Implementing ERP Systems in Higher Education Institutions

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Implementing ERP Systems in Higher Education Institutions

                      Leo Zornada MSc., Tamara Bertok Velkavrh MSc.
                  Faculty of Management Koper, Cankarjeva 5, SI-6000 Koper

Abstract. With the computerisation of business        they already expand their solutions in order to
activities in higher education institutions ERP       satisfy the needs of higher education institutions.
vendors quickly perceived a new market
opportunity. Enhancements or mere adaptations         2. Risks in ERP system implementation
of these solutions, which stemmed from the
experience in business practice were not always           ERP (Enterprise resource planning) systems
successful. By taking a global view, the present      or integral information solutions, often called in
needs and future expectations of higher               practice connected information systems or
education institutions on one side and ERP            integrated application packages, enable us to
vendors on the other side in domestic higher          control all key business functions in a company
education environment were analysed.                  by using unified information architecture. Their
    The article presents research results in the      main aim is to connect all business units and all
field of ERP systems and their use in higher          business functions into a unified computer
education institutions (universities, faculties and   system that satisfies the needs of the whole
independent higher education institutions) in         organisation. By implementing such solutions
Slovenia and abroad. On the basis of the study of     users expect to improve company's efficiency
the supply on the market and by a thorough study      and, consequently, to improve the quality,
of cases from practice we try to find similarities    productivity and profitability of business
and differences between Slovenian higher              operations [14]. There are commercial
education institutions and world trends.              programme packages, which enable the
                                                      integration of transactional-oriented data and
Keywords. ERP systems, informatics, higher            business procedures throughout the whole
education institutions.                               organisation or within the whole supply chain
                                                      extending over a number of organisations [1].
1. Introduction                                           Despite promises for improved organisation
                                                      and more effective management in the company,
    We live in times of ubiquitous presence of        a number of research activities have shown a
computers. Information and communication              rather high failure rate in the implementation of
technology (ICT) have been present in our             integrated information solutions, which, in some
environment for quite some time.                      cases, even involved a high degree of risk [5].
    The opportunity for making profits from ICT       The reason for this can be found in the history or
was first perceived by manufacturing enterprises.     strategy of the development of ERP systems,
These opportunities were later perceived by the       which, following the principle of “best practices”
state and its institutions. Today, the academic       analysed main business functions in most
world is aware of the advantages of ICT too. Not      successful organisations and formed appropriate
only from the point of education and research         reference models. Consequently, this meant that
activities, but also from business aspect, which      the implementation of ERP systems involved a
uses ICT to support other business functions          high degree of complexity and adaptation to
(administrative, organisational, accounting, etc.).   different organisations [5]. The reasons for
An increasing number of higher education              failure can also be found elsewhere [15]:
institutions have introduced ERP systems in             • Strategic goals are not clearly defined;
order to improve their operations and make them         • Company management is not responsible
manageable and more transparent. ERP vendors                 for the system and does not participate in
are also aware of this fact, which is the reason             its implementation;

    27th Int. Conf. Information Technology Interfaces ITI 2005, June 20-23, 2005, Cavtat, Croatia
•     The       project     of      implementation   from those supporting manufacturing activity to
       underestimates the scope, size and             processes      like   orders,    finance,    assets
       complexity of the information solution;        management and human resource management.
  • The organisation is not ready for changes         Lately, these systems have been offered for
       brought about by the integral information      grants management, marketing automatisation, e-
       solution;                                      commerce, student systems and supply chain
  • The project team is not selected from             systems [13]. And what about the academic
       among the most experienced and                 community? Most certainly, the solutions are a
       trustworthy professionals;                     step closer, but still not entirely adapted to
  • Inappropriate education of employees, who         support business activities in higher education
       are thus not able to satisfactory manage the   institutions.
       system;                                            ERP systems for higher education develop in
  • Accuracy of data is not assured;                  the direction of support for key administrative
  • System efficiency measures do not allow           and academic services. The core of such a
       for successful changes to take place           system usually supports minimal student
       (expectations of the organisation are not      administration (enrolment procedures and
       realistic);                                    student enrolment, financial support for students,
  • Questions regarding the method of system          student data), human resource management
       implementation in many parts of                (monitoring of employees) and finance
       organisation have not been appropriately       (accounting, payments, investments, budget). It
       resolved;                                      is possible to include some other programme
                                                      add-ons, e.g. assets management (contracts,
  • Technical problems.
                                                      subsidies, grants, etc.) or for monitoring student
    The success of the implemented ERP system
                                                      and developmental services of institutions [10].
depends on numerous factors, as it embraces all
                                                          The main advantages of ERP for higher
business operations of an organisation. The
                                                      education institutions are, according to ECAR
participation      of    the    management,     the
                                                      organisation, the following [6]:
modernisation of existing business processes, the
                                                        • Improved information access for planning
possibility to connect the integral information
solutions with other business information                    and managing the institution;
systems, cooperation between advisers and               • Improved services for the faculty, students
employees and, last but not least, highly                    and employees;
educated staff are of key importance [2].               • Lower business risks;
    The implementation of ERP system may also           • Increased income and decreased expenses
represent huge financial costs for the company.              due to improved efficiency.
According to some authors, expenses for the               The integration of all business functions in
implementation of integral information solution       higher education environment represents the
for a medium-sized enterprise may amount to           integration of systems for student administration,
between $2m and $4m. On the other hand, the           human resource management systems and
expenses for the implementation of ERP systems        financial systems that used to be supported by
in a large enterprise can exceed $100m [14].          separate and often incompatible information
                                                      packages. An integrated database shared by
3. ERP systems and higher education                   different business functions and, consequently,
                                                      different business modules of a single integral
   Lately, many higher education institutions         information solution is of key importance. Data
want to take advantages of ERP systems. They          can be transferred between individual processes
invest tens of millions of dollars in ERP projects    and accessible by various users in real time. The
that may go on for two, three or even more years      use of up-to-date information approaches (web
[13]. The investment in ERP systems represents        technologies, mobile phones, on-line services,
the biggest investment in ICT for higher              etc.) is an additional advantage, not only for the
education institutions [9].                           administration within a higher education
   The basic idea behind the ERP systems lies in      institution, but also for people who constantly
connecting the main functions of a typical            interact with the institution (students, teachers,
enterprise in manufacturing. As late as in the        researchers, etc.) [9]. Nevertheless, many higher
nineties, the range of ERP systems broadened          education institutions do not implement integral
                                                      information solutions ERP systems. The reasons
can be found in existing “good enough”                       solution at Ohio State University rose from
information solutions, which are used by the                 the initial $53m to $85m.
institution and the unwillingness of institutions       • The University of Minnesota had a similar
for changes and investments (other priorities, not           experience, when the planned cost of $38m
being ready) [6].                                            rose to $53m, and finally reached $60m.
    Some authors describe the implementation of           Risks related to the implementation of ERP
ERP solutions in higher education institutions as     systems in higher education institutions are
extremely difficult. Expenses and risks involved      relatively high, with the institutions not always
are high, whereas the return on investments is        being aware of them, and not anticipating all or
medium to long-term [3]. An answer to the             at least the majority of eventual problems. Being
question “Is it better to avoid the implementation    aware of the advantages and threats involved in
of integrated information solutions?” should be,      the implementation of ERP systems, PMFISHE
according to the chief information officer at the     (Project Management for Information Systems in
University George Washington, a definitive            Higher Education) initiative was presented at the
“NO”. He believes that integral information           University of Newcastle. The initiative aimed at
solutions give higher education institutions          preparing a document which would provide the
competitive advantages and adds that:                 guidelines for all higher education institutions
“…institutions, which are unlikely to switch to       faced with the problems surrounding the
integral information solutions, will find it          implementation of ERP systems in their business
difficult to retain their market share of students.   activities [4].
Students will, sooner or later demand services,           In order to improve the share of successfully
offered by other institutions…” [9]. The latter is    implemented ERP projects in higher education
stressed by Farrell in his contribution, which        environment, the initiators of PMFISCHE
emphasises the importance of developing global        initiative wanted to create the conditions for a
economy and operations according to 24x7              successful communication and cooperation
principle, which directs the development of ERP       between two completely different groups of
systems. This is the direction followed by many       people: the management of a higher education
higher education institutions (franchising,           institution, who is not familiar with information
distance education, on-line learning and the          systems and their implementation and
introduction of self-services), which makes wide      development on one side, and IT experts, who
accessibility and the retention of market position    usually do not have or lack experience related to
possible [3].                                         the implementation of information solutions
    Research in British higher education              adopted to special needs of academia on the
environment reveals a number of cases in which        other hand [4].
universities      started    projects    for   the
implementation of integral information solution.      4. ERP Vendors for higher education
Unfortunately, no results or conclusions                 institutions
stemming from this research are available,
because the projects have not been finished yet           The main ERP Vendors for higher education
[3].                                                  in the world are Oracle, SCT, PeopleSoft, SAP,
    Despite a limited number of implemented           Jenzabar and Datatel. Despite this year's merger
integral programme solutions in higher education      between PeopleSoft and Oracle Corporation, the
institutions, some cases of unsuccessful              latter will keep the development department of
implementation can be found in practice [11]:         PeopleSoft and their products, thus these two
  • At Cleveland State University they were           companies will be dealt with in our article
       almost forced to take legal action against     separately. According to research carried out by
       the ERP vendor, after they had found out       ECAR organisation it can be noticed that none of
       that only half of student requests can be      these vendors is a market leader [6].
       dealt with in 1998. The University
       continued with the implementation of ERP
       system despite rising costs (the planned
       amount was exceeded by $10.8m and
       amounted to more than $15m).
  • Similarly, the planned cost of the
       implementation of integral information
Challangers                   Leaders

Percentage of implementations

                                                                              Other                                                             Datatel

                                                                                           Ability to execute
                                                                              SCT                                                                    PeopleSoft

                                40                                                                                                                        Oracle
                                                                              Oracle                                            SAP

                                           Financial      HR        Student                                          Niche players                   Visionaries

                                                       ERP Module                                                               Completeness of Vision

                                      Figure 1. The share of ERP systems                                        Figure 2. ERP in US higher education
                                               implementation [6]                                                          institutions [10]

   According to Gartner Group the consolidation                                               Solutions of these companies embrace the
of vendors and the return to basic business                                                majority of main functions of ERP systems
operations had a crucial influence on ERP                                                  (managing study process, managing human
solutions in the area of higher education [17].                                            resources and finance). Advantages of individual
ERP vendors are divided by Gartner Group                                                   solutions can be noticed in different areas.
according to their vision and the possibility of                                           PeopleSoft emphasise the role of Internet and
solution     implementation.       Their  "Magic                                           web technologies (reaching virtual organisation
Quadrant” comprises four groups of vendors[10]:                                            through portals), SAP is in favour of ERP
  • “Leaders”: enterprises with a good market                                              systems centred on users (student part which is
      position and an excellent vision regarding                                           student-oriented, etc.), Oracle connected the
      future business activities. SCT (Banner                                              Internet and back-office operations in E-Business
      solution), Datatel (Colleague solution) and                                          package.
      PeopleSoft belong to this group.                                                        It is difficult to find any of the mentioned
  • “Challengers”: enterprise with a good                                                  ERP systems in Slovenian higher education
      market position, but without a deeper                                                environment. Even though some vendors of ERP
      understanding of future development                                                  systems for higher education are present and
      trends.                                                                              easily recognisable in Slovenia (SAP, Oracle),
  • “Visionaries”: enterprises with a good                                                 they are mainly found in manufacturing, the
      vision regarding their operations in future,                                         higher education segment of the Slovenian
      but slightly worse present business                                                  market remains unknown to them.
      operations. Oracle belongs to this group,
      yet the merger with PeopleSoft can change                                            5. Higher education information system
      the situation in the future.
  • “Niche players”: enterprises which are                                                    On the basis of the analysis of business
      successful in certain market segments.                                               activities in a higher education (HE) institution
      SAP belongs to this group, as they are a                                             [19]      and      strategic     plans     regarding
      leading company in the field of integral                                             computerisation of HE institutions in Slovenia
      information solutions. But Gartner assesses                                          [7,12], business activities and information
      their vision and strategy in the field of                                            support for HE institutions can be defined as
      higher education as rather questionable.                                             shown on Figure 3. For each of the basic
                                                                                           activities of an institution, business activities and
                                                                                           information support is divided into:
                                                                                             • the implementation of the basic processes
                                                                                                  (education and research),
                                                                                             • administrative           support     for      the
                                                                                                  implementation of the basic processes.
Inter-university national and international cooperation, higher       became a member of the newly established
                  education at the level of country,
                           lifelong learning                             University of Primorska (UP). The FM’s
                                                                         computerisation development represents the
                          INSTITUTIONS                                   basis for the computerisation of the UP.
   Business reports, controlling, decision support systems, quality         These       three      strategic      plans     for
                                                                         computerisation reveal that their development
          THE                    THE               OTHER BUSINESS        was      similar,    regardless       of     different
  IMPLEMENTATION          IMPLEMENTATION               ACTIVITIES        implementations. They stemmed from the
   OF EDUCATION             OF RESEARCH           HRIS – human
     ACTIVITIES               ACTIVITIES          resource               existing situation in the field of informatics with
portals, forums,         Research                 information system,    the following characteristics:
systems for              equipment, library       financial and
e-learning, virtual      system, support for      accounting IS,           • satisfactory ITC equipment,
libraries, library
                         project work,
                                                  administrative IS
                                                                           • the existence of independent unconnected
laboratories,            research software,       document system),             or only partially connected functional
teaching equipment,      etc.                     marketing IS,
simulations, etc.                                 publishing IS, sales
                                                                                information solutions in the field of
                                                  IS, etc.                      accounting      and       human       resource
  ADMINISTRATIVE          ADMINISTRATIVE                                        management,
     EDUCATION                RESEARCH                                     • the       existence      of     a    good,     but
     PROCESSES               PROCESSES
SIS – student            RIS – research
                                                                                technologically outdated solution Fnisid,
information system       information system                                     which was used almost at all higher
                                                                                education institutions in Slovenia at that
      Figure 3: Business activities of HE                                       time [8],
    institutions and higher education ERP                                  • unconnectedness of solutions with other
                    system                                                      information systems in the field of
                                                                                education and research.
   The strategic targets (developmental strategy,                           Based on a number of independent studies
business excellence and the quality of all                               that analysed business operations of higher
business operations, based upon the vision,                              education institutions and their information
mission and strategies of a higher education                             needs plans for computerisation were made with
institution) can be reached only by incorporating                        the following common characteristics:
a suitable information strategy, based on the
                                                                           • at least three aspects for the support of
implementation of the model shown on Fig. 3.
                                                                                processes in higher education institutions
The development of ERP systems was and still is
                                                                                were defined: educational process,
the only possible way for reaching these targets,                               financial and accounting function, human
because it comprises [15]:
                                                                                resource management,
  • a common view on business operations,
                                                                           • the demand for a technologically up-to-
  • a common database for data and                                              date solution used in a variety of
       transactions.                                                            contemporary         business       operations:
                                                                                e-commerce, mobile commerce, etc.,
6. Computerisation of higher education                                     • insuring independence, upgradeability,
   institutions in Slovenia                                                     connectiveness, stability and security of
    Slovenian higher education institutions                                • within the framework of all three strategies
(universities, faculties and independent higher                                 the creation of a single data warehouse or a
institutions) almost simultaneously initiated                                   central database was planned,
strategic planning of IT. At the University of                             • the support of the education process was
Ljubljana (UL), the strategic plan for the                                      made a priority.
computerisation was ready in 2001 [12], at the                              The aim of all these plans was to create an
University of Maribor (UM) the project for the                           ERP system in support of business operations
renewal of information system was prepared in                            carried out by higher education institutions. As
the same year [7]. The Faculty of Management                             there were no solutions available on Slovenian
Koper (FM) should be mentioned from among                                market that would support education activities,
the independent higher education institutions.                           the decision to develop an in-house solution was
The FM, formerly called Higher School of                                 sensible. Such an approach involves:
Management        in     Koper    initiated  its
computerisation in 2000 [19]. In 2004, FM
•    in-house development of information             users are most often adapted to the information
      subsystem in areas, which are peculiar to       solution during implementation phases. Higher
      higher education institutions and for which     education environments are extremely dynamic,
      there are no competitive solutions              especially in Slovenia, where the education
      available on the Slovenian market,              system has been fundamentally changed. A
  • the integration of a commercial solution,         consequence of the wish to build up-to-date
      available from a vendor of functional           information support for business activities, but
      information system, into the higher             with material and regulatory inability to
      education information system, with a            introduce a global solution, we are faced with the
      possibility to develop an in-house solution     development of three equivalent integral
      later.                                          information solutions in the field of higher
   The UL, UM and UP have already developed           education. Despite the differences of individual
and still use individual information subsystems.      approaches it can be expected that the future will
The UM develops the most centralised                  bring a convergence of systems (at least from the
information system based on common                    functional point of). The role of the state could
information solutions for all faculties, the UL       prove decisive, because it finances the
develops a much more heterogeneous system, as         development of individual solutions through
individual faculties use information solutions        projects. Higher education institutions and the
provided by different vendors, all of which are       state should leave behind the question of
connected to a common data warehouse. The UP          information support for business processes and
adapted the system used at the FM, which now          should focus on informatics as one of the key
represents the basis for university information       factors of quality assurance in higher education.
system that is founded on the same distributed
support for business processes on the level of        8. Literature
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