The global economic crisis in 2008 has had a profound negative impact on endowment performance, public sector financial support, and the ability of students and their families to pay tuition, and in recent years, disruption in the higher education industry has been accelerating at an unprecedented pace. Ovum believes that rather than adopt a retrenchment strategy – as they have in other periods of change – many colleges and universities are making progress on a journey to leverage technology as a strategic resource to survive or even thrive during this era of persistent disruption.
The meteoric rise – and to some degree fall – of massively open online courses is probably the most well-known example of industry disruption, but the growing popularly of Lynda.com and other online resources for skills acquisition suggests that fundamental change is afoot. Education continues to be a critical component of achieving at least a middle-class life, but technology is opening the door for that education to take other forms. As part of this trend, learning management systems (LMS) have unequivocally joined the pantheon of mission-critical solutions as institutions seek to differentiate their academic services, build capacity for innovation in their delivery, and extend their reach to students far beyond the campus gates.
The disruption is intensified by accelerating technological innovation and growing consumer influence, which has shifted institutional priorities to focus on improving the quality of the student experience and ultimately student outcomes, such as graduation rates and gainful employment. The adoption of constituent-relationship-management solutions has matured rapidly over the last five years, moving from small installations that support discrete elements of the student recruitment function to driving student life-cycle management initiatives across admissions, student services, and alumni affairs in a more integrated way.
Ovum anticipates that the next wave of strategic investment will be in student information systems (SIS) and will unfold with growing speed over the next 18 months (see Figure 1). While industry disruption has been on the rise for nearly a decade, sparking interest in alternative solutions, new investment has remained elusive until now, since several key elements had not yet fallen into place.
First, cloud delivery models, particularly for mission-critical solutions, failed, at least initially, to gain widespread support due to concerns about security and customization. However, as early adopters proved successful and as others gained experience with less critical cloud applications, such as email and lecture capture, cloud-first initiatives emerged and gained traction, paving the way for the uptake of cloud-based ERP, HCM, and finally SIS solutions. Second, the competitive landscape for SIS solutions had almost reached stasis since the last implementation wave. Consequently, many perceived switching SIS as unlikely to deliver significant benefit.
All of this changed in 2013, when Workday announced its intention to build a cloud-native SIS. While taking different development approaches, industry incumbents soon followed suit, and with 2017 looming on the horizon, there are now three cloud SIS solutions available: Ellucian Banner, Unit4 Student Management, and Workday Student. Conversations about the value of more modern and cloud-delivered SIS solutions are now commonplace. Ovum’s 2016 ICT Enterprise Insights Survey confirms this position, with nearly 56% of respondents reporting the intention to upgrade their SIS over the next 18 months, a far larger number than any other solution area.
To be clear, switching SIS solutions, regardless of delivery model, is an epic journey, fraught with the challenges of change management and technical uncertainty, and thus should not be taken lightly. However, the process of building and assessing the business case for this journey will deliver critical insight into an institution’s capacity for innovation and agility, which will prove invaluable during a period of persistent disruption.
Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.