456 Part III • Acquiring Information Systems
institutional business processes, the KFS is designed to
meet the needs of any Carnegie Class institution, regard-
less of size or complexity.
The Indiana University Financial Information
System had a number of characteristics that made it desir-
able as the basis for a system to serve the higher education
community. The system was designed and built for higher
education institutions whose needs are quite different
from the needs of most business organizations. It was used
at all seven IU campuses, both large and small, so it could
be tailored to the needs of small undergraduate-oriented
campuses as well as large research-oriented campuses. It
was a paperless system that could be accessed from desk-
tops throughout the university system.
The Kuali Financial System was developed and dis-
tributed using the “community source” model, a type of
open-source approach. System development was managed
by the Kuali Financial System Board and staffed by employ-
ees of the partner institutions. Except for the fact that the
developers operated in a virtual organization and were geo-
graphically distributed across the country from Ithaca, New
York, to Hawaii, the development process was managed just
like any other large systems development project. However,
the software is being distributed under the open-source
Educational Community License that provides:
Permission to use, copy, modify, merge, publish, dis-
tribute, and sublicense this Original Work and its
documentation, with or without modification, for
any purpose, and without fee or royalty to the copy-
right holder(s) is hereby granted,....Thus, anyone can take the Kuali software and do
whatever they want to do with it. Anyone, including for-
profit companies, can take the code and documentation,
modify it as they wish, and use it or sell it without restric-
tion. A large trove of information on the KFS is available
on the Web at http://www.kuali.org,including both user and
technical documentation. Also, anyone can download the
software from this site.
How It Started
The Kuali Financial System project was initiated by
Indiana University. IU had an excellent Financial
Information System (FIS) that had been developed in the
early 1990s. By 2002, however, it had become clear that
the client/server technology on which the IU FIS was
based was rapidly becoming obsolete and was not likely
to be supported for much longer. Furthermore, the other
administrative systems at IU were migrating to Java Web
technology. It was becoming difficult to keep good
technical people in this area because the client/server
technology had become a dead end in the career paths of
IU development staff. So, although the users were quite
happy with the existing FIS, it was decided that the FIS
would have to be replaced.
There were two traditional possibilities—build a
replacement system for the FIS using newer technology or
install a financial system from a software vendor. Both of
these alternatives were quite expensive. IU was using the
Student and Human Resources modules that were part of the
PeopleSoft ERP suite. There was initial support from the IT
department for installing the PeopleSoft Financials, but the
estimates of the cost of this conversion ranged from $20 to
$22 million. Furthermore, it was clear that in terms of func-
tionality the PeopleSoft system would be a step backward,
so that was not an attractive option. The option of building a
replacement for the system in-house was estimated to cost
$8 million, which would be a very painful expenditure for
Indiana University. There would be additional costs of con-
verting to the new system, but these would be far less than
for converting to the PeopleSoft system.
IU had previously experienced growing pains with its
homemade OnCourse course management system, and
established partnerships with other institutions with similar
problems to develop a course management system that
could be used by all. In late 2003, then IU Assistant Vice
President Bradley C. (Brad) Wheeler joined with represen-
tatives of the University of Michigan, Stanford University,
and MIT to found the Sakai Project to develop an open-
source course management system for higher education by
assigning staff at the participating institutions to develop
course management systems software under the direction of
a multi-university project board. With a $2.4 million grant
from the Andrew W. Mellon Foundation and a $300,000
grant from the William and Flora Hewlett Foundation, the
Sakai Project was launched and soon began to upgrade and
integrate classroom management software components
from the founding institutions. Within a short time a host of
other outstanding universities were supporting this effort,
and by 2006, the Sakai software was being used by dozens
of higher education institutions on five continents.
In 2003, Wheeler and John F. (Barry) Walsh, Senior
Director of e-Business Services at IU, decided to try to adapt
the approach that had been pioneered by Sakai to the
replacement of the IU FIS and began discussions with the
National Association of College and University Business
Officers (NACUBO), the rSmart Group, and the Andrew W.
Mellon Foundation regarding an open-source financial sys-
tem that could be used for all higher education institutions.
The Mellon Foundation provided a small grant to NACUBO
to assess the feasibility of an open-source financial system.
NACUBO sponsored a survey of higher education finance