A decade or so ago, I ran a software selection & negotiation project for a major university system. It was for a new ERP/Student Management System. Software for higher education is a bit different than traditional ERP solutions as it includes a number of unique modules (e.g., financial aid, course registration, alumni, encumbrance accounting etc.).
Even the nomenclature differs in key areas. Universities don’t have ‘customers’, they have ‘students.’ Universities don’t have ‘users’, they have ‘full-time student equivalents.’ It would be hard to retrofit a solution designed for manufacturers to work in the higher-education vertical; however, several horizontal ERP vendors have done this.
Ten years later, I have reconnected with Ellucian, the new name behind the SunGard HE (Higher Education) solution that my client eventually purchased. In this quick briefing, Ellucian Chief Product Officer, Stephen Laster and I covered a number of topics.
The changing education software market
Stephen and I discussed how this software market has changed of late. He indicated that:
- The cost model for higher education is changing – Like in many cross-industry ERP markets, subscription pricing is now the preferred purchasing mode.
- Lots of innovation is occurring with higher education ERP – Advanced technologies, like machine learning, are popping up in many applications.
- On-premises implementations are fading out – While this shift has been underway for a while, the pandemic of 2020 has sped up cloud deployments. Stephen indicated that most customers have been going from on-premises to hosted cloud solutions first and then to a multi-tenant public cloud solution later. The remaining customers are going straight from an on-premises solution to a multi-tenant public cloud solution.
- Ellucian now has over 100 customers using their multi-tenant version of the product.
- Stephen did mention one really unique change driver that I hadn’t heard before – It seems some educational facilities have data centers in fire zones. With all the forest fires in the Western US lately, some of their customers have decided to reduce their risk by moving off of their on-premises applications running in at-risk data centers and using a hosting firm’s or hyperscaler’s data center instead.
- Planning functionality is more important than ever – This isn’t a surprise considering how strong sales have been this year for traditional CPM/EPM vendors (eg: Anaplan, Planful, Workday Adaptive, etc.).
Ellucian’s place in the market
The Higher Education ERP market has a number of competitors. Traditional ERP firms like Oracle, SAP, and Workday all have higher ed products. Unit4 acquired a Higher Education solution a few years ago and it continues to gain market share.
Several firms have specialized in higher ed solutions exclusively. These include Ellucian (nee SunGard Higher Ed), Anthology (nee Campus Management) and many more.
Market share figures are tough to compare as some firms only focus on large universities, some on smaller colleges, some target public schools, etc.
Stephen indicated that Ellucian has revenues approaching $1 billion and over 2,700 customers in 50+ countries. Ellucian’s website indicates they support over 20 million students. Global capability is an interesting differentiator. Some competitor solutions are limited in their ability to support different currencies, languages, regulatory requirements, etc.
Other items of note
We also spoke of COVID pandemic safety issues and their impact on higher education institutions. Stephen indicated that Ellucian has made it easy for its ecosystem partners to connect their relevant safety solutions to Ellucian software.
Speaking of connections, I’ve known for some time that college ERP customers are often big users of Salesforce. Salesforce’s software is often used in identifying and recruiting potential students to the schools. Similarly, Salesforce’s software could be used in tracking benefactors, alumni and other individuals with whom the school will want to develop an ever-deepening relationship. I’ve known universities using both Ellucian and Salesforce for over a decade. Stephen indicated that Ellucian has made it even easier to connect to and share data with Salesforce’s software.
ERP is not a homogeneous solution space. There are vendors that have great cross-industry horizontal applications (eg: human resources software) and many more firms that offer vertically-focused ERP solutions (eg: manufacturing). There are even niches within niches (eg: plastics manufacturing versus a generic manufacturing solution).
The Higher Education space is definitely a unique vertical. Beyond the specialized applications, it’s also a space where word of mouth goes miles in building market share for vendors. There are clearly pockets of fans for specific solutions. Ellucian’s Banner products have such a following. Likewise, there are higher education fans for Workday and other vendors, too.
The current pandemic will undoubtedly trigger change in the higher education space. I suspect many on-premises solutions will be ripe for replacement with newer cloud-based solutions. Why? The work-from-home and other safety mandates make it hard for people to interact with on-premises solutions. But we should also remember that the pandemic has also placed financial challenges on students and colleges alike. With revenues in flux, making major software changes now could be a financial and technical risk. That said, replacements are definitely underway with a number of companies looking at SAP, Ellucian, Unit4 and other products.
A new round of higher education software replacements will likely bring a fair degree of modernization to the vertical. I was pleased to hear Stephen speak of how machine learning is being used to make very personalized recommendations to students re: course selections that align with their degree journey and interests. They also use machine learning to identify at-risk students. That’s key to identifying and triggering timely outreach to specific students so that advisors can help these students remain productive and eventually graduate.
Generalized or horizontal solutions are fine for specific, spot software needs (eg: Payroll). But when higher education entities need a suite that also supports special functions (eg: financial aid), a vertical solution is likely the better buy. For many years, many of the higher education vertical solutions were a bit behind technically vis-à-vis their horizontal competitors. Ellucian’s cloud, integration and machine learning capabilities appear to be on a par with several horizontal competitors.