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Colleges to share Oracle ERP system in effort to cut costs
Private, nonprofit colleges are discovering they can reduce back-office IT costs by working together. Novel approaches are emerging to reduce the financial drain of ERP systems.
What Champlain College, Middlebury College and Saint Michael’s College are doing is rare for private institutions. But as more schools seek ways to control back-office costs, this idea may spread.
The three independent, nonprofit colleges did not have a history of working together. But in 2013, they formed the Green Mountain Higher Education Consortium to examine sharing an ERP system.
“Private liberal arts schools and the education that they offer is becoming more and more unaffordable for many students,” said Corinna Noelke, the consortium’s executive director and a doctorate-holding economist who was director of special projects at Middlebury.
The consortium went through a request-for-proposal process and picked Oracle ERP systems. They will use Oracle’s Human Capital Management Cloud, its ERP Cloud and the Enterprise Performance Management Cloud.
“The schools discovered that they could really work together on one software platform, as long as it allowed them to separate the schools efficiently,” Noelke said.
The implementation begins this year. The three colleges are now using Ellucian systems: One is using Banner, and two are using Colleague. Two of the colleges ran the ERP systems on premises, and the third outsourced.
A goal for the three schools was to implement best practices in a SaaS environment and to take advantage of using shared services.
Using best practices “has nothing to do with your culture and nothing to do with your special niche as a school,” Noelke said.
Public colleges have long shared IT platforms
Public universities have long shared systems across the various campuses, but it’s rare for nonprofit, private colleges to share services, said Kenneth Green, the founding director of The Campus Computing Project, which runs a continuing study of the role of IT in higher education.
The Vermont colleges’ effort “is interesting and it is innovative, and it will be carefully watched,” Green said.
Back-office systems collaboration may be a growing trend in higher education. In a separate effort, over 100 smaller colleges recently banded together to collectively negotiate ERP pricing with major vendors.
“Why can’t we leverage our collective voices with you, the vendors, to get better pricing,” said Carol Smith, CIO of DePauw University and president of the board of directors of the Higher Education Systems & Services Consortium (HESS). This effort to negotiate as a group with ERP systems vendors began in 2016.
Most of the HESS Consortium schools have student full-time-equivalent populations of less than 8,000 and some only a few thousand students. But a goal of HESS is to give its members the contract negotiation clout of a large university system.
Transparency on ERP pricing is one goal
HESS is also working to normalize ERP pricing and services between vendors to make it easier for colleges to conduct apples-to-apples comparisons. The schools, some of which previously have gotten little vendor attention, hope that now changes. They are meeting collectively with their respective vendors to discuss their needs.
The Green Mountain effort takes the idea of ERP collaboration a step further.
The consortium had four ERP candidates: Oracle, Workday, Unit4 and Campus Management.
In its selection, the Oracle ERP system gained the edge with its pricing, functionality and ability to set up a shared environment, Noelke said.
The Oracle ERP system architecture allows you to be in one instance and have three separate and distinct operations for each of the campuses. Employees at their respective schools don’t see information from other colleges unless they want to have a shared service. Each college will have independent user interfaces and data will be separated, but otherwise, they are operating on one platform.
“The architecture is very elegant and is really letting you be separate where you want to be separate, but also to come together where you want to come together,” Noelke said.
Configurations are being discouraged
The introduction of the SaaS platform is requiring the schools to make substantive changes to their business practices. They are holding workshops involving finance and HR and working with implementation firms. The schools may do some processes differently as they shift to a “best practices environment.” They are holding “process reimagine and redesign” workshops facilitated by CampusWorks Inc., and their implementation contractor is Hitachi Consulting for Oracle.
The basic premise is the schools will only customize configurations where needed, and the departments will have to make a business case for it. As soon as you configure differently between the three schools, it makes it harder to update the system, Noelke said.
The implementations will continue through much of the year. They will have to make “a million little decisions every day” with the implementers.
The three colleges expect to pay less with the Oracle ERP system. They have cut licensing costs by about 20% by acting together. The implementation costs are much less, because they are doing it together, Noelke said. This doesn’t account for long-term productivity gains helped by the elimination or reduction of manual, paper-based processes.
Over an eight-year period — fiscal year 2018 through fiscal year 2025 — buying software together and implementing it together at the same time is saving $20 million versus each school buying the software themselves and implementing it themselves, Noelke said.
Education systems require specialized software related to student needs, such as registration, class schedules and financial assistance. Oracle is developing a new student system using the knowledge they have on needs and requirements from the PeopleSoft product. This work is still in development. The consortium is likely to use Oracle’s approach, but will make a final determination once the development work is completed.
The motivation for these joint efforts is clear. At DePauw, Smith said she personally believes these types of collaborations among private schools will expand.
“We’re here to provide an educational experience for our students, so that they can be the best they can be,” Smith said. “I think we have to try to preserve every ounce of resources that we possibly can.”