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Vendor Consolidation: Another Challenge to Planning

How should institutions handle ERP planning with the announcement of Hellman & Friedman’s purchase of SunGard Higher Education and the subsequent merger with Datatel? With care and due diligence, now is not the time to panic or make rash decisions. It will be at least 18 months before the long-term impacts can be evaluated. The first objectives of management teams from both companies will be to close the deal, identify the management team of the new company, and begin the transition planning. Once the new company starts, then the transition will begin throughout the company, including product management. Product management will focus on the review/rationalization of the products and the development of a product strategy and roadmap. The strategy and roadmap will identify if or when products will be combined or eliminated. The actual impacts of these decisions will not appear until the components of the strategy are executed, which will be at least 18 months out. Throughout this process, the company will reassure customers about continued support and new benefits. At the same time, the customers will speculate on the impacts and the cost of the impacts.

Planning Assumptions

Institutional planning should continue to focus two to five years into the future. Developing assumptions about the vendor consolidation can help identify how this combination will impact existing plans.

One of the initial assumptions to consider is the expected value the consolidation will provide. Will the new company be in a better position to provide additional benefits? The next assumption is around the product lines. There are overlaps in the products and there will be some consolidation to reduce the costs associated with supporting and enhancing multiple similar products. Some of the potential results of the combination are:

  • It is unlikely Student components of SunGard Banner or Datatel Colleague will be eliminated in the foreseeable future as both have a large install base which will not change quickly
  • SunGard PowerCampus is the third student system in the mix and appears to be the system most likely to be discontinued or at least receive minimal future enhancements
  • The Advancement products will be rationalized as there are too many options supporting the same functionality
  • A single Analytics solution will emerge capable of utilizing data from Banner or Colleague
  • Over time, common components, like HR, Finance, and Financial Aid, between Banner and Colleague will move to common modules created for use by both products

The question to ask is if the new company will change entire product lines or address components of the product lines. A focus on the components allows incremental changes with the benefits of minimizing customer impact, leveraging of assets from each company, providing additional value to one or more of the product lines, and reducing the cost of development and support.   For example, do any of the Finance components provide differentiation over  the other? Is this where the core value of the system is delivered to justify supporting and enhancing multiple versions of Finance? The Finance component rounds out the product line and is not the differentiating function. Similar arguments could be made for HR and Financial Aid. Are there components within the Student system that are particularly strong or weak in a product line?  For example, if CRM for Datatel is much stronger than components from Banner, will enhancements continue on the Banner components or be replaced by Datatel CRM.

Approach to Planning

Looking at the ERP as components will allow an organization to focus on their needs and identify the best approach to delivering their needs. There is already discussion of Kuali having a fairly well-accepted Finance module that could be used to replace your existing Finance module. Is it an option – yes, but what are the impacts of such a change? WorkDay has recently announced their Higher Education Finance and HR solutions. Again an option, but what are the impacts? There are benefits and costs to adopting a component not included in the ERP.

The good news is that there are/will be options. Understanding your needs and options will empower you to make the decisions and even provide input into future product decisions. When the product rationalization starts to become a reality, the new products could very well be your best solution. That is a decision you can make as opposed to the vendor making it for you. In the mean time:

  • Decisions that have already been made should not be reevaluated unless they are not fulfilling the organization’s needs
  • Organizations making significant decisions on purchases or upgrades in 18 to 24 months should have the advantage of more clarity about their options in their decision process
  • Every organization will benefit from clearly understanding their needs, options, and a clear decision process to meet their needs