Tambellini’s Finance and HCM Insights in Higher Education

The Tambellini Group has published its 2019 U.S. Higher Education Financial Management and Human Resources Systems Market Trends Report. Be sure to check out this long-awaited annual report at your first opportunity.

Tambellini’s research and advisory services enable institutions to navigate the complex vendor landscape with unbiased data, including insights into financial management and human resources/human capital management (HR/HCM). For instance, Tambellini data shows that institutions use third-party solutions to address gaps in legacy core systems, including finance, HR/HCM/payroll, and student information systems. Additionally, vendor acquisitions and mergers of solutions have created disjointed application ecosystems that lack integration and common user interfaces. It is common for an institution to have well over 100 third-party solutions to augment the functionality of their systems of record. As cloud finance, HR/HCM/Payroll, and student solutions reach maturity, Tambellini projects that institutions will accelerate to eliminating up to one-half of their third-party applications.

Overall themes driving higher education financial management (finance) and HR/HCM procurements began to shift in 2010 when Workday announced that the company would deliver modern, cloud-based systems for finance and HR/HCM. Since 2010, top vendors with finance and HR/HCM higher education solutions have been addressing the benefits of modern cloud solutions. While each of the top vendors provides a different approach, key themes are consistent. Institutions seek modern solutions for finance and HR/HCM to provide better user experiences for constituents. These experiences include automation of tasks, a modern and consumer-like user experience, mobile access, and self-service applications.

Tambellini research also shows that in 2018, an estimated 70 percent of the institutions that selected new finance and HR/HCM solutions chose cloud deployment, which encompasses both SaaS and hosted/managed models. As modern finance and human resource systems specifically designed for cloud deployment mature and establish peer references, the number of higher education institutions evaluating finance, HR/HCM, and student alternatives is increasing significantly. An estimated 35 percent of institutions that made finance and HR/HCM systems decisions in 2018 chose modern SaaS solutions from either Oracle, Unit4, or Workday.

All of the finance and HR/HCM solutions for higher education have committed to cloud and/or SaaS delivery models. Traditional on-premises software vendors, such as Campus Management, Ellucian, Jenzabar, Kuali, Oracle, and SAP, are redirecting investments to cloud solutions. New vendor solutions, such as Oracle Cloud, Unit4 Business World for Education, and Workday, offer cloud-only deployment. The transformation from legacy finance and HR/HCM to modern cloud solutions typically follows one of three paths:

1. The majority of institutions choose to migrate selected systems, such as finance and or HR/HCM/payroll, to a modern cloud solution(s) with a near-term (36 month) goal to move student systems to the cloud as well.
2. Institutions with large research budgets (R1 institutions) tend to adopt a best-of-breed strategy with the intent to manage significant portions of the selected implementation in-house.
3. A subset of institutions chooses a single vendor approach to migrate finance, HR/HCM, and student to a modern cloud solution. Those institutions that have been the quickest to embrace modern cloud finance, HR/HCM, and student solutions are those institutions that view technology as a strategic component to carrying out the mission of the institution.

Once a decision to replace legacy applications is made, 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/HCM, 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.

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. 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 by moving finance and HR/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? Alternatively, is it related to other non-financial improvements?

Tambellini helps institutions answer key strategic questions, such as:

• Can my institution gain similar efficiencies from cloud/hosted solutions as from private cloud solutions?
• Can my institution expect the same capabilities from private cloud solutions that institutions might expect from a multi-tenant cloud?

Contact The Tambellini Group today to learn more about planning your institution’s finance/HR/HCM/student system replacement project and to gain access to our newest report series on finance and HR/HCM market trends, to publish throughout May 2019.

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