. The goal of vendors is to sell institutions multi-year agreements for software and services.
The burden to understand the total cost of implementation, support, operating costs, etc., falls to the institution.
Also, consider the cost of implementing and maintaining cloud solutions compared to running on-premises solutions. Regardless of the provider, institutions may gain efficiencies, and a potential return on investment (according to experts) by moving finance and HCM/payroll to the cloud. Be clear about your institution’s rationale for moving to the cloud—is it savings in IT, the business areas, the colleges, and departments? Or is it related to other non-financial improvements?
For higher education institutions, operational efficiencies related to cloud deployment are generally not seen as reasons to move to the cloud.
There is a myriad of complexities involved in setting institutional strategy to move to the cloud, above and beyond financial considerations. For example, Tambellini research indicates that institutions are interested in clarification around definitions relating to cloud and cloud versus hosted solutions. It can be confusing to consider the difference between Amazon (AWS) and Microsoft based systems (Azure).
Can institutions gain similar efficiencies from cloud/hosted solutions as from private cloud solutions? Can institutions expect the same capabilities from private cloud solutions that institutions might expect from a multi-tenant cloud?
Institutions care about risks and outcomes, but may not understand the benefits or risks of multi-tenant versus single-tenant implementations of cloud solutions. The distinctions are critical to the outcomes, flexibility, and operations after the implementation, plus the institution’s budget.
Contact The Tambellini Group today to schedule an analyst call to learn more about planning your institution’s HR/Finance/Student replacement project.
You may also want to read Tambellini’s research on the SIS and ERP market, which can be found here.
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