If You Can't Beat 'Em...

August 25, 2014

The Kuali Foundation, after a decade of fighting commercial software vendors as a community source initiative, will launch a commercial company to better fight... commercial software vendors.

The foundation, whose institutional members are developing piecemeal modules that may one day combine to challenge the suites offered by enterprise resource planning software providers such as Ellucian, Jenzabar, Oracle and newcomer Workday, announced the new direction in a blog post Friday afternoon. 

The foundation reached the decision after two community strategy sessions hosted over the summer, said Bradley C. Wheeler, chair of the foundation's board of directors.

“We’re turning 10 in August, and we need to be thinking about our next decade,” Wheeler said in an interview. “We’ve decided the best way for the community to continue to achieve its values is to create a professional open source firm.”

Kuali’s software will remain free and open source, but the company will charge customers for services such as hosting or contracted software development. Meanwhile, the foundation will diminish (as will membership fees), but still “enable members to pool funds to get special projects done that are outside the company’s roadmap.”

In other words, Kuali may model itself after a company such as Instructure, which provides a free “community version” of its Canvas learning management software.

The comparison with Instructure is no mere coincidence. “Kuali 2.0,” as the foundation styles itself in the blog post, has named Joel Dehlin its first chief executive officer. Dehlin served as Instructure’s chief technology officer until his sudden departure from the company this summer (though Wheeler said the events were unrelated).

Speaking to Inside Higher Ed, Dehlin said he has been interviewing candidates for an unspecified new project for the past six weeks. As Kuali’s soft launch began when the company published the blog post, Dehlin said he will begin hiring immediately.

“The most important thing is keeping the community motivated moving forward and building up our hosting competency,” Dehlin said. “At the same time, we’ll pick the first module and start making a multi-tenet version of it. But we don’t know what that module is yet.”

In addition to its hosting capabilities, Kuali’s top priority is software development, Wheeler said. After all, the foundation doesn’t have any developers of its own -- or indeed any employees. Its board consists of members who serve as deans, chief information officers and vice presidents, to mention some roles. The actual software development is done by administrators, faculty and staffers at colleges and universities in the Kuali community.

“I think people sometimes have in mind that the Kuali Foundation is like Oracle,” Wheeler said. “We’ve never been that. We’ve always just been a means if a handful of institutions wanted to come together.”

Kuali’s products are all in different stages of production as community developers tackle them module by module. Wheeler praised the success of the financial management software, for example, but described the student information system as a “huge elephant.” Similarly, the foundation “never found the investor pool” to tackle all the different modules a human resources management system would include.

“In many cases, that’s not a pressing matter,” Wheeler said. “There’s a lot to look at over the next decade.”

With Kuali taking a more active role in helping institutions implement its software and train people to use it, the company may post a threat to other companies already providing those services. The community already has an ecosystem of commercial affiliates.

RSmart, one such company, did not respond to a request for comment on Friday.

Wheeler said Kuali is likely to partner with some of the commercial affiliates in the future, adding that he thinks the “ecosystem will continue to grow.”

During Kuali’s first 10 years, its members were not shy about lashing out at commercial software providers. During Friday’s announcement, Dehlin and Wheeler fired their latest salvo.

“We frankly suck [at] the cost of education in the United States,” Dehlin said. “Part of that is because not only are ERP suites expensive, but they don’t solve problems. They treat schools like companies.”

Wheeler said higher education has been “beaten around” by large vendors. As a result, he said people in academe trust websites ending in “.edu” or “.org,” but are automatically skeptical of anything that ends in “.com.”

“What we’re really doing is gathering the good things a .com can do: stronger means of making decisions, looking broadly at the needs of higher education and maybe sharpening product offerings a bit more,” Wheeler said. “This is going to be a very values-based organization with patient capital, not venture capital.”

The foundation will fund the launch, Wheeler said. For future funding, the company won’t pursue venture capital or private equity, but money from “values-based investors” such as university foundations. That means Kuali won’t need to be run like a traditional ed-tech startup, he said, as the company won’t be “beholden to Wall Street.”

Wheeler said more information about the company will be released in the coming weeks.

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