This article concerns an area that interests me greatly—the education industry, sometimes referred to as the educational services industry. As a part-time graduate student, and having returned to university almost a decade after the completion of my undergraduate degree, I have witnessed major changes in the education industry.
The emergence of new technologies and changing student demographics are driving dramatic changes in the way educational institutions deliver their services. These institutions—colleges, universities, and vocational, technical, and trade schools—have seen growth in enrolment over the last decade, as society as a whole is showing a trend to value continuing education. Such growth requires the proper management of student information, curricula, finances, and human resources.
Through an analysis of Technology Evaluation Centers’ (TEC’s) market data, I provide a glimpse into the types of enterprise systems that educational institutions are considering, and the top functional priorities they seek to help manage increased financial, organizational, and regulatory demands in the industry.
The Education Industry Landscape
Easy access to endless amounts of information over the Internet has reshaped the education industry over the last two decades. This has changed not only the way that teachers and professors design and deliver their courses, but also the way students conduct research, study, and prepare project work. Access to previously administered exams and assignments are more readily available, forcing teachers and professors to find new ways of testing their students’ understanding of course materials. In addition, access to personal and mobile computing devices, declining telecommunication costs, and the availability of streaming video and broadband Internet technologies have led to substantial growth in the distance education and e-learning industry—a market poised to reach US$107 billion by 2015.
Many educational institutions today are faced with increased costs as a result of reduced public funding. For example, a recent report issued by the Canadian Union of Postal Workers illustrates that public funding in Canada represents 57% of university and college operating funds, down from 81% two decades ago. Major cuts to public funding are widespread and global, particularly in countries where government funding of educational institutions has typically been very high. These institutions are being forced to find new and innovative ways to make the most of their restricted budgets and effectively administer their finances.
New approaches to education, as brought about by technological advancements, and the shift in public funding together have demanded that educational institutions implement structural reforms to adapt to the changing education industry landscape. Many of these institutions have turned to software solutions to help them manage these changes and help alleviate their day-to-day challenges. Some software vendors, such as UNIT4, Oracle, SunGard, and Jenzabar, offer industry-specific solutions that help meet the unique needs of educational institutions.
TEC Market Data: A Profile of the Education Industry
Selecting the right enterprise software is often a cumbersome, time-consuming, and costly process. With limited resources and budgets, educational institutions need to ensure that they are making the right choice. But once an institution makes a well-informed software selection, it is poised to reap the benefits of its chosen system—including boosting productivity by reducing the time spent on routine work, and increasing efficiency by eliminating redundant work—thus allowing staff and faculty to focus on the most important aspects of their jobs.
In order to paint a portrait of the enterprise software user in the education industry, I examined more than 13,000 software evaluation projects from decision makers within the education industry and the associated market data in TEC’s online software evaluation system, TEC Advisor, from the last two years. (Try TEC Advisor, if you haven’t already.)
The graphs below provide an overview of the demographics of the respondents, the software types and functionality they sought, and their interest in software-as-a-service (SaaS) and on-demand deployment options.
Respondent Demographics
Figure 1 illustrates the geographical breakdown of education industry respondents that evaluated enterprise software in TEC Advisor. The largest number of respondents originated from Asia, Latin America, and Africa—at 28%, 19%, and 19%, respectively. The region in Asia that drew the most interest was India. The Indian education market is experiencing significant growth due to increased per capita income, national economic growth, and enhanced technology. IT education and training are specific areas of growth, a direct result of India’s booming IT industry.
Figure 1. Geographic Breakdown of Education Industry Users that Evaluated Enterprise Software in TEC Advisor
(as a percentage of all users)
Top Software Types
Figure 2 depicts the top 5 software types that users in the education industry used to compare vendor capabilities. The accounting and enterprise resource planning (ERP) for small and medium business (SMB) software evaluation model topped the list. It targets the functional requirements for a fully featured accounting solution and includes categories such as general ledger, accounts payable, accounts receivable, payroll, and job and project costing. Such functionality offers educational institutions the ability to manage the increasing financial demands related to accountability and managing change. Accounting solutions can also help manage increasing regulatory pressures, such as those outlined by Sarbanes-Oxley and International Financial Reporting Standards (IFRS).
Human resources (HR) software systems were next on the list. This software type provides educational institutions with functionality to manage staff benefits and payroll, workforce management, and training, as well as student information and records. The main benefits of these systems include the ability to support HR personnel by automating much of the routine work required and support the growing talent management needs of organizations.
Learning management was also indicated as a top software type evaluated by educational users. These systems assist in developing effective training systems, e-learning and virtual classrooms, and course content. This becomes important as educational institutions increasingly use technology and the Internet to deliver course content. Learning management systems enable them to manage course curricula, administer the assessment and evaluation of course components, and benefit from communication and collaboration features.
Figure 2. Top Software Types that Education Industry Users Evaluated in TEC Advisor
(as a percentage of all evaluations)
Top Software Functionality
With the help of my TEC colleagues, I analyzed the software requirements of educational institutions and sorted them by percentage of responses to determine the most frequently sought functional areas. I make the general assumption that a more frequently selected functional area constitutes functionality with a higher aggregate priority.
As Figure 3 shows, the top functional modules requested by educational users evaluating enterprise software focused on core accounting functionality, such as accounts receivable and cash management—thus helping educational institutions manage, for example, tuition and outstanding payments from their student clientele. Other functionalities, such as payroll, customer service and support, and financials and accounting, are consistent with the top software types illustrated in Figure 2.
Figure 3. Top Prioritized Functional Modules Requested by Education Industry Users Evaluating Enterprise Software
in TEC Advisor (as a percentage of responses depicted in Figure 2)
On-demand Software Requirements
An increasing number of educational institutions are considering SaaS and cloud-computing deployment options to meet their increasing financial, organizational, and regulatory demands. A clear example is the popular use of Google Apps (according to US News & World Report, 66 of the Top 100 US universities and colleges are using Google Apps for education). The adoption of a cloud-based platform from Salesforce.com by some schools to facilitate better communication between faculty, support staff, students, and parents/guardians is another example.
As can be seen in Figure 4, the general acceptance of hosted software delivery models in the educational services industry has remained relatively stable since 2010. The first two months of 2012, however, illustrates a relatively higher intention to evaluate hosted and SaaS solutions when compared with previous years.
Figure 4. Percentage of TEC Advisor Users in the Education Industry that Requested SaaS or Hosted Applications
During Their Software Evaluation (as a percentage of all evaluations)
Conclusion
TEC’s data shows that educational institutions sought accounting and ERP for SMB solutions, with core functionality in accounts receivable and cash management, to manage their ever-complex financial systems. With increasing pressures from regulatory bodies and the changing education industry landscape, educational institutions look to enterprise software to help them boost the productivity of their faculty and staff, and increase the efficiency of their day-to-day operations.
The market data presented in this article represents the entire education industry—including a mix of K-12 schools and higher education institutions, as well as companies that provide educational and training services. These establishments have differing needs, goals, and objectives, and therefore this article paints only one broad-stroked portrait of the enterprise software user in the education industry. Segmenting the data by institution type and size would provide further insight into individual institutional needs and trends. That, I leave for a follow-up article.
Previous portraits in this series: