Serving Education and Training Markets Since 2006

The New Face of ERP – Part I

Enterprise applications come out of the back office to manage everything from business operations to student lifecycle relations.

By Joseph C. Panettieri

When it comes to Enterprise Resource Planning one size does not fit all.

Just ask John Southard, chief technology officer for New York Law School.

Southard’s team manages a “quasi best-of-breed” mix of enterprise resource planning (ERP) and constituent (or customer) relationship management (CRM) systems across the university. The solution includes SunGard’s SCT Banner for ERP; Admit-M software from the Law School Admission Council; and Blackbaud’s Raiser’s Edge software for alumni development.

Never one to rest on its laurels, NYLS also is investigating end-to-end hosted SunGard solutions from Drexel University (Pa.), which offers such services to other colleges, according to Southard.

NYLS isn’t alone. Highered institutions across the globe are rethinking their ERP and CRM investments with a new goal in mind: total financial management coupled with total student relationship management from recruitment and enrollment, through retention, graduation, and even alumni giving.

The journey to this potential nirvana won’t be easy. Like NYLS, most colleges and universities have a mix of ERP, CRM, and financial systems running across mainframes, Unix, Windows NT, and more recent architectures. Ripping and replacing these multimillion-dollar investments that took decades to design isn’t an option. “On the one hand, universities want to simplify their back-end systems,” says Ed Golod, president of Revenue Accelerators, a consulting firm in New York. “But on the other, they don’t want to do anything that puts their current operations at risk.” The best chance for real change frequently occurs when CIOs at institutions of highered reach out to their CFOs. “You can save money or drive revenue higher with a new enterprise system,” Golod adds. “And that’s the discussion CIOs have to have with their CFOs.”

Ultimately, IHEs can gain economies of scale by standardizing on fewer, more powerful ERP and CRM systems, Golod asserts. “It’s like buying in bulk from a wholesale warehouse, only you’re not saving a few dollars here and there. You’re talking about annual savings that can exceed $100,000 through reduced licensing fees and better automation.”

With hosted applications, some IHEs face cultural pushback from trustees and privacy advocates who worry that remotely hosted data can be lost or stolen.

Skeptical? Consider the situation at the University of Houston. A new hosted CRM system from RightNow Technologies saves roughly $1 million annually, confirms a spokeswoman. Instead of a huge up-front licensing fee, RightNow gets a monthly subscription fee for the hosted service. The system automates communications between students and the university, reducing labor expenses related to retention, enrollment, and other key activities.

Comparatively speaking, RightNow is a relatively small player in the crowded enterprise software market. At first glance, the ERP and CRM industries are rapidly consolidating around two major forces: Oracle and SAP AG, the two largest independent application providers. A closer look reveals dozens of options.

Not sure where to start? First, keep four key enterprise software categories in mind: the traditional approach, hosted applications, open-source industry applications, and homegrown open-source applications. Here’s a closer look at the pros and cons of each path.

The Traditional ERP Approach

For many IHEs, traditional server-based applications provide scalable, reliable, predictable environments. But a little change can do a lot of good. Applications from a decade ago required expensive RISC (reducedinstruction set computing) processors and Unix software. In stark contrast, today’s applications can run on lower-cost servers designed on processors from Intel and Advanced Micro Devices.

The net result? Server hardware running Windows or Linux delivers at least 10 times the power at one-

tenth the price of RISC hardware running Unix from a decade ago, estimates Golod.

writing its own applications, but Oracle has been busy acquiring third-party applications for the past five years or so. As Oracle swallowed PeopleSoft, Siebel Systems, and the JD Edwards software lines (to name a few), some IHEs feared Oracle would suffer from a severe case of indigestion. Customer churn, employee turnover, and product overlap were potential concerns during the acquisitions, concedes Jim McGlothlin, vice president of higher education at Oracle. “But I think our track record proves we addressed those concerns rather effectively.”

That’s for sure. For the most part, Oracle has clearly communicated its software strategies to higher ed and other vertical markets. Short term, Oracle continues to position its PeopleSoft solutions as its best-in-class option for universities. That’s not to say IHEs running Oracle’s own homegrown software have been left in the lurch; development on that code base continues. Longer term, Oracle will meld its original higher ed software with PeopleSoft’s code in a project known as Oracle Fusion.

The strategy has earned largely positive feedback from the Higher Education User Group, a major organization representing Oracle and PeopleSoft customers across the higher education landscape.

Southern Illinois University, for instance, completed a migration to Oracle E-Business Suite version 11i this past fall. The deployment spans accounts payable, cash management, fixed assets, general ledger HR, payroll, and purchasing. “We did the upgrade with internal staff because we had the in-house talent and clear understanding of Oracle’s strategy,” says Frank Scobby, director of administrative information services at SIU, an HEUG member. The university now has a clear long-term investment protection because Oracle is developing migration roadmaps to Oracle Fusion.

Brandeis University (Mass.) also has a clear path to Oracle Fusion. But in this case, the university’s journey will start from the PeopleSoft code base. In April 2006, Brandeis deployed the latest version of

  • PeopleSoft’s Human Capital Management (HCM) to
  • Still, the traditional applications market is undergoing
  • manage HR, payroll, base benefits, position
  • some monumental changes. SAP focuses mostly on
  • management, and time and labor functions, according to Jason Alan Masciantoni, a staff member for library and technology services.

Yet these traditional applications typically require deep pockets for service and support contracts that can easily cost $100,000 or more per year. Plus, not all colleges and universities are clearly situated in the Oracle or PeopleSoft camps. Many institutions NYLS, for one have a hodgepodge of student and financial systems, and they are exploring hosted applications to simplify their IT infrastructures.

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