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3 Things I Don't Know about the Datatel and SunGard Deal
August 8, 2011 - 9:00pm

"Under a new agreement, the private equity firm Hellman & Friedman, which owns Datatel, plans to buy SunGard Higher Education from its parent company, SunGard Data Systems, for $1.775 billion. Hellman & Friedman would then meld Datatel and SunGard Higher Education into one company under a new, yet-to-be-decided name."

--A Back-Office Deal August 8, 2011 by Steve Kolowich

3 Questions:

1. Can the S.I.S. (Student Information System) market be disrupted by an inferior (for now) but significantly cheaper and simpler competitor?

The incumbent S.I.S. market appears to be relatively mature in terms of both corporate (ownership) and product evolution. We like our S.I.S. systems (can you tell me differently?), and we like the companies that provide them (again, please disagree). What we worry about is the cost, and we would like it if our academic tech dollar could be spent on teaching and learning needs rather than administrative needs. Are there platforms, products and companies ready to disrupt this market? Who are you? What are your plans? Will the new "SunAtel" or "DataGard" (or whatever) be smart enough to try and disrupt itself, offering a cheaper, simpler (and worse) product under a different brand to compete with its own offerings?

2. When will the S.I.S. migrate to the cloud?

At some point, all of our mission critical campus systems (from the S.I.S. to the LMS to the ERP etc.) will evolve away from applications that we run and into services that we rent. The real question is not if, but when? Today, we are simply not comfortable with our most treasured and protected and valuable data living in the cloud. But the economics of multi-tenancy, a model in which multiple customers share a single infrastructure, will eventually win out. Renting applications as a service from the cloud will be cheaper, better, and more secure than local, distributed hosting. How will the new merged Datatel/SunGard owners accelerate this trend? Where do we stand now with cloud based S.I.S. systems?

3. Will a merged Datatel and SunGard be able to move up the educational value chain, and greater margins from selling services, by focussing on analytics, reporting, prediction and retention?

The S.I.S. market, like all mature markets, will eventually bifurcate into a low-end value sector and a high-end premium sector. To keep earning high margins, the S.I.S. providers need to push into business intelligence, analytics, predictive data mining, reporting, and compliance. They will need to demonstrate a clear value proposition of higher retention through prediction of at-risk students. Mobile services, and other client facing (consumer like) applications out of the core S.I.S. will also be key. Will a merged Datatel and SunGard invest the resources necessary to lock-in the premium market? Who will be the main competition (Blackboard Analytics or others?). What premium services can the S.I.S. providers up-sell from the standard student information system?

What are some of the things that you don't know (or that you do know) about the S.I.S. market?

 

 

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