• April 17, 2014

Business Software, Built by Colleges for Colleges, Challenges Commercial Giants

Though many are wary, the Kuali Foundation's free program for finance has been adopted by a few institutions

Managing grants often means pushing paper. But the big source of grant money, the federal government, is going digital. And this move to transmit proposals through mouse-clicks rather than mail trucks has universities shopping for better software to administer their research.

The Kuali Foundation hopes its wares will be the most tempting—and the least expensive. A nonprofit group that coordinates colleges' efforts to produce free software that is built through a collaborative, "open source" process, Kuali is bringing out a research-administration system that it says could ultimately save universities millions.

The project, plus a student-information system, opens another front in Kuali's five-year-old challenge to Big Software. The foundation intends to produce software to handle many of a university's crucial business functions, like accounting, enrollment, and budgeting. At a time when information-technology budgets are getting cut, commercial programs to handle these tasks can cost in the tens of millions.

A few colleges are warming to the idea of an open-source alternative. Colorado State University and San Joaquin Delta College both adopted Kuali's financial-management program this year. And this week, Kuali plans to announce new projects for library-management and disaster-recovery software.

"There's becoming a greater acceptance that open source is a viable alternative—that open source isn't just some computer nerds sitting in a back room," says Stephen D. Dowdy, director of research information and systems at the Massachusetts Institute of Technology and a Kuali board member.

Kuali is a Malaysian word for a small cooking pot that is described as a humble but crucial tool. The idea behind the project is that colleges can control their digital destiny by pooling resources to build software tools for their needs. The venture first emerged when Indiana University and the University of Hawaii, frustrated by the high cost of commercial financial-management software, led the effort to build an open-source alternative.

But don't expect a stampede of chief information officers tossing their commercial products in favor of upstart open-source systems for their universities' core administrative needs.

The reality is they remain wary. When the Campus Computing Project surveyed institutions this year, fewer than 5 percent predicted they would switch to an open-source application for financial, student-information, human-resources, or research-grant management systems over the next five years.

Still, adoption could slowly "snowball," depending on the first reports of pioneers who test the systems and tell their stories, says Kenneth C. Green, director of the Campus Computing Project. For traditional vendors like SunGard, Jenzabar, and Datatel, he predicts, "it's going to be an increasingly competitive environment."

He compares Kuali with Moodle and Sakai, two open-source systems that have gained traction in another section of the higher-education software market, learning-management systems. Nearly 15 percent of public research universities surveyed in the Campus Computing Project are now using Moodle or Sakai, up from about 9 percent two years ago. For private four-year colleges, the number is almost 30 percent, up from about 19 percent.

Whom Do You Trust?

The question boils down to this: Can I trust the system? Colleges look to their peers for the answer, Mr. Green says.

"With due respect to the elites that are at the core of Sakai and also Kuali," Mr. Green says, "the real issue is not the deployment of Kuali or Sakai at MIT, at Michigan, at Indiana, or at Stanford. It's really what happens at other institutions, the non-elites."

What's happened at Colorado State has already raised eyebrows.

The university needed a new financial system —fast—and decided Kuali was the best fit because it also wanted the research system. The total budget for both was $3.9-million. Patrick J. Burns, vice president for information technology, is fond of sharing the reaction he has gotten from other universities: Shouldn't there be another zero on the end of that?

Colorado contributes $25,000 a year and one programmer to help sustain Kuali, Mr. Burns says, far less than a vendor's continuing costs. It also gets the community's support.

Colorado State was scrambling to meet a deadline set by its board, which called for the upgrade because the old mainframe-style financial software couldn't easily generate the reporting that members wanted. Kuali's community of software developers "dropped everything" to make Colorado's high-stakes July 1 launch a reality, even traveling to the university, Mr. Burns says.

"Everybody accuses us of jumping off a cliff," he says. "And in a sense we did that. But we held hands with the best programmers in the world from Indiana, from Cornell, from University of Arizona," development partners in Kuali.

Mr. Burns considers the rollout a success. He acknowledges problems, though, roughly a 100-item list of them. Some work-flow configurations were wrong. The accounts didn't balance at first. There were issues integrating an online purchasing module.

Colorado staffers e-mail the group of other Kuali users with problems, he says. Two or three answers typically come back in minutes.

He contrasts that with setting up commercial software: You call up your vendor project manager with the problem, who is charging you a monthly fee. That project manager schedules a phone call with the person you need to speak with inside the company, he says, perhaps in the next week or two. Half the time it's not the right person, but you pay them on a meter anyway. Then they decide they need to come to campus—in six weeks.

The Kuali model aspires to alter the economics of how colleges set up large software systems. Traditionally, they've paid a licensing fee based on the number of users. Then the monopoly supplier would lock them in to annual support payments, says Bradley C. Wheeler, vice president for information technology at Indiana University at Bloomington and chairman of Kuali's board.

"We've seen pretty egregious behavior over the years of ramping up those support costs," he says. "And of course, you really have no bargaining position."

With Kuali, whose various projects have received more than $6.5-million in grants from the Andrew W. Mellon Foundation, the software is free. You don't pay a licensing fee, meaning it makes no difference if you're using the software for 100 students or 100,000. You can hire rSmart, a company that supports open-source software like Sakai and Kuali, to set it up and maintain it for you. If you felt unhappy with its service, you could get a bid from somebody else. Unlike the old model, software and support are now "unbundled."

Under what Mr. Wheeler calls the "golden rule"—if you bring the gold you make the rules—universities who want a seat at the table to influence features and priorities contribute one developer, or about $120,000 cash per year.

The financial system Colorado put in place is in its third major release, but its counterpart for research management, called Kuali Coeus, only started releasing its first modules in July of 2008.

The software is an attempt to create a "paperless research enterprise," says Mr. Dowdy. It's based on Coeus, a system originally developed at MIT and now used by about 50 universities. The software does jobs like creating a proposal, developing a budget, attaching the science, routing it around the university, getting approval, and submitting the proposal.

Mr. Dowdy recalls the days when 18 semi trucks would unload proposals at the National Institutes of Health on deadline days. NIH is now getting the vast majority of its applications electronically, he says, reflecting a general government shift away from paper over the past several years.

"To an institution that's heavily engaged in research," he says, "this kind of software is becoming invaluable now that everything is going electronic."

The current options for software to manage research are a mix of homegrown systems like MIT's and commercial products from companies like Cayuse, Click Commerce, and InfoEd, which probably boasts the largest list of university clients. Kuali Coeus, Mr. Dowdy says, will be the first open-source option in the market.

Now Kuali plans to extend its build-it-together software strategy to yet another major new area: academic libraries. This week it is scheduled to announce plans to create an open-source system that manages the ordering, purchasing, and lending of library materials. "Libraries know that these systems are core to their role in serving faculty and students," says Mr. Wheeler. "As such, they wish to collectively take control of the destiny and costs of these systems."


1. subcrea - November 16, 2009 at 02:52 pm

I don't get Ken Green's comment about it not mattering that the "elites" use Kuali and Sakai. For one thing, if a project like this starts with the institutions that have the resources to pull it off, can't the less rich institutions benefit once the ecosystem evolves? And for another thing, just take a look at the institutions deploying Sakai--there are plenty there besides the elites: http://sakaiproject.org/whos-using-sakai

I expect Kuali will follow the same path. And why is adoption by non-elites the real issue at all? As long as the community-source projects are self-sustaining, they don't have to aspire to world domination. They just have to meet the needs of their communities.

2. chronanon - November 20, 2009 at 08:05 am

The obstacle to Kuali isn't a fear about open source, it's financial. If you already have a system in place, the switching costs are enormous and the licensing fees are on a tiny portion of those costs. The only people who would seriously consider Kuali are those who are already considering a move away from their existing SIS. I'd be interested in the percentage of survey respondents who said they plan to implement a new system, and then multiply the 5% by the number of competitors in the space to see if those numbers match.

3. justbrowsing - November 20, 2009 at 03:23 pm

Another way to look at the business case for Kuali may be to focus on whether an institution already has "systems" in place, not a system. Many institutions have a hodgepodge of non-integrated, locally written, discreet systems that only automate a subset of the lifecycle of a research project. What gives ERP systems so much value to an organization is the integration and data transparency through the business cycle. An end-to-end research administration system that is integrated with the financial system and other institutional data brings with it more than a lower price and vendor independence of open source, it also brings powerful efficiencies and fact-based decision making.

4. dwood37 - November 22, 2009 at 06:29 pm

Dear Justbrowsing:

I was wondering if you could point me to a college or university that is using an ERP system in the way you describe with "powerful efficiencies and fact-based decision making."


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