Study: More colleges turn to large IT vendors

A new study suggests that colleges and universities are increasingly choosing the giants of the IT industry to manage finances, student records, and human resources–continuing a gradual drift away from small- to medium-size companies.

Nearly 300 U.S. universities selected a student information system from a "top tier" higher-education software company between 2003 and 2007, according to a report released by independent market research firm Syngery3, which tracks higher education’s software trends.

A spokesman for Synergy3 said numbers from before 2003 were unavailable, but the survey shows a clear shift to companies such as Oracle PeopleSoft and SunGard–companies that are also known for their work with the business sector. Experts said the Synergy3 study helps disprove a common misconception in higher education: that large IT vendors catering to big business customers sell software that proves inflexible and hard to customize for campus IT directors. 

In 2007, Oracle PeopeSoft became the leading choice for student information software among colleges and universities, Synergy3 said, with 43 percent of campuses surveyed choosing the IT vendor. SunGard Higher Education was second with 22 percent. Jenzabar was selected by 16 percent of campus IT departments, and Datatel was chosen by 14 percent of the campuses surveyed.

Forty-three percent of the colleges surveyed were private, not-for-profit campuses, while 30 percent were public, two-year colleges, 25 percent were four-year institutions, and 2 percent were private, for-profit universities.

Colleges with enrollments of less than 2,500 students proved to be the most likely to switch to a top-tier vendor during the five-year period.

The migration to larger IT companies has narrowed the field of vendors for campuses in the market for new software. In the late 1990s, there were about 10 times the number of IT vendors catering to colleges and universities, Synergy3 said.

Campus tech chiefs cited several common reasons for the trend toward larger, top-tier software vendors in higher education–including the need to stay competitive in the market to recruit students and faculty.

Greg Smith, chief technology officer at George Fox University in Newberg, Ore.–a campus with 3,200 students–said IT officials there are working to transfer human resources, financials, and student records to Oracle PeopleSoft software. He said the university’s previous information system lacked database capacity and was prone to slowing student and faculty web activity to a crawl.

"The old system couldn’t handle web transactions as effectively as the new system," said Smith, the university’s technology chief since 2004, adding that a "loaded-down" network could deter potential students. "It translates into customer satisfaction … and we certainly have to be more aware of the competitive nature of who’s going to select your university."

The need for constant, specialized support, Smith said, used to drive small colleges away from large, complex software systems like those made by Oracle. But these top-tier vendors have made student information systems less "support intensive" and have attracted a market of small campuses in recent years. Smith said George Fox University spent about $3 million to switch to Oracle’s PeopleSoft system.

"Oracle today is not to be feared like Oracle of five years ago," he said. "Our biggest fear used to be Oracle. That’s the way it was [in the late 1990s and early 2000s]. But we don’t need as much expertise [from Oracle] anymore."

The Synergy3 report showed that more than 60 percent of campus IT officials chose their student information system vendor based on "functional needs." System reliability and quality were the first- and second-ranked criteria, and "integration with other systems" and "ease of use" were third and fourth, respectively.

The ability of IT giants to adapt to colleges’ needs and limitations have made these software leaders a more viable option for schools that could not afford pricey installation and database management, said Tim Liu, a spokesman for Synergy3.

As the largest IT companies have installed new information systems at smaller colleges, they have molded affordable options, Liu said.

With higher-education budgets shrinking at even the largest research campuses, he said, IT vendor selection will trend toward companies that can offer extended payment plans that won’t gash 2009 operating budgets.

"Colleges and universities purchasing a new system in 2009 may find vendors more flexible with their pricing and business terms, as well as possibly providing more attractive financing options," he said.

The trend from 2003-07 does not mean starter IT vendors won’t find a niche in the higher-education market in the latter part of the decade, Liu said. 

"Certainly there are smaller or younger IT companies that are successful in the marketplace by focusing on the unique needs of certain market segments, such as small private colleges, for-profit institutions, and institutions with continuing education programs," he said.

Smith said that while the biggest IT vendors have attracted campuses of all sizes, more variety in the vendor world could lead to better prices.


Synergy3 report

Oracle PeopleSoft




George Fox University