A group of U.S. universities is blazing a new path in open source software. The members are building a set of enterprise applications -- the big, important, mission-critical ones that have long been the exclusive domain of software companies like Oracle, SAP, and Microsoft.

The first application is the Kuali Financial System, a financial management application designed from the outset for the specific requirements of colleges and universities. It's available under a variant of the Apache 2.0 license. Strikingly, the first deployment is a small school in Nairobi, Kenya: Strathmore University , which estimated that it cut deployment costs by more than half compared with using a commercial product.

The software project is being overseen by the Kuali Foundation , a nonprofit group that brings together academic institutions, grant funding and a small but growing list of commercial partners, all committed to an open-source software model for a suite of administrative applications. The name is a Malaysian word for "wok," a common but indispensable utensil in a Malay kitchen. The overall approach is similar to that of the Sakai Foundation , a higher education project focused on a learning management system.

Other Kuali projects are focusing on administering grant applications and awards (based on the Massachusetts Institute of Technology's Coeus software ), a student information system, and endowment management. The foundation creates a community around each project, with teams responsible for collaborative design and coding.

The reality of 'zero leverage'
"The critical reason we're all doing this is the idea of controlling our own destiny," says John "Barry" Walsh, director of university information systems at Indiana University. "We're acutely aware that we're a quirky market," Walsh says. "We don't even want to pay wholesale [prices]. And when we buy your product, we're going to badger you to change every little thing."

Walsh is just as acutely aware that badgering doesn't do much good with big ERP software vendors. "Higher ed is one percent of Oracle's total global market," he says. "That is zero leverage."

Walsh's idea was to create an open-source alternative, basing it on a homegrown, modular, client-server financial system that Indiana developed in the mid-1990s, and was willing to contribute to open source. He mined his higher education contacts to find likeminded folks, including the National Association of College and University Business Officers and IBM . With a $2.5 million grant from the Andrew W. Mellon Foundation, Kuali came into being .

The heart of the original Indiana financial system was a chart of accounts designed specifically for higher education, organized around a workflow engine and modular business processes, which could be changed easily as needed without affecting the rest of the application. The goal was to create a software application that would have "zero disruptive upgrades. You don't have to park the university for a year while you upgrade to version 9 or whatever," Walsh says.

A key change for Kuali was rewriting the code in Java and making use of Web services interfaces to decouple the various program modules and simplify integration.

The laborious tweak to the Apache license
One of the most laborious parts of this process was making a small change to the Apache license so universities with large and complex software patent portfolios could more easily contribute code to open-source efforts like Sakai and Kuali, according to Chris Coppola, president and CEO, rSmart Group, a software services company that specializes in open-source support for higher education.