The higher education enterprise systems market is changing nearly as quickly as the U.S. higher education system itself. Note that I said "nearly." In the two years that we have spent working to found the Higher Education Systems and Services (HESS) Consortium, ERP market dynamics and views on institutional return on investments have drastically changed. All colleges and universities are tightening their financial belts, and they are turning to cloud computing for options to improve system functionality and reduce operating costs.
Why Another Consortium?
Two years ago, a group of chief information officers and chief business officers started talking about how we could work together with other similar colleges and universities to better communicate with our ERP partners and develop collaborative agreements in private higher education. Today, our membership in the HESS Consortium has grown to over 70 private, nonprofit institutions, large and small. HESS is growing quickly for what I believe are two primary reasons: the opportunity for collective cost savings and a desire to collaborate better and closer with each other and our ERP software partners. Most of our software partners have been excited about the opportunities of a consortium like HESS. Campus Management, Ellucian, Jenzabar, Oracle, Unit4, and Workday are all current HESS software vendor partners.
So, was this idea for collaboration solely to collectively demand major pricing discounts for our institutions? Surprisingly, the answer to that question is no. Our HESS private institutions understand that for our schools to be successful, our software vendor partners must be successful. It is a symbiotic relationship. Yes, we do want to affect the future of price escalation but only based on the evolution of our institutions, helping our software partners better understand the changing higher education market they serve. We know that we cannot continue to operate in the way we have for the past 30 years, and we believe that the answer for many of our member institutions may be "in the cloud." For many institutions, exploring the idea of cloud operational models gives them the impetus to reevaluate their entire ERP solution, examining the marketplace and functionality of other products.
The development of what I call a "collective cloud" model, along with the entry of newer higher education ERP software vendors into the marketplace, could add a spark to the industry that we have not seen in years. The development of a new model for features, delivery, and — yes, pricing in the cloud — brings private institutions into the reevaluation and selection process. Our objective is for our member institutions to have the option of joining a HESS vendor cohort, collectively negotiating a price and implementing a new or strengthening their existing solution in a multi-instance cloud-computing environment. Collective implementation costing models as well as the rethinking of annual and multiyear maintenance and support models can and will change the industry as we know it. I am also convinced that a closer collaboration between our member institutions and our ERP and ancillary software partners will help us all discover new and exciting opportunities.
Change Is Inevitable
The key to future success in higher education is twofold. Yes, it is important for us to work with our ERP software partners to rethink pricing models as we move to the cloud. This is difficult for both them and us. Many of our ERP providers have used the same costing models for years. The system is so deeply embedded in their financial earnings statements that the thought of changing it terrifies them. We can all understand this. Many of our institutions operate with the same historical constraints and can be just as difficult to change.
The second part of success is internal to most of our institutions. We must begin to think about how we can find savings by pushing costly overhead in our operations to the cloud as well as rethink our workflows and business processes. For most institutions, this is a gut-wrenching prospect. Many of our internal processes have evolved slowly through the years to a comfortable and repetitive state. Thinking about how we can innovate shared business operations and cloud-based ERP operations disorders our campuses' sense of culture and community. Colleges and universities do not like this type of meddling; in fact, they resist it ferociously. On the other side, vendors must figure out how they can make these operational services cost-effective, reliable, and attractive for institutions to make the jump. This is where HESS can bring together private, nonprofit institutions and vendors to find solutions for the future.
We all have to change. Much like our national debt problems, higher education faces mounting challenges with declining student populations, increasing economic constraints, and shrinking student financial aid opportunities. We all know challenges are coming, and ignoring them won't make them go away. Our private, nonprofit higher educational institutions have stepped out to address some of these oncoming challenges not only with ERP systems but also with collaborative services. We hope that the work we are doing to collaborate, find economies of scale, and develop new ways of engaging with our software partners will help our HESS Consortium members become stronger and more resilient in the leaner years to come. I also believe that many of the lessons we are learning in the building of this new group will help all colleges and universities find new ways of collaboration and partnership.
Guided by Virgil's notion that "fortune favors the bold," our collaboration in ERP solutions is only the beginning at HESS. We are looking for new ways to collaborate and effect positive change in all of our purchasing and service areas. In the coming months, we will be inviting more software companies to begin discussions with us in many different areas. If we want our private institutions to survive, we must evolve and find new ways to work together. The HESS Consortium is an effort to adapt to a quickly changing higher education market and find new opportunities for our collective and individual futures.
We invite your private, nonprofit college or university to join the HESS Consortium in finding solutions. For more information, please visit us online.
Keith Fowlkes is chief information officer at Centre College and co-founder and vice president of the board of directors of the Higher Education Systems and Services Consortium (HESS).
© 2016 J. Keith Fowlkes. This EDUCAUSE Review blog is licensed under the Creative Commons BY-NC-SA 4.0 International license.