Higher education institutions are in a race to replace 20-year-old administrative systems to modernize the faculty and student online experience, yet new findings show that investments across student, finance and human capital management technology systems dipped harshly following a surge in 2022.
The Tambellini Group’s “2023 U.S. Market Share, Trends and Leaders Reports for Student, Finance and HCM Systems” found that last year’s investment declines contradict a decade-worth of steady financial commitment to institution’s technological upgrades.
“The declines in all major areas of selections in 2022 reflect the magnitude and impact of the resource challenges almost every higher education institution faces, including staffing shortages, declining enrollments, and overall economic uncertainty,” said Vicki Tambellini, CEO and Founder of the Tambellini Group, according to a press release.
Tambellini Group parsed data from over 3,000 institutions whose current student, finance and HCM systems vendors comprise at least 1% market share.
However, 2022 selections outpaced similar selections from 2016 to 2020. Similarly, Finance and HCM systems outpaced those from 2018 to 2020.
Selection declines
- Finance selections – 2021: 63% increased | 2022: 17% decrease
- HCM selections – 2021: 67% increase | 2022: 24% decrease
- Student selections – 2021: 98% increase | 2021: 25% decrease
Factors leading to selection slump
Shifting to cloud-based systems to integrate student, finance and human capital management systems is no small financial feat. Large research universities can spend anywhere from $30 million to $100 million on these projects, while smaller institutions are looking at a $5 million expense. Declining enrollment is shortening up net tuition revenue and a shaky economy has also dried up endowment and reduced state funding, killing school budgets.
Besides money, schools lack skilled manpower. Tambellini Group discovered a growing IT staff shortage due to those retiring and those leaving higher education in search for better paying jobs and flexible, remote positions. This IT brain drain thus costs institutions time and progress, which feeds back into being a money budgeting problem.
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Other tech trends
Both institutions and vendors are finding creative ways to work around budget pressures to modernize higher education’s online infrastructure. Institutions are combining their financial resources for a mutual modernization and vendors are reducing their fees, especially for small and mid-size institutions.
Tambellini Group also identified a growingly and rapidly evolving array of AI-powered tools and features that schools are adopting. AI has proven itself a viable tool across multiple fronts in higher education, from the admissions process to enrollment strategy.
