Ditching their legacies, colleges and universities embrace switch to Cloud

Costly but necessary, institutions know that to remain competitive and secure, they must invest in newer systems.
By: | March 29, 2022
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Undaunted by COVID-related spending challenges and in a race to improve technology, institutions of higher education heavily invested in new cloud infrastructure to replace worn legacy systems in 2021, according to an annual report from the Tambellini Group.

Nearly two-thirds more colleges and universities chose to upgrade their finance or human capital management (HCM) systems than in 2020, one of the largest year-over-year increases since Tambellini began doing its Financial and Human Capital Management Systems US Higher Education Market Share, Trends, and Leaders report. “Many institutions finally had the bandwidth to resume long-term technology projects that had been paused since 2020 due to pandemic-related factors, and others that struggled with the limitations of outdated and inflexible technology were motivated to move forward and modernize,” said Vicki Tambellini, CEO and founder of Tambellini Group.

The investments are not cheap, but almost a necessity given two essentials—that systems continue to keep up with the technology demands of ever-evolving institutions and that they protect assets and data from hackers. Tambellini noted that small colleges and universities need to put up around $5 million in the first five years to make the switch, while it may cost larger institutions between $30 million and $100 million. Though much of higher education has been very slow to embrace making the move—only 3% of the industry has done so in the past seven years—the survey of 4,300 institutions indicated sea change may be coming.

“We expect that the valuable benefits cloud-based systems offer in enabling remote work and learning, enhancing cybersecurity, and streamlining operations will continue to drive growth in the higher education market for years to come, despite considerable costs and downward budget pressures on institutions,” Tambellini said.

Still, there are significant differences in who is forging ahead in higher ed. Public universities saw a nearly 60% growth, which outpaced two previous years by a few percentage points. Private institutions, however, only rose 41% after experiencing a 44% uptick in both 2019 and 2020. Selections for the smallest and largest institutions saw slight declines in growth, while midsized colleges and universities invested nearly 10% more than in 2020. Even those colleges that aren’t doing a full makeover are still shifting part of their resources to the cloud.

Tambellini said one of the big reasons for the increase in new system choices is that institutions feel far more comfortable now in making the switch, despite the costs. Report authors note, “Institutions have learned from the experiences and missteps of early adopters and are benefiting from having a more realistic and profound understanding of the time, expenses, and resources required for making the transition to cloud-based systems.”

They also have become much more adept at picking the right vendor to serve their needs by pressing them to show how their solutions will streamline data migration and other processes. Institution leaders also have combined efforts to ensure they are getting the most robust and cost-effective offerings. More than ever, vendors, too, are making a conscious effort to give institutions more for their money, improving both chat and productivity functionality.

According to Tambellini, institutions almost always have chosen one vendor to implement all three systems (including students), but that changed dramatically last year. Because of delays, less than half chose the same vendor, as many opted to postpone their selection of a student system. The vendor most large institutions selected for both finance and HCM was Workday, followed by Ellucian, though the latter was preferred along with Jenzabar by the smallest colleges and universities. Anthology, Oracle, SAP and Unit 4 are the others that make up the market.