Update: State of Cloud for SIS
I thought I would take a look back at a post I wrote in 2012, SaaS Changes to Higher ERP market. The purpose of the post was to look at the speed of change in the educational technology area with the use of SaaS solutions and if this speed of change would be applied to the administrative systems. Some of the key points were:
- Will there be a disruptive ERP bringing a whole new solution to market similar to the LMS?
- At the time, most vendors provided a marketing message that they provided/would provide a SaaS solution or their customers were not asking for SaaS.
- The challenge for the vendors is how to get the ERP, with its slow development and implementation cycles, to provide the solutions to the new needs of the institution.
Current state of SaaS/Cloud
Since the time of this post, Workday has released their SaaS based student system. The system was released with basic functionality and they continue to add capabilities with additional releases. It is probably too early to determine if the release is dramatically impacting the SIS market in the same way Canvas impacted the LMS market. The LMS market had many schools reviewing LMS purchases, whereas the SIS market has a limited number of schools replacing systems in a given year. In addition, the implementation time for an LMS solution is significantly shorter than the SIS. This is still a wait and see.
At this time, most vendors offer a cloud option for their solutions. Most vendors call them a SaaS solution, although most of these solutions are really some form of hosting. Why is this important to understand the difference between multi-tenant (cloud) and hosting? The cloud technologies provide a promise of significantly better development and implementation timelines, but it is a different development process. It makes sense that vendors are providing hosting solutions, regardless of what they are called, because the vendors started with their old technology models. Moving to a true multi-tenant environment requires a new architecture. The good news is that vendors are implementing some new components using a cloud approach. To me, this is still a work in progress.
Understanding the technology and not the marketing message is important when moving to the cloud. When I questioned a vendor about their definition of SaaS, they stated it did not matter, what mattered was the SaaS based pricing. To a point, I agree, but it does have different implications to the implementation and support of the SIS. Remember, cloud is not an answer, it is a capability that provides better solutions. When reviewing a cloud solution, you should consider:
- Is the pricing based on users or utilization of resources? Pricing should be straight forward based on usage and not based on equipment, storage or some other measure.
- Are you able to increase capacity based on demand? One of the benefits of cloud computing is to be able to quickly scale when needed.
- Are you able to decrease your users or utilizations when demand reduces? Cloud should allow you to reduce costs when utilization is reduced either by activity or number of users. This is a challenge with SaaS solution that are by user, usually there is not an option to reduce the number of users over the life of the contract.
- Other than testing new releases, what effort is needed for updates? Salesforce and Workday have proven that you can have large scale systems that role out updates to all users at the same time. With many of the vendors, the customer has their own copy of the database. This will require additional effort to schedule and manage the roll-out of updates.
Is the cloud the answer yet?
The answer is very easy, no. The cloud was never going to be the answer, the cloud can speed development and provide more flexible solutions that are the answer. What has happened is the vendors are providing solutions in the cloud that can provide customers value and change the way software is supported in the institution.
Where I think the current solutions are lacking is in providing the ability to do more than an institution could do with a cloud solution than they could with an on-premise solution. The SaaS/hosted solutions allow institutions to potentially save money and free up resources but institutions need to do more than what they did in the past. For example, if data and reporting solutions in the on-premise software do not meet their needs, moving the same solution to SaaS/hosting will not improve the use of the software.
Where does it go from here? The vendors will continue to push institutions to implementations in the cloud. I think most vendors will stop offering an on-premise option in the next few years as it reduces their cost of development, implementation, and support. One of the biggest benefits of eliminating the on-premise software for the vendor is the ability to keep customers on the current version. It is important for institutions to take this first step to the SaaS/cloud solutions as it is no longer if you should go to the cloud, but when. Institutions should capture the value of changing to the cloud, but with a focus on the future. It is not good enough to just take this first step, it is critical to identify what can be done that could not be done in the institution’s current world. As with the initial post, the institutions need speed, capabilities, and flexibility to meet their current and future needs.