Universities are adopting cloud services at an accelerating pace

Universities and colleges are moving their finance and human capital management systems to the cloud at a quickening pace, according to data published Monday by The Tambellini Group, a higher education advisory and research firm.

The rate of increase for institutions selecting systems for finance and human capital more than doubled in 2020 compared to the previous year, the group found. And as a growing number of higher education institutions make long-term decisions for their technology infrastructures, the landscape also grows more homogeneous: Researchers found that among those that made decisions for those systems in 2020, more than 90% selected cloud solutions, rather than buying technology to continue hosting services in their local environments.

Vicki Tambellini, the firm’s founder, told EdScoop this trend marks a “major shift” as institutions feel the pressures of the pandemic.

“It’s a combination of lack of resources, institutions are concerned about their ability to continue to support the goals of their institutions based on the amount of cuts they’ve had to do, the number of furloughs and the cutback in resources,” Tambellini said. “They’re being required to deliver more services to campus with fewer [full time employees].”

The group also found that two major cloud providers, Oracle and Workday, gained a greater share of the market last year, with 65% of institutions naming one of those companies as their system provider last year, compared to a 50% share claimed by Oracle, Workday and a third company, Unit 4, in 2019.

The Tambellini Group looked at 4,300 higher education institutions in the U.S. for this report and all cloud providers claiming at least 1% of the higher education market, including companies like Anthology, Jenzabar and SAP. Vicki Tambellini said that although growth of cloud investment in higher education is accelerating, most institutions are still running their services from servers on their campuses.

Among research institutions with at least 20,000 full-time employees, just 30% have their finance and human capital management systems in the cloud. And among midsized and small institutions, the numbers are smaller, with 15% and 6% investing in the cloud, respectively. But the group projected the current growth rate will continue accelerating, with those figures doubling for large institutions and tripling for small and medium schools by 2024.

The pandemic spurred the trend along, she said, as institutions plan for the future.

“It takes a long time in any environment, especially now, to plan,” she said. “Though these decisions are more commonly being made for cloud deployments, most institutions still have not moved to the cloud. To do that, they’re moving from capital expense to operating environment expenses, so these projects require transitions and they know now from watching others stall and fail that it takes more planning, and so they’re trying to take more time ahead of projects to ensure success.”