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More than a decade ago, a handful of institutions embarked on a venture with a playbook that called for efficiencies based on mission-critical systems built by and for higher education. The collaborative, open source, modular approach has gained popularity and scored numerous benefits.

By Jennifer Foutty

While it is often said that there is nothing new under the sun, to many, the arrival of cloud computing for essential administrative systems seems to counter that wisdom voiced by King Solomon a few millennia ago. The full quote, however, begins with, "What has been will be again, what has been done will be done again"—and that phrasing may help us best understand this seemingly new information technology (IT) era.

Today, cloud computing is the latest incarnation of the computing service bureaus of the 1970s and 1980s, and now, as then, it proffers savings, increases speed of delivery, and simplifies the executive agenda. Pay a modest fee. Get an awesome outcome.

Yet, if we have learned anything over the past few decades of big administrative systems, it is that they are essential, extremely difficult to customize, and can consume far more dollars than expected—potentially diminishing investment in our core mission of education and research. These characteristics hold for cloud-based systems as well.

For those reasons, in 2004 the Kuali Community was born. A small group of colleges and universities initially collaborated on the design, development, and support of open source software systems for finance, and subsequently added research administration. We set a target of 25 percent cost reduction for administrative software, such that we could redeploy these savings into our mission, directly supporting education and research.

A few years later, we asserted that there is no credible shell game for hiding the real costs of big systems (see "Mitigating the Risks of Big Systems," in July-August 2007 Business Officer), but that there are very real ways for colleges and universities to mitigate the risks and reduce costs. Kuali has proven that much of such risk mitigation and cost reduction can be achieved with its collaborative, open source approach.

Kuali Teamwork

Kuali Collaboration

More than 160 universities count themselves as customers of the Kuali Company or members of the Kuali Foundation.

Kuali Company. Software designed by Kuali is affordable, configurable, and based on the brightest ideas from a community of peer institutions. Find out more at www.kuali.co.

Kuali Foundation. For 11 years, the nonprofit Kuali Foundation has provided a home where institutions can pool resources and collaborate on Kuali activities. To learn more, visit www.kuali.org.

The Kuali Community is now well into its second decade. It continues with a singular focus on meeting the system needs of higher education with beautiful software that fits; is configurable so that it does not require expensive customization or hidden "shadow systems"; and is available as a subscription cloud service or as a self-hosted implementation using the open source license. Kuali consists of small modules of software that do not require a so-called "Big Bang" style of implementation.

The evolution of the software continues to be directed by colleges and universities to fit the real complexities, compliance needs, and simplification desires of our institutions. And, since it continues to cost less to implement and operate than off-the-shelf systems, using Kuali results in more money for our mission.

These goals and values of the Kuali Community have remained unchanged since our inception. How these goals are realized at universities is best understood in the words of those representing Kuali institutions:

Collaboration and cost containment. Lynn Johnson, vice president of university operations at Colorado State University (CSU), Fort Collins, has supported Kuali for many years. "I was sold on Kuali when I went to my first Kuali Days event in Tucson, Arizona, in 2007," Johnson remarks. "The value of the solid community collaboration and the opportunity to work on enterprise systems that were being built by higher education, for higher education, was very attractive. I was also sold on the concept of 'keeping your money in your mission,' which fostered the opportunity to invest wisely in the community and avoid the large sticker shock that comes along with implementing an alternative product offering."

Transparency and access. "With the Kuali Research module, the office of research is no longer blind to the proposals being developed within the University of California Irvine (UCI) schools and departments, which means that we're better able to allocate resources to meet future service demand," says Bruce Morgan, associate vice chancellor for research administration. "It's also given our faculty and the staff who support them unprecedented access to the status of their research proposals and award negotiations, which has reduced the incoming communications load on our office."

Some New Plays

What has changed with regard to Kuali goals and values is the means through which we achieve them.

Stronger, long-term risk mitigations. For institutions that value risk mitigation for administrative system investments, the most important change is improved risk containment from software cost and feature surprises. While Kuali has always made its software freely available open source, the community shifted to a stronger open source license that compels sharing of system enhancements, bug fixes, and so on. That means no forced upgrade to some future system and no withholding of software fixes due to vendor pricing or contractual disputes

Leaders in the industry believe it is essential for institutions to consider moving more mission-critical systems and data to the cloud. The Kuali solution, which has no vendor lock-in, provides that in a risk-free approach.

A change in coding responsibility. A second change is the means of coding the Kuali software. This task has shifted from software developers at colleges and universities to those at Kuali, Inc. The not-for-profit Kuali Foundation created and invested in this for-profit company to add a third element to the Kuali ecosystem, alongside the foundation and the community.

The company can directly and efficiently develop software faster through a more formal, line authority model of coordinating software development as directed by the community. The professionally dedicated software development applies equally to the open source downloadable software for local hosting and the cloud-hosted subscription service for those institutions that want to move the work of operating and enhancing the software to a cloud model. The company now has more than 50 full-time, top caliber designers; engineers; and other product experts.

These two changes interact to provide extremely strong risk mitigation for the future, and especially for those who move to a cloud-service model. Since the software is perpetually available as open source, Kuali Inc. will not have long-term pricing power to abruptly raise fees in the future. An institution or a consortium of institutions will always have a walk-away option to operate or have the software operated by others. Few if any cloud vendors provide this direct risk mitigation against vendor lock-in and fee escalation.

An additional feature of shifting the development to a dedicated company is that it enables Kuali to make more attractive software. Said plainly, as the Kuali Community grew, we learned that we had too many players on the field. We needed a stronger chief technology officer; more-experienced "User Experience Designers" who understand the needs of college and university users; and strong voices who had the authority to say no when our community got a bit too ambitious in "feature creep." Two years into the shift in software delivery, we are seeing dramatic changes in the user experience and making the product more usable and configurable.

Technology Triumvirate

Collectively, the community, the foundation, and the company are proving there is a better approach to meeting our critical needs for administrative systems without spending the $10s of millions that have so often robbed the academic treasury.

How does it all work? The Kuali ecosystem has become an innovative and purposeful integration of higher education institutions—"the Community"—that have software needs; a not-for-profit Kuali Foundation that enables members to aggregate their needs and resources; and the for-profit Kuali Inc. that works on behalf of the community. Kuali is a combination of all three entities, integrating the best of each, while avoiding the historical downsides of each acting alone.

The Community. Members of the Kuali Community take many forms. Some universities are deeply engaged, contributing effort and financial resources to steer high-level priorities. Others are cloud customers who provide feedback to improve the software. More than 160 universities count themselves as customers or members of the Kuali Foundation.

The Foundation. The Kuali Foundation provides a not-for-profit home where institutions can pool resources and collaborate on Kuali activities; it has done so for 11 years. Schools can become members, get involved, and contribute resources to one or more of the products—Financials, Research, or Student. These may be both functional and technical resources. Foundation members engage in monthly, or even weekly, meetings with the company to address implementing, designing, and testing the software.

When a college or university wishes to become a partner in one or more of the products, the institution assigns a person to sit on an executive sponsor team (EST), which is the group that provides strategic direction and helps to set the priorities for the product. The company and the EST work closely to manage resources, prepare road maps, and deliver products and support.

The Company. The Kuali Company is based in Salt Lake City and has grown to 60 employees in its first two years. Its role is to rapidly produce software that specifically fits the needs of higher education and to offer it as a cloud service or for local download and on-premises operation. It serves design partners from the community who work through the foundation, its cloud customers, and open source adopters.

The company also starkly differs from most other software firms in that it does not take venture capital, cannot be acquired for at least 10 years, and cannot change its open source software license without the consent of the director appointed by the Kuali Foundation. The company is owned by the foundation and employees. These choices were put in place to keep the company focused on the mission of the community rather than driving its quarterly returns or engaging in distracting mergers and initial public offerings that rarely reduce costs to customers in the end.

CSU's Lynn Johnson notes: "A few years ago, in order to ensure sustainability and improve speed of delivery, the community made a shift to engaging with a for-profit company; one that shares the vision and values of the Kuali Community. The strength of the community collaboration continues full steam ahead, and we are persistently and continually deploying our resources towards mission-related activities. CSU remains a strong advocate of the vision created by founders of the Kuali Community, and we look forward to engaging with those willing to join us on this journey."

Clarifying Cost Savings

Collectively, the community, the foundation, and the company are proving there is a better approach to meeting our critical needs for administrative systems without spending the $10s of millions that have so often robbed the academic treasury. Lest this seeming obsession with risk mitigation seem over the top, you need only enough experience to observe the full life cycle of a big system implementation to see the very expensive, unintended consequences that arise when software doesn't fit, vendors change owners, products are killed off, or prices escalate with no real option. Consider the following recent examples:

  • After documenting almost $200M in direct big system expenses over a dozen years, one institution then had to spend another $100M to upgrade the system. Why? Rabid customization for generic software that didn't fit the needs of higher education had proliferated. Licensing costs for the upgrade alone could have provided more than 100 students with full four-year tuition.
  • Another institution is experiencing an implementation of just one big system that is already more than three times its initial $100M projected cost.
  • After years of using software from several vendors, one institution suffered from a provider's decision to reinterpret its contractual arrangements such that university schools of dentistry could no longer enable dental students to use a clinical piece of software when practicing on patients. Schools had to suddenly pony up five- and six-figure payments in time for the vendor to hit its quarterly goals, or face cease-and-desist orders for use of any of the vendor's software in any part of the university.
  • Another group of institutions has been whipsawed for years, awaiting the next version of a big system, as the provider went through multiple mergers and acquisitions, raised maintenance fees, and provided no credible software road map. Since switching costs for big systems are high, many feel stuck and dig deeper holes with more local customizations.

In contrast to these examples, Pat Burns, chief information officer at Colorado State University, states: "CSU implemented Kuali Financial System (KFS) in July 2009, with substantial assistance from the Kuali Community, at a total cost of around $1 million. Alternatives considered at that time would have cost three to 15 times as much to implement, with ongoing elevated costs as well, and not been as good a fit functionally for CSU. Since then, we extended KFS to the board office and CSU-Pueblo at a total one-time cost of around $30,000—a small fraction of the costs for vended systems. We have been extraordinarily pleased with the low costs and high functionality of KFS ever since."

"Our functional teams value the system for its rich functionality and high data integrity, which have resulted in the best audits we have had at our institution."

— Mike Allred, University of California Davis

Because big systems are complex and difficult to maintain, challenges arise with any approach, whether home grown, community built, or cloud based. Yet, what differs for Kuali is the dramatic control and options that remain with every member of our community to mitigate the worst of these risks while obtaining essential, highly modular software systems.

"UC Davis has been using the Kuali Financial System for over six years," says Mike Allred, associate vice chancellor for finance and controller at the University of California Davis. "Our functional teams value the system for its rich functionality and high data integrity, which have resulted in the best audits we have had at our institution. Our technical teams like the way it is designed to be very modular with integration features in the overall ERP suite. Because the product is open source, we have saved significant dollars that we could reallocate to other important initiatives."

It is important to note that the design of the Kuali ecosystem blends the best of the corporate, open source, cloud, not-for-profit, and customer elements. We make no proclamation that any one element is the way, as Kuali seeks to optimize offerings to meet the mission of higher education.

"What Has Been Will Be Again"

In higher education, vended software systems will remain essential, expensive, and difficult to customize when they don't fit the real needs. Whether this is in the cloud, or on premises, we remain convinced that these trends will continue and repeat.

Kuali offers a different approach from other essential, big administrative systems. Kuali is built exclusively for higher education, is highly modular and configurable, promotes sophisticated user design, and has a strong community of support and engagement. In addition, hosting Kuali as a cloud-based subscription service delivers a superior value through its ease in configuration and smaller, highly modular offerings.

While systems in the cloud are not new under this sun, Kuali helps ensure that your next big system move—whether on campus or to the cloud—doesn't leave you underwater.

JENNIFER FOUTTY is executive director of the Kuali Foundation, Bloomington, Ind.