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It Takes a Community

A collaborative effort led by Indiana University has nurtured the Kuali Financial System from an innovative idea into a comprehensive suite of open source administrative software for higher education.

By Anna-Louise Jackson

Fast-forward nearly five years. After thousands of hours of development, testing, and tweaking, the Kuali Financial System is slated for a March release of its third and final baseline functionality. Nearly a dozen institutions are in various stages of implementation planning. In addition, the Kuali Foundation has expanded its portfolio of enterprise software to include research and student services. Indiana University was recently awarded the 2008 NACUBO Innovation Award for its leadership in this collaborative project. In light of this award, four members of the founding partnership recall how the Kuali Financial System came to be, opening the door for future community source initiatives and redefining the word “kuali” in the process.

“A No-Brainer”

In spring 2004, a group of people met in a hotel suite in New York City to discuss the possibility of creating a comprehensive suite of open source financial software for colleges and universities. Discussion centered on a variety of “what if” scenarios, and though informal in nature, the meeting marked the first formal discussions about the Kuali Financial System.

Indiana University (IU) was at the hotel meeting; it was not the first time the university had entertained the thought of adopting a community solution for its financial system. Three years earlier, Barry Walsh, associate vice president of enterprise software, had explored the customary solutions for replacing an aging home-grown financial system, but there were concerns about purchasing a vended package. In 2001, IU had tried to organize a private consortium of Big 10 schools to come up with a solution; the project fell through but the idea did not. Now, in 2004, Walsh contacted colleagues at other institutions, and soon a better solution rose to the top.

By working with a team of other colleges and universities, IU could share the burden of developing a new financial system for the seven-campus university while creating software adaptable for the entire higher education community. Walsh calculated that the university would reallocate $2 million over three years to ramp up staffing for technical functions, compared with a multimillion-dollar vended product or significant staff investment to retool the system alone.

“It became a no-brainer,” he says.

Walsh had the support of university administrators in Bloomington, even if some were cautiously optimistic, like Kathleen McNeely, IU’s associate vice president and executive director of the office of financial management service.

“I am very much an advocate of higher education and believe institutions and individuals should contribute back to the community, so that component of the project was very appealing,” McNeely says. But, “I was a little concerned about the amount of work and the difficulty in collaborating on such a large project.”

McNeely decided the opportunity outweighed any logistical hurdles, and Walsh began to recruit colleagues at other institutions. But, he wasn’t just pulling names out of a hat. This was not the type of project that could be handled by sending an e-mail to a listserver; IU needed to trust that potential partners would be committed to the project and, in turn, potential partners needed to have faith in IU’s vision.

“These projects are done through relationships because it involves a lot of trust. You’re basically putting your institution’s strategic direction on the line, and you’re not going to do that without knowing the partners you’re going to be doing business with,” he says.

Selling the Project to Others

Stay on Course for Innovation

Pursuing innovative processes inevitably means change is not far behind. Presiding over innovation requires strong communication and collaboration skills among leaders, according to the individual recipients of the 2008 NACUBO awards. The four winners of the Distinguished Business Officer Award and the Rising Star Award weigh in on the essential leadership characteristics necessary to encourage innovation and stay on course.

The ability to communicate why innovation is necessary and how it will improve processes is essential for leaders to stave off resistance, according to Richard Spies, executive vice president for planning and senior advisor to the president at Brown University. After all, innovation cannot be accomplished alone, so some salesmanship is necessary to get staff on board. “If people don’t understand why innovation is necessary, then they resist change,” Spies says. “If they do understand, then they can get behind it and they can support it in direct and indirect ways.”

Effective communication is critical, but so are collaborative skills, according to Jose Carlos Hernandez, associate vice president and comptroller at the University of Texas at El Paso. The higher up the organizational ladder, the more responsibility a leader has to foster collaboration. “As financial leaders, we must be able to clearly communicate complex financial and administrative issues to all levels of the organization and then use this as a basis to collaborate on substantive organizational change,” he says.

To prevent a project from failing, leaders must use their visionary skills to secure buy-in from stakeholders and constituents early on, according to Debbie Adishian-Astone, associate vice president for auxiliary operations and enterprise development at California State University, Fresno.  Leaders should also know when to seize the moment.

“With certain innovative processes, you have a window of time to implement, and if your timeline extends too long, the excitement and need for the innovative process may not be as critical,” Adishian-Astone says. “Be sure you have the support at the onset from the senior administration to ensure that they also understand and support the implementation of the innovative process and recognize the benefit to the institution.”

Once approval is secured, leaders must not be afraid to push the envelope. Embracing innovation means going beyond standard policies, procedures, and institutional bureaucracy, according to David Bosserman, vice president for administration and finance at Oklahoma State University, Stillwater. “A good rule of thumb is if you can find it in an institution’s policy and procedure manual or if you have an office or person that deals with the idea or concept, you are probably not dealing with innovation but reinventing the wheel,” he says.

Leaders can enhance the chances of success by resisting the insistence to follow policies and procedures that have outlived their usefulness. “Leaders and institutions must adopt adaptation and rewards for those ideas and personnel who are willing to take the risk of challenging the status quo through innovation and creativity,” Bosserman says.

But, innovation that challenges the status quo should not be taken lightly and should not be rushed. Spies says leaders must take the time to prepare the community and revise the project as necessary, while Hernandez says it is important to keep in mind that change can be scary, especially because it often affects more areas and individuals than initially identified. Adishian-Astone says leaders should keep others in the loop by being clear about objectives and desired outcomes, maintaining a reasonable timeline, and identifying the resources required to implement the change. Above all, leaders should embrace the innovative spirit.

“Don’t be afraid to be creative and entrepreneurial—remember,we are institutions of higher learning,” Adishian-Astone notes.

McNeely knew the project would require the university’s leadership on the front end because IU brought the financial system to the table, as well as an intimate understanding of how it worked. In addition, the university had a handle on the legal and licensing issues necessary for the project to move forward.

After months of working at recruitment, Walsh says there was a tipping point when several institutions became interested in the project. The University of Hawaii was the first institution to sign up, and soon four others followed suit, including the University of Arizona.

Charlie Ingram, associate vice president of financial services at Arizona, was skeptical when he first heard about the proposal. It was hard enough to get six people on one campus to agree on something, he reasoned; how would people at institutions spread across six time zones come to a consensus?

Ingram quickly came to appreciate the value of collaborating, and he was encouraged by a NACUBO assessment that determined the system could easily be used by institutions outside of the Hoosier state. Having IU in the driver’s seat was also comforting.

“IU leadership and participation have been absolutely critical to this project, and it was a major decision factor for us to join, having such a high-quality partner,” Ingram says.

The rSmart Group, based in Phoenix, was involved in discussions about Kuali before it became a reality. Involvement in Kuali was a given because the project meshed with the company’s mission, according to Chris Coppola, founder and president. The company was founded in 2002 to support cooperative software efforts like Kuali. However, tackling a major enterprise business application carried higher stakes.

In 2004, the concept of collaborative, community-based projects was still relatively new, Coppola recalls. Without a framework to guide the process, partners needed to be flexible, tolerant, and make trade-offs to ensure success. IU’s leadership was essential, as were the partners who came onboard.

“We had the right mix of partners, and without the right mix, this project could have gone a very different way,” he says.

According to Walsh, the right timing had as much to do with who joined as anything else. The partner institutions shared a common need—to update their financial systems at the same time. By becoming part of the process, they could control the system's destiny as well as its functionality. These benefits, however, came with one caveat: Other institutions might choose to sit on the sidelines and wait for the software to become publicly available, but there would be no free rides for the partners.

Give and Take

By late 2004, an optimal number of committed partners were in place: Michigan State University, San Joaquin Delta Community College, Cornell University, and NACUBO joined IU, Hawaii, Arizona, and rSmart to round out the initial group. In early 2005, the partners applied for and were awarded a $2.5 million grant from the Andrew W. Mellon Foundation. Walsh says the grant was “absolutely critical” because it brought credibility to the partnership. The grant also made it more affordable for institutions to become founding members, especially given the alternatives.

For Ingram, the commitment required of Arizona to be part of Kuali—three full-time staff and $48,000 over a two-year period—was almost too good a deal to pass up: “That’s pretty cheap to throw your oar in the water and be a part of the founders.”

Ingram was frustrated with the limitations of vended products that were designed for purposes other than higher education, not to mention the cost. Kuali was cheaper, but also more innovative because it was to be written for higher education, by higher education.

In return, Indiana provided the technical and functional knowledge about the existing system and trained the other partners until they became knowledgeable enough to add value to the project. And, there was another incentive at the end of the road—upon completion, the partners would have developed a system they would know better than anyone else.

“There are real benefits and value propositions for the partners,” McNeely says. “The partners were developing expertise—both functional and technical—that you would never have at implementation if you bought a vended package.”

Kuali also afforded participants the opportunity to develop better internal relationships between functional and technical teams. At IU, Walsh oversees the technical team, which is made up of individuals who are generally working on the project full time. McNeely oversees the functional team, which contributes to the project on a more voluntary basis in a specific area of subject matter expertise. Despite different tasks, the teams work together almost daily.

“Collaboration between the functional and technical sides has been just as important as the collaboration across different institutions. It has been instrumental to the success of the project,” she says.

McNeely acknowledges that she was naive about differing opinions within the functional team, though she credits the partners for handling these issues in a respectful manner that led to positive outcomes. But, sometimes the outcomes did not mesh with IU’s institutional priorities.

“A lot of the compromises that have been made were functional items,” she says. “IU committed from the beginning that if we were going to do this, we had to balance our needs with the needs of the higher education community.” With this in mind, McNeely notes, “IU stuck with the logic that if it’s good for the higher education community, then it can be good for IU.”

Balancing Local Priorities With Community Needs

IU had prior experience working on other community source projects, but Kuali was still a learning process. Once IU reached out to potential partners, it was important that the project become truly collaborative and not an autocracy, according to Walsh. However, there was an egotistical battle to overcome, especially when one person believed a particular approach should be taken and the rest of the table disagreed.

When disagreements surfaced, Walsh says it was important to pause and ask: How critical is this decision? Should I wage this battle, at the risk of losing the whole war?

In addition, staff needed to step up and take on additional responsibility. McNeely and Walsh asked their staff to work harder and smarter, while collaborating with people they had never worked with before. The university was outsourcing five sixths of the cost of developing the new system at a commensurate cost savings. Trust was imperative, which was a difficult transition for some of Walsh’s technical team members.

“This was hard; this was countercultural for a lot of these people. We think we know how to do it best,” he says.

Even as IU’s leadership team was managing their staff through changes, they continued to provide leadership and guidance to the Kuali community. Getting to the point where staff embraced the cultural change is one indicator of IU’s leadership ability, according to Coppola. The university set an example for community behavior and how to balance local and community priorities in a transparent manner. He credits IU leaders with the foresight to help their teams understand why the university was making trade-offs to achieve long-term goals that would benefit other institutions.

“Balance is one of the key things that makes a project like this work. If you focus too much on local priorities and forego the community priorities, like anything else, it’s one-sided and it doesn’t work very well,” Coppola says.

Achieving this balance has been difficult, McNeely acknowledges, particularly with limited time and staff resources. But, her staff did what needed to be done, and then some—even if they thought going it alone might save time and money.

The Reality Triangle

Just like IU, the other institutional partners had limited staff resources. Managing expectations for such a large-scale project could prove to be difficult, so McNeely started using the so-called “reality triangle” in planning meetings. The idea was simple: The three sides of a triangle represent scope, time, and resources. The scope of the project grew and shrank over time, and there was some flexibility in the timeline, while resources were essentially fixed.

The triangle was used during the priority-setting process. Instead of making comparative choices, team members had to make value judgments about what could realistically be accomplished. This prevented what Walsh calls “fuzzy thinking.” In addition, the triangle was used to establish reasonable timeline expectations and identify the minimal functionality that must be included in each release.

“The reality triangle helped control functional scope, but the partners have not let the reality triangle interfere with minimal and core functionality delivered in a quality manner. That’s been our focus,” says McNeely.

From New York to Hawaii and Beyond

Staying focused was also critical given the geographic spread of the partners, which spans six time zones. Thanks to a variety of technologies—video and audio conferencing, instant messaging, and conference calls—keeping up with the founding partners has been easier than it would have been even five years ago.

“Communication was one of the most significant challenges we’ve had to overcome in developing this project and knowing how we operate as a community,” Coppola says. “The subtleties of communication and alignment of institutional cost and priorities is a complex endeavor and required a lot of face-to-face time.”

The online tools were useful for day-to-day communication but needed to be interspersed with meetings in person. Walsh wishes more in-person collaboration had been feasible, but there wasn’t enough money to support that. “Every time we brought together functional people or technical people for extended periods of time where they worked together at one institution, the results have been staggering—just fantastic,” he says.

Walsh believes that the community’s ability to overcome geographic and timing barriers speaks to the level of trust they have for one another. But, as with any other large-scale effort, there have been ups and downs. Ingram says periodic meetings helped the group to persevere and maintain momentum and morale.

In addition, participation in Kuali has beefed up Ingram’s contact list. Now, he has colleagues he can call to ask about an accounting issue, for example. “It has been a huge networking opportunity, as well, to be exposed to the way other institutions do business. There’s a lot more than just Kuali going on.”

Fostering Innovation and Collaboration

The once-skeptical Ingram has become one of Kuali’s biggest proponents, in part because the concept makes institutions more competitive and efficient. The project has also precipitated innovative changes at the Tucson campus; the university’s financial services department formed a project management team, and staff learned how to develop and market projects from the bottom up, rather than from the top down.

At Indiana, the IT department has fully embraced the changes necessary to work with colleagues around the country.

“This whole ability to collaborate is huge; we’re seeing it impacting internal projects as well as enabling us to be collaborative in other areas besides just software,” Walsh says. “The IT atmosphere has become a collaborative machine.”

That collaborative spirit will come in handy as the project evolves. In the past two years, the Kuali concept has spread to research and student services, and there is an impending human resources payroll project in the works. In the back of his mind, Walsh had thought it might be possible to expand beyond financial systems one day, but there had been no justification for anything else. Now, he says, the Kuali project has succeeded beyond his wildest dreams.

When the call for Kuali Coeus Research Administration went out, four of the existing Kuali Financial System partners signed up, including the University of Arizona. This was a significant testimony to the project’s success, according to Walsh. “For these schools to sign on for research is a huge validation of the process and the concept.”

As word spreads about community source initiatives, Coppola says the effect is exponential. These projects are well-aligned with institutional objectives, and there is a deliberate role for companies (which was lacking in prior projects). In addition, there is real cost savings. Strathmore University in Kenya adopted the system because it would not have been able to afford proprietary software. The project not only reduces the cost to each individual institution, but also reduces the amount spent in aggregate.

“We’re starting to see how these projects have a real impact on education. They are changing for the better the way the software ecosystem works in education,” Coppola says. “I think the holistic approach to making this project truly sustainable changes how software is developed and consumed in the industry.”

Coppola sees parallels to a natural ecological system, where removing just one component can cause the whole system to fall apart. Keeping this in mind, existing and future Kuali projects are designed with a lot of resilience for change.

That’s good, because a lot of change is on the way. When the third and final release of the Kuali Financial System becomes available in March, more institutions are likely to begin adopting the software. In addition, the definition of “kuali”—as it pertains to higher education—will continue to evolve as the project expands to other administrative staff.

One of the project’s biggest accomplishments is that it has broadened the options available to colleges and universities over the past five years. And, in another five years, the landscape will look even more different than it did when the seeds of Kuali first were planted.

ANNA-LOUISE JACKSON, Chicago, covers higher education business issues for Business Officer


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