Monday, August 30, 2004
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2 Universities Team Up to Create Free, Open-Source Financial Software for CampusesBy JEFFREY R.YOUNG
Frustrated with the high cost of commercial financial-management software, Indiana University and the University of Hawaii are leading an effort to build a free, open-source alternative. The project's leaders say the effort could save colleges millions of dollars. The institutions plan to devote more than $2.5-million in staff time and resources to the project, which is called Kuali. Other initial partners in the project are the National Association of College and University Business Officers and the RSmart Group, a company that hopes to sell support services to colleges that install the free software. The Kuali software -- which will be free to all and will allow anyone to look at its source code -- will help manage accounting, billing, e-commerce, budget planning, and other campus functions. Officials said it would take about two years to build, and would be an updated version of home-grown financial software that Indiana now runs on its eight campuses. Financial-information systems are often the most expensive software packages purchased by colleges, with some institutions paying tens of millions to companies like PeopleSoft and Oracle for software and installation. Most colleges buy such software, though about 15 percent handle financial transactions with software that they have built themselves, according to Gartner Inc., a technology research firm. Colleges that build their own software, however, usually do not collaborate or share it with others. The Kuali project is modeled on Sakai, an effort to build free open-source software to create course Web sites (The Chronicle, July 23, 2004). Indiana University is a leader of Sakai, and the University of Hawaii is a partner in that project as well. David J. Lyons, a senior fellow at Nacubo, as the business officers' group is known, said a key motivation for the Kuali project is concern over consolidation in the financial-software market. "We're losing all of our small vendors that cater to colleges," said Mr. Lyons. And colleges are concerned that Oracle, which sells financial software and other programs to colleges and companies, might win its bid to acquire PeopleSoft, a leading provider of financial software to colleges and companies. The Department of Justice has sought to block the merger, arguing that merging the two companies would hurt competition in the business-software market. "These vendors then have a lot of pricing power, and they don't have to pay attention to some of our needs quite as closely as we would like," said Mr. Lyons. Officials at Oracle and PeopleSoft could not be reached for comment late last week. The University of Hawaii decided to join the project after officials reviewed commercial options and decided that none suited their needs, said David K. Lassner, chief information officer at the university. The university now uses a system it bought in the 1990s from SoftwareAG. But the company discontinued support of the product in 1998, and since then the university has had to modify and upgrade the software by itself, said Mr. Lassner. "We're on our own now -- if something goes wrong with our financial system, it is our problem to fix it," he said. Being part of an open-source project will give the university the support of other partners, he said. John G. Robinson, chairman of the RSmart Group, said that colleges would benefit by having an open-source option tailored to the needs of higher education. He described systems sold by PeopleSoft and Oracle as "big and expensive and complicated," in part because the software is also sold to businesses, which have different needs than colleges. Mr. Robinson said the Kuali software would be "less complicated." "There's no reason anybody should be paying $5-, $10-, or $20-million to install these financial systems," he added. Bradley Wheeler, associate vice president for research and academic computing at Indiana University at Bloomington, said the open-source software would give colleges more control over how they customize the financial software. "With open source we can all see the behavior of the system and understand it," he said. "With a commercially-licensed product you're often impeded from seeing the behavior of the [computer] code." Michael Zastrocky, vice president for academic strategies at Gartner, said the project would be difficult to pull off, especially with so few partners. He also said it would be hard to persuade top university administrators to use Kuali, since they might have doubts about an upstart effort and might prefer to buy commercial software instead. "This is one [area] that's mission-critical," he said. "Your institution would be in serious trouble if that thing started to fall apart." Because Kuali will be derived from software that has been in use at Indiana for years, Mr. Lyons said, it will have a proven track record. A survey of Nacubo members in November demonstrated that there is a demand for open-source financial software, leaders of the project said. In that survey, of 257 colleges, 25 percent of the respondents said they were likely to install a new financial system in the next three years, and 46 percent of the respondents saw open-source offerings as viable options. Nacubo conducted the survey with the support of a $45,000 grant from the Andrew W. Mellon Foundation. Nacubo is not giving money or staff time to the Kuali project, but will offer its support and advice, said James E. Morley Jr., the association's president. "We got a very clear response back from the membership that this is an option that looks like it makes sense to study," said Mr. Morley. "We've continued to get broad anecdotal support for moving ahead."
Background articles from The Chronicle:
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