What's a Kuali? A cute name belies the mission of this open source financial management software for higher education, which soon enters its next incarnation.

"JUST THREE YEARS AGO A group of higher education's IT people and financial managers teamed up to take on a new project. Their mission: To develop open source financial management software that could keep a general ledger, run payroll, or perform any other basic financial function.

The hard work is paying off. Next month, October 2007, The Kuali Project officially enters Phase II. A new version of the Kuali software will include different bells and whistles for the financial team. Among the highlights: more functions for the general ledger, new modules for tracking contracts and grants, and help with monitoring procurement, according to Kathleen McNeely, assistant vice president of finance at Indiana University, who gave a rundown at the "Kuali Update" session in July at the annual conference of the National Association of College and University Business Officers (NACUBO), which took place in New Orleans, La.

The Kuali project aims to deliver the best of breed from nonproprietary software packages, explained McNeely. The project began when a key group of colleges and universities that had already developed technology to manage their own financial matters agreed to work together and share software code. McNeely's employer, IU, has been a large contributor to Kuali. IU's financial management system is the baseline for the Kuali software, although others certainly have added to the project.

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Next month's additions follow last October's release of Phase I, or Kuali 1.0, if you will. Spearheaded by The Kuali Foundation, the first iteration of the software was designed to handle such key tasks as general accounting, budget creation, capital asset management, requisitions, and disbursements.

"Kuali" is loosely translated from Japanese into English to mean "humble utensil that plays an important role in the kitchen." The whimsical name is a nod to the Sakai Project, another open source initiative that pre-dates Kuali and was named for Hiroyuki Sakai of the popular Iron Chef TV show. While Sakai is developed to be an alternative, or complement, to commercial learning management systems like Blackboard and WebCT, Kuali is all for business.

THE COST OF FINANCIAL MANAGEMENT

Commercial technology systems for higher education do not come cheap. Depending on the size of the college or university, and the amount of data being managed, the cost to license a commercial financial system can run into the hundreds of thousands of dollars, and even be as much as $1 million.

"But that's not where the real costs are," observes Brad Wheeler, vice president for information technology, CIO, and a dean at Indiana University. The real nut to crack is the implementation cost, which can run as much as $20 million, says Wheeler. "There is a tremendous amount of work involved in moving data and maintaining a system," he says.

The Kuali Foundation wants to ease this financial burden. That's why Kuali software is distributed for free. Free is the whole idea behind open source, which gives users access to software code and permission to change it at will. Open source software is, by definition, an open book. The code is not only available for download, but fits with the higher ed model of open discourse and shared information. The "free" concept also appeals to those watching the bottom line.

Kuali took shape in 2004 with $2.5 million in seed money from the Andrew W. Mellon Foundation and four founding partners: Indiana University, the University of Hawaii, NACUBO, and the rSmart Group, an open source software services provider. For the uninitiated, rSmart is to open source software in higher education what Red Hat is to Linux, an open source application that runs on UNIX.

rSmart is an important partner, guiding users through the process of converting to the Kuali software and learning how to use it at optimum levels.

But while the software is free, this help is not free. Neither will be the staff hours to convert to Kuali and run the system. Those who have explored open source already know that free software comes with other costs, but it holds the promise of cost savings. "When we say free, think free puppy not free beer," says Wheeler. Make no mistake--there will be work involved.

Case in point: Kuali partners have invested an additional $4.5 million in services and staff time over a two-year period to develop the Kuali Financial System--that first software package for higher education that was introduced in Fall 2006.

One of the appeals of open source is the flexibility. If an application needs to be tweaked, there's no need to wait for a commercial software company to issue an upgrade. With enough in-house talent, or consultants to rely on, the software can be rewritten and customized to specification. Conversely, there are no forced upgrades. No one is required to use a new version just because it has been issued.

Kuali has been designed in modules, which means that bits and pieces can be matched to work with existing commercial systems. At Indiana University, for example, several Kuali applications work in tandem with PeopleSoft's HR and student system.

During the past three years The Kuali Foundation has pulled in more partners. The University of Southern California made a splash at the summer conference by announcing that it had signed on to be a Kuali software user.

USC's Dennis Dougherty, senior vice president, finance and CFO, explained his reasoning this way, "The greatest potential for success entails the pooling of efforts by the higher education community to leverage the best of modern technology." Traditional approaches in which institutions "grow their own" solutions, or adopt commercial software products that are primarily developed for other markets, are not cost effective in the long run. They don't address higher education's needs head on, he said.

As Wheeler notes, Kuali wasn't developed to help run a city government or a manufacturing operation. This is software by higher education for higher education.

There are other advantages to using software germane to the higher education sector--there is no worry that a parent company is going to abandon the education client base for a more lucrative market.

A GROWING TEAM

There are other Kuali partners on board. The University of California system agreed to become a member just last year. Other new members also include Cornell, Michigan State University, San Joaquin Delta College (Calif.), and The University of Arizona.

Other commercial ventures have joined rSmart as Kuali affiliates. They include IBM, Huron Consulting Group, Exeter, and Integral.

And while anyone can use the code, or turn to the commercial affiliates for help, The Kuali Project asks that partners pay annual membership fees to help offset development and operational costs. These costs are based on the size of the institution involved. A smaller college might pay $5,000, while a larger system's costs run as high as $25,000.

Is support for Kuali paying off?. There are no clear answers, yet. While these institutions have pledged their support, and willingness to share best practices, the first live implementation of the Kuali Financial System happened just this summer at an IHE far from founding partner Indiana University.

The trial balloon is Strathmore University, located in Nairobi, Kenya. The university hired the rSmart Group to implement the open source financial software, which it hopes will reduce costs, according to John Odhiambo, CEO and vice chancellor. Strathmore is using Kuali to run its new fiscal year accounting records and will use its enterprise resource planning suite in the future.

There may be more full-scale implementations past October, when Kuali's Phase II is in full swing. Then the community gears up for Phase III, due next summer, which will include even more financial service options. The next version of Kuali will include endowment management modules, adds McNeely.

Resources

The Kuali Foundation, www.kuali.org rSmark Group, www.rsmart.com