Going for the Bold
The collaborative community set its sights high: developing open source administrative software for higher education. Four institutions have now made Kuali Financial System modules a reality and are exploring this new environment.
By Anna-Louise Jackson
In July 1969, Neil Armstrong stepped into history when he became the first person to set foot on the moon and utter his now-famous line about the landing: “That's one small step for man; one giant leap for mankind.” Armstrong's words also reflected the prodigious effort leading up to this first moon walk. For eight years, NASA worked tirelessly to accomplish President Kennedy's ambitious goal of sending Americans to the moon by the end of the decade.
Though few projects can compare with Apollo 11's mission, any large undertaking requires extensive planning, development, and testing. In higher education, a collaborative project is taking flight after years of development. In 2004 a small group of institutions and a commercial company set out to develop a comprehensive suite of open source financial software. Nearly six years later, the Kuali Financial System (KFS) has landed at campuses. Four institutions have successfully launched KFS, several more are queuing up in anticipation, and the community is in full swing.
Ready for Launch
The impetus for the Kuali Financial System came from Indiana University (IU), which needed to replace its aging financial information system. Instead of developing software alone, administrators led an initiative to create open source financial software that would benefit IU and other interested institutions. As the community took shape in 2005, it decided to base the software on IU's existing system. Not surprisingly, IU was the first to implement several components of KFS—the General Ledger and the Labor Ledger—in February 2009, marking the first phase of its plan to implement full functionality by 2011. The General Ledger, along with the Chart of Accounts, represents the core of the Kuali Financial System; IU was able to do without the Chart of Accounts module initially because KFS is based on the IU data system.
IU was recognized for its leadership in developing Kuali with the 2008 NACUBO Innovation Award and remains a leader in KFS and the broader Kuali Foundation. But another institution became the first to implement the fully-functioning KFS 3.0.
Colorado State University (CSU), Fort Collins, did not set out to earn this distinction. Rather, it did so out of necessity. In 2006 the university's board of governors mandated that CSU update its aging financial system by July 1, 2009. This mandate provided a short window for a very big change. CSU was not among the initial partners of the original Kuali project, but a team of technical and functional leaders soon identified KFS as an option.
First, Colorado State needed to determine whether KFS was a viable solution. Working with rSmart, a founding Kuali Commercial Affiliate, CSU converted its chart of accounts to KFS using Kualifier, a package of software and services rSmart developed that enables an institution to test KFS compatibility with its data. The software's applicability was proven in three or four months to the satisfaction of the college and departmental business officers and high-level administration, according to Patrick Burns, vice president for information technology.
KFS seemed to be a good fit for Colorado State and key stakeholders were on board, so the executive team sent a coalition of both technical and functional experts to a 2007 Kuali Days conference to learn more. That's where the deal was sealed, Burns says. The coalition listened to Brad Wheeler of IU, one of Kuali's visionaries and recent chair of the Kuali Foundation Board, describe the benefits of community source software. “You can't listen to Brad and not come away feeling inspired,” Burns says. “He really sold Kuali for Colorado State.” When the coalition returned to Fort Collins, the vote by the 24-person evaluation committee was unanimous: CSU would implement KFS to meet the board's mandate.
After selecting Kuali, Colorado State had approximately 18 months to prepare for implementation. But a major obstacle stood in the way: The Kuali community was still working on the final set of modules for KFS version 3.0, scheduled for release Oct. 30, 2009—four months past CSU's deadline.
CSU ultimately met the board's deadline and overhauled its 19-year old financial system. To accomplish this, employees dug deep. The university does not dedicate people to specific projects, Burns says, so staff did their “day job” (running the old system), in addition to their “night job” (implementing the new system). Only one technical manager was wholly dedicated to Kuali, and the institution's full-time IT staff put in extra time to make the launch a reality.
In the process, Colorado State reviewed its business practices and how they would work in the new KFS environment. Minimal changes were required, because KFS could be configured to support CSU's specific practices. Many implementation choices were table-driven and CSU could fill in the particular values and choices that applied. For example, the KFS Chart of Accounts uses a simple, flexible coding structure with additional account information stored as attributes, which can be used for reporting. CSU staff found it was fairly easy to map its legacy chart and data elements into KFS, with some modifications. They also timed implementation with the start of the fiscal year, which “allowed us time to address issues before we needed to report on data in the system,” says Burns.
Five weeks prior to the launch date, CSU froze the code for the prerelease version of KFS. With much assistance from the Kuali community, which temporarily suspended development, CSU then made any necessary modifications to the software and tested it for performance. On July 1, CSU went live with the prerelease version of KFS. The university launched all available modules except Labor Ledger and Effort Certification—modules already available in its human resource system—but it will implement those by the end of the fiscal year. In February, CSU will transition to the final KFS 3.0 version.
San Joaquin Delta College, a community college in Stockton, California, also went live July 1 after nearly a year of research and development. The campus initially launched KFS in its capital outlay fund, which administrators selected because the fund's chart of accounts is small, has only six authorized users, and provided a manageable opportunity to test the system. San Joaquin also went live on a beta version of KFS 3.0 with frozen code. After a successful initial launch, programmers performed testing scripts to ensure the code was stable for full implementation. In addition, San Joaquin hired rSmart to help with back-end programming and to supplement campus resources.
Jon Stephens, vice president of business services, estimates the campuswide effort was approximately 10,000 working hours, including an extensive training program. San Joaquin was aggressive with implementation, but the final push—between the release of KFS 3.0 on October 30 and the December 18 launch date—meant “training and testing got stacked on top of each other,” says Stephens.
To accomplish the compressed implementation, Stephens says many staff worked overtime and on weekends, while temporary workers were hired to backfill for accounting staff who were testing and training in the new software. Among necessary tasks were migrating the previous system's chart of accounts to the new KFS chart, writing test scripts, and writing user documentation. Core, secondary, and tertiary users all required training.
Then, mere weeks before the final software version was released, another institution jumped into the fray. Naval Postgraduate School (NPS), Monterey, California, went live Oct. 1, 2009, with several modules of KFS on its internal financial system—including Accounts Receivable, Capital Assets, and Post-Grant Research Administration—in line with the start of its fiscal year. As a federal entity run by the U.S. Navy, the university must maintain and use the Department of Defense's accounting system for external reporting. However, KFS provided the granularity, specificity, and user-friendly interface needed for internal reporting and benchmarking efforts, says Tom Halwachs, director of financial systems. NPS launched the same beta version used by Colorado State and San Joaquin Delta and also hired rSmart for the implementation process. In the spring, NPS will transition to the final version of KFS 3.0 and add additional KFS modules, Budget Construction and Labor Ledger.
Like CSU, NPS faced an aggressive implementation timeline: 15 months. Administrators decided to launch KFS and keep their legacy system live for one year, providing an opportunity for the university to socialize the change on campus. But as a result, staff must enter data as many as three times—once in KFS, once in the old system, and once in the military system. NPS was already accustomed to dual entry under its old financial system, so this has not been as much of a hassle as it may seem, Halwachs says, and ensuring everyone is comfortable with a big change is important. “Anytime you put in new administrative systems, you have to go through a fairly detailed set of rationalizations for end users,” Halwachs says. Launching KFS in tandem with the old system provided a comfort zone for the comptroller and others on campus. The campus staff looks forward to fully transitioning to KFS next fall.
New Era for Higher Education
The initial implementation successes at Colorado State, San Joaquin Delta, and NPS are affirming to the Kuali community and provide external validation, says Jennifer Foutty, executive director of the Kuali Foundation. Indiana University completed its fiscal year-end processing, closed its books using KFS General Ledger, and was audited without issue. Meanwhile, CSU has submitted quarterly reports that have been approved by the state. This demonstrates that the software meets certain auditable criteria as set forth by the community. “That was job No. 1 for people in Kuali, to make sure that type of criteria was inherent in the software,” she says.
The University of California, Davis (UC Davis) already has a taste of what KFS implementation will be like. When Colorado State was in the midst of implementing KFS, a UC Davis programmer went to Fort Collins for a week to assist with implementation, while other staff assisted from afar. This experience will be helpful as the university approaches the first phase of implementation, scheduled to go live July 1, 2010. In this phase, it will implement Chart of Accounts as well as Contracts and Grants, followed by Financial Transactions/General Ledger, and Labor Ledger in the second phase, to launch July 1, 2011. In the final phase, to launch July 1, 2012, it will add Purchasing/Accounts Payable, Capital Assets, and Accounts Receivable.
In light of California's budget constraints, a phased approach lessens financial strains and resource disruption on campus. “It allows us to spread our limited resources over a longer time period to deal with the implementation,” says Michael Allred, associate vice chancellor of finance and controller.
Similarly, Cornell University in Ithaca, New York, is phasing in the work related to KFS implementation, to go live in July 2011. Project Director Kim Yeoh, assistant controller, calls this a “quasi big-bang” approach, which is based on the overall integration of the KFS modules, the age and lack of integration of Cornell's current systems, and the significant number of interfaces that must be remediated. The university plans to go live with all modules of KFS, including the Endowment Management module, not yet released. In July 2012, Cornell will add the Budget Construction and Accounts Receivable modules.
From a functional perspective, Yeoh says, the university needs a system that can more easily provide the information required by financial managers, principal investigators, executives, and other decision makers. “Implementing a new financial system provides the opportunity to redefine the financial structures and processes in a way that meets the needs of these various constituents at the university,” she says.
The University of Hawaii (UH) plans to launch KFS for all 10 accredited campuses in the state system on either July 1, 2011, or July 1, 2012, depending upon how the university chooses to incur costs of implementation. Administrators at Hawaii—the first institution to sign up as a partner in the Kuali community—have been tracking KFS implementation at Colorado State, the Naval Postgraduate School, and San Joaquin Delta.
“Implementation of any enterprise information system has its issues and pain points, but the initial KFS implementations seem to be doing extremely well, relative to other choices,” says David Lassner, UH vice president for information technology and chief information officer. “That's very heartening to those of us who are behind them.”
Finally, Michigan State University is gearing up to go live next January. Unlike the other institutions, Michigan State will implement KFS on Jan. 1, 2011, which does not align with its fiscal year but does mesh with the university's implementation of a new human resource system and start of the payroll cycle. Campus leaders recognized pros and cons of a mid-fiscal year implementation, says Bruce Alexander, director of enterprise business systems projects, ultimately deciding there was insufficient time to prepare for a July 2010 launch.
The university conservatively estimates potential cost savings from implementation because Kuali requires the same type of planning as any other system, though the software costs are less than a vended option. Alexander anticipates higher-quality implementation because staff has a deeper understanding of the functional and technical aspects of KFS. “The fit is so good that it saves a large material effort,” Alexander says.
The University of Arizona also has KFS on the horizon and is planning a go-live date between July and October 2010. “We did not evaluate vended solutions or their costs when we decided to use KFS,” says Kymber Horn, Arizona's financial system implementation director for Kuali. “We were a development partner and understood that the delivered higher ed functionality and workflow exceeded what we could reasonably expect to get from a vended package.” The university has completed collaborative implementation projects with CSU, NPS, the University of Hawaii, and rSmart.
Transitioning to Kuali provides a variety of benefits, including workflow capability, a Web-based system and a user-friendly interface. Institutions preparing for KFS implementation are eyeing these and other community source system benefits:
At Hawaii, KFS will replace an older mainframe-based system that the university has been operating on its own since the vendor abandoned it more than a decade ago. “Not surprisingly, a system written in the early 1990s does not do everything we want today,” Lassner says. “Moving to a totally Web-based system will be a big win, particularly for people who don't understand the old system.” In addition, KFS will improve financial transaction processing and reporting, and will integrate budgeting, financial management, and workflow functionality.
At UC Davis, the Labor Ledger module will transition the university to a composite benefit rate model, making life simpler on campus, according to Allred. In addition, moving from a “clunky” financial system implemented in the mid-1990s to a fully Web-based system will provide cost savings and improve user functionality.
For Michigan State, the system's robust workflow and integration capabilities were particularly appealing. “The workflow requirements in higher education can be quite complex,” says Alexander. “Kuali seems to have successfully navigated these waters, and much of the required functionality can be configured by users within the system.”
For Cornell, the prospect of transitioning to a 21st-century financial system is very exciting. The KFS implementation will allow the university to retire its decades-old mainframe system, reducing maintenance costs and risk, says Yeoh. In addition, KFS will improve financial transaction processing, provide better financial data for decision making, and offer more effective and efficient reporting tools.
Not the least of the benefits of Kuali is the cost savings. At the time its board of governors authorized CSU to move forward with Kuali, the cost to purchase an off-the-shelf financial system was projected at $5 million to $7 million or more, without the full functionality the institution needed. In contrast, the total cost of the Kuali Financial System and its implementation was less than $2 million, says Burns.
At San Joaquin Delta, staff estimate that KFS cost less than half of proprietary systems under consideration, and about $1 million more than it would have cost to upgrade the existing older system that was not meeting their needs.
Lessons in Collaboration
“Whenever you want help, you just send an e-mail out and you get the whole community jumping in to help you."
Patrick Burns, Colorado State University
For early implementers, support from the Kuali community has been pivotal to success. Colorado State has experience implementing large administrative systems—KFS marked the third in seven years—but Kuali offers a feature that is unique for IT endeavors. Community support is a big strength of the system, Burns says, and that became evident when someone on campus found a serious performance issue with the software and sent an e-mail to the Kuali listserver that evening. Within hours, other institutions had weighed in with possible solutions and the eventual solution was identified the next day. “It was just amazing. Whenever you want help, you just send an e-mail out and you get the whole community jumping in to help you,” Burns says.
Community source efforts encourage collaboration at a variety of levels. Michigan State and UC Davis are collaborating to create a module for storehouse inventory and ordering functionality, dubbed Kuali Stores. “We learned enough about how to collaborate during the Kuali process to make this possible,” says Alexander. In addition, UC Davis is also working with UC Irvine to assist with planning that campus's implementation strategy.
For Cornell, KFS is the largest Java project the university has undertaken, and securing the necessary financial and staff resources is considerable. Contributing developers to the Kuali development projects has helped to mitigate the technical risk, because developers come back to campus with in-depth knowledge of the Kuali technology. In addition, on-campus support has helped make the transition a reality. “We are fortunate to have strong support for this effort, not only at the grassroots level, but also from university executives and trustees,” Yeoh says.
Community support also helps to get staff enthused about the new software. Allison Dineen, then Colorado State's vice president for finance, became a convert to community source. She was frustrated after years of using systems not designed for the complexities of higher education. “When you finally realize that there's a system that works with you and works with your business processes, it generates a lot of excitement because it's not something we felt has been available to us up until now,” Dineen says. This has manifested in a culture of collaboration among central administration and campus constituencies at CSU. Administrators want to ensure that they maintain and leverage this collaboration in other ways not directly related to KFS.
Similarly, KFS has created synergy at San Joaquin Delta that transcends the software itself, resulting in spontaneous potlucks and study sessions. “We've seen a lot of camaraderie, with people wanting to have the system installed well,” Stephens says. In addition, KFS has helped to forge new relationships and bridge gaps on campus. The college's department of finance is located just off campus, but Stephens says it may as well be 10 miles away. “Kuali has forced us to get together in a very good way and people are excited about new relationships.”
Cross-campus collaboration is also the strategy Michigan State University is employing with a small group of staff referred to as “at-your-side consulting” (AYSC). These are functional experts already familiar with the new systems and processes who meet with various MSU colleges and departments to help them understand what the new systems can do and how to migrate their current processes and practices to the new environment. Thus, the business impact on the controller's office and user community is minimized through vigorous change management and communication efforts. According to Vincent Schimizzi, assistant controller and MSU functional project lead for Kuali, other institutions preparing to implement or considering implementation could leverage the AYSC technique as well as the strong and sustained community behind KFS.
Giving back is essential to the community source model, through support and technical innovations. Kevin Little, comptroller at Naval Postgraduate, is happy to provide the type of support to others that his campus received during implementation. At the most recent Kuali Days in November, implementers fielded numerous questions about the logistics of implementation from both functional and technical working groups. These questions quickly turn to the future. “What was important within those groups was not only looking at our processes from how do we things now, but how do we want to do things in the future,” Little says. “We are very much looking forward to continuing the advancement of the product and the community.”
The Kuali community offers a menu of resources for business office users, from frequently asked questions to mailing lists and listservers for specific topics. User guides and other documentation may be downloaded from the Kuali Web site.
Plans for the Future
Sustainability is vital to keep institutions engaged in Kuali and ensure ongoing community support. Foutty says community source skeptics perceive a lack of support after implementation, but ongoing support has been built into the Kuali model, including: code and release support, documentation, technical and functional assistance via e-mail lists, regular meetings, webinars, and on-campus support from commercial affiliates. These measures ensure institutions don't go it alone. “I think we've shown that the community support model can be highly effective, with specific examples from CSU's implementation,” Foutty says.
The community's model of sustainability was attractive to San Joaquin Delta, says Stephens. “There are reasons to enter an open source community other than just financial,” he says. “Resources on the community level are far beyond what one college or university could muster.” Similarly, Dineen and Burns were impressed by the partners collaborating in the effort, resources committed to the project, and the community delivering on its promise to release KFS version 3.0 on time.
The Kuali community recently tackled sustainment head-on. In the past year, KFS partners defined a charter of how the community will sustain itself and what type of activities it will engage in, including corrections, enhancements, regulatory changes, compliance issues, and FASB/GASB standards. Ten institutions signed on as sustaining partners, dedicating approximately $1.3 million per year for three years. “We feel that's incredibly solid,” Foutty says, though the community intends to add additional institutions to the mix.
There's more new software on the way, as well. A group of leading academic research libraries will partner to develop the Kuali Open Library Environment (OLE, pronounced “oh-LAY”) project, an initiative that will pioneer capabilities for libraries to manage their increasingly digital resources and collections. Beyond that are plans for a disaster planning system called Kuali Ready.
The good news is that institutions value continued investment in Kuali, even in the face of budget constraints. Hawaii was among the first institutions to sign on as a sustaining partner. “Like most institutions, we're undergoing a severe budget strain,” Lassner says. “But we're confident we'll get value by continuing to participate at an active level, and our executive committee unanimously supported the sustaining investment.”
The Kuali mission is in full throttle now. As the community evolves, it will chart new territory for delivering open source solutions applicable to higher education institutions.
ANNA-LOUISE JACKSON, Chicago, covers higher education business issues for Business Officer.