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Why private colleges & universities are forming buying consortiums

By Ted Saludes
senior vice president for global higher education, Unit4
April 24th, 2018

Here's a smart and affordable way to update outdated core systems

One of the primary issues higher-ed institutions currently face when it comes to attracting and retaining students is the rising cost of education, balanced against the benefit of a college degree. With increasing costs, there’s also a rise in the number of students who don’t complete their degrees; in fact, less than 50 percent of students complete their degree within six years. All the while, colleges and universities are dealing with increasingly outdated core systems, and the upkeep costs increase every year.

To overcome these challenges, an emerging strategy among smaller, private institutions is to form consortiums to meet student success targets. While this trend is well established in public and state-level systems, its emergence among smaller, private institutions provides group-purchasing power and pricing transparency when negotiating with IT vendors.

In 2014, 11 public universities joined together to form the University Innovation Alliance. Its goal is to improve the graduation and retention rates among an estimated 400,000 U.S. undergraduate students. Through the alliance’s work, awarded degrees have increased by 10 percent.

Defining enterprise resource planning (ERP) consortiums

College consortiums, which have emerged in the last few years, are when two or more higher-ed institutions implement a new system together (either officially or unofficially) and share the associated costs. Institutions who are early adopters of this model cite a myriad of benefits.

Many colleges start a consortium for the financial benefits and discover further advantages to sharing tools, services, and knowledge. Sharing core operational system resources helps institutions establish best practices, and not just at the institution level. The new generation of cloud-based ERP and student management systems are designed with a unified database to enable a single view of the student from enrollment to alumni.

The benefits of consortiums

In addition to the costs associated with system selection and RFPs, consortiums can also share longer-term costs, such as staffing, cloud hosting, IT, and maintenance.

One of the best examples of this type of consortium is the Higher Education Systems & Services Consortium (HESS), a non-profit, membership-run organization that comprises more than 50 colleges and universities, including Oberlin College, Roanoke College, and the College of Wooster. Together, they work in lockstep to accomplish tasks, determine which marketplace options are available to better meet their needs, and which innovative solutions are being implemented in the sector. With the recent release of modern ERP and student systems, there are new opportunities for collaborative pricing, consultative services, software-as-a-service, cloud services, and shared services.

HESS Consortium’s executive director, Corinna Noelke, told TechTarget: “Over an eight-year period…buying software together and implementing it together at the same time is saving $20 million.”

One visionary consortium is Vancouver Island University (VIU) and Selkirk College, who are working together in an unofficial capacity to navigate the ERP selection and implementation process. While the schools did not create an official consortium, they are reaping the benefits of working together and sharing costs. The two institutions have saved approximately 5,700 hours of implementation and more than $1.1 million.

HESS and VIU/Selkirk also enjoy the benefits of pricing transparency. Since schools share their pricing details, they know they’re receiving the best possible price They can also negotiate costs together, as well as customization and technical services, thanks to consortium-pricing transparency.

Sharing best practices

Most schools have established best practices to determine which ERP system customizations they require, but these customizations aren’t always best for each school and can cause complexities down the line when systems require updating. When schools form a consortium, they are able to collaborate, analyze ERP customizations, and choose the best practices for the group. They also cut down on unnecessary customizations to help streamline the back-end system.

According to Elfie Smith, chief transformation and project director at VIU, this was a huge benefit during VIU and Selkirk’s collaboration. As she says: “As we continued to work with Selkirk, we also recognized…the knowledge sharing that resulted from learning about their requirements and processes. We attended meetings and system demonstrations together, and with a differing perspective in the room we were always sure we were asking the tough questions and getting in-depth answers.”

Most of the ERP systems in use today are more than 30 years old. In recent decades, many requirements have emerged for things like degree audit, recruiting/admissions, financial aid, student success, online payment processing, and more. Institutions must manage additional applications added to their ERP systems as requirements change. This process causes the core IT platforms, and thus the student experience, to become a patchwork of systems with multiple databases and interfaces that also need to be maintained. As a result, institutions are held back by fragile infrastructures that are difficult to maintain and upgrade.

This common problem among institutions, combined with the emergence of a new generation of student systems, is a catalyst to seek superior best practices. Consortiums can be an answer, thanks to their ability to liberate resources and positively impact the student journey.

About the Author:

Ted Saludes is the senior vice president for global higher education at Unit4. Prior to joining Unit4, he worked with Ellucian, a supplier of ERP and CRM software to higher-education institutions, as North America vice president in the CRM and learning management systems division. Saludes also has extensive enterprise-software experience from Avaya and EMC, where he was general manager for eight years.

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