Ed Tech Merger Could Result in Monopoly

The merging of two large companies is usually grounds for speculation and discussion about the potential for a monopoly. The two merging companies usually try to sell their decision as one that will ultimately benefit everyone, but consumer and media skeptics aren't always so sure. This scenario played out recently in the ed tech world, as two major software providers moved toward a merger.

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The Merger

In early August, 2011, Datatel and SunGard Higher Education, two major providers of commonly-used higher education administrative software, announced a merger. Under the terms of the merger, Datatel's parent company is to pay $1.775 billion for the SunGard Higher Education brand. The merger will result in a single new company that will operate under a new, yet-to-be-determined name.

Prior to the merger, the companies were competitors, providing software used in administrative, rather than educational, applications. Both Datatel and SunGard Higher Education could be used to track data relating to finances, fundraising, human resources and the student body. According to a recent article in Inside Higher Ed, the parent companies of both software systems hailed the move as a positive step. A lack of competition and pooling of resources is certainly better for these two companies, but will it produce better results for education industry consumers?

Is Bigger Really Better?

While it is true that these two companies stand to benefit from their merger, it is not necessarily the case that the merger will result in a lower quality product for consumers. The merger allows the companies to merge into one new company that will presumably make use of the best of both components' best qualities. Plus, it will still behoove the newly-minted company to do its best to serve its customers' needs. Though a lack of need or concern for customer satisfaction is a risk in the case of a true monopoly, it seems a bit premature for those concerns in this case.

Datatel and SunGard Higher Education did not constitute the entire market share before their merger, and will not do so after the fact. There are still several similar software companies in operation, including Oracle/PeopleSoft, which is backed by Oracle, a large and notable parent company. Plus, higher education is one area in which open-source software has thrived. Though this hasn't been as much of a trend for administrative software as for educational software, higher education administrators often have access to computer scientists who can help engineer a program to suit their needs.

More About the Software

Inside Higher Ed reports that, prior to the merger, the combined client roster of Datatel and SunGard Higher Education included approximately 2,000 educational institutions. These types of software systems, which are dedicated to internal support systems tangential to an organization's main product, are referred to as 'back office applications.' In the case of higher education, the 'back office' refers to the many administrative support offices that enable the educational activities that are college and universities' main reason for being.

If you're interested in more ed tech news, education trade papers are starting to release mobile apps that make accessing their articles easier than ever.

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