As many of you know, Tambellini has been tracking all student system vendors selling into higher education across North America (and, more recently, globally) for over 20 years. In April, for the 15th consecutive year, we released our 2023 Student Systems US Higher Education Market Share, Trends, and Leaders Report, which provides a detailed view of the US student systems market, including 2022 student system selections across institution size and sector, student system modernization trends, historical purchasing trends, and much more.
In 2022, higher education student selections decreased by 25 percent as compared to 2021. We attribute this drop to three large system selections in 2021 that significantly increased the selection numbers. However, 2022 selections still outpaced the number of student selections in each of the preceding years from 2016 to 2020, and we know of system-level activity in the market that is likely to drive numbers back up in 2023. As SaaS-architected student platforms are released and gain maturity, institutions are making an increased number of selections to replace aging systems.
In examining the modernization of student systems from 2010 to present, our research shows slow but steady cloud modernization, with the predominant deployment method for new selections shifting from cloud hosted to SaaS-architected. Overall, the adoption of SaaS-architected student platforms lags the adoption of finance and HCM significantly, except in the private, not-for-profit sector, where full-platform adoption tends to be the norm. This disparity is most prevalent in larger institutions and generally decreases with size, which makes sense given the lack of mature modern systems that are aligned with large institutions and their complex needs and the large size, scope, and cost of such implementations in larger institutions.
Tambellini research shows that more than 84 percent of the US higher education student market has not yet selected a SaaS-architected student solution. For these institutions, their most recently selected student solutions (counted over the last 20 years) are deployed either on premises or via hosted/managed services. A number of these institutions are in varying stages of planning and preparing for student system replacements, recognizing that vendors will not support on-premises platforms indefinitely once relevant SaaS-architected student solutions are feature rich and functionally and operationally mature. Many institutions are focusing on shorter-term goals related to student success and student analytics, typically relying on third-party products and services and deepening data analytics operations to meet institutional recruitment, retention, and student well-being goals. Many find that their current core student platforms and the limited agility they offer are obstacles to achieving these goals.
Workforce constraints and the volatile economic and political climate in higher education are having an adverse effect on modernization projects of all types and sizes. Institutions are not only experiencing unprecedented staffing shortages due to recent large-scale retirements and outside competition, but they are also challenged with budget pressures stemming from an increasingly more competitive student enrollment landscape, shrinking student populations, and challenging global economic conditions. These challenges are problematic for institutions that seek to move to modern SaaS-architected student platforms.
As SaaS-architected student solutions expand and mature, more institutions will modernize their student, finance, and HCM systems, especially those institutions that have noticeable gaps or significant technical debt in their current systems that are impeding progress toward meeting student outcomes and the institution’s strategic goals. The scarcity of viable student offerings and the associated costs have deterred many institutions, who are taking the a “do nothing” or “wait and see” approach to modernization. However, several vendors are bringing new SaaS-architected student systems to market in 2023, and as modern student options expand to support multiple price points and mature functionally, Tambellini predicts that the number of selections will increase significantly. Tambellini advises all institutions to begin the planning process for cloud modernization, even if it is several years away. There is a significant benefit to institutions in beginning the planning and preparatory steps for such a large transformation.
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