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Why is it so difficult for campus card system providers to make a go of it?

Why is it so difficult for companies to stick around in the campus card market? Of course all industries have turnover, but the rate at which the card technology and campus application providers come and go is staggering. Think of the players and ex-players–AT&T, American Express, MCI, National CacheCard, GTE, Schlumberger, iCollege–and now CyberMark is added to the list of ex-players.

There are understandable reasons such as acquisition and consolidation and then troubling reasons including abandonment, bankruptcy, and dissolution. Every one of the ex-players on the list above entered the market with the best intentions to make a healthy profit and provide a needed service. But somehow many more fall short than succeed. I don’t pretend to have the answers but I can’t resist posing the questions.

Is the market saturated with vendors? There are more than 3500 institutions in the U.S. and only a handful of vendors. Far more campuses are ‘vendorless’ than are served.

Are the profit margins too slim and sales cycles to long for companies to make it? I have long said that only lean organizations can survive providing the current list of available applications at prices that the market will bear.

Is the solution set being offered simply wrong for the majority of campuses? More and more I have to wonder if this is not the case. Most institutions don’t have a card system vendor because most can’t pay–or can’t justify paying–the asking price for a system that (1) only partially meets or (2) greatly outstretches their needs. While the big schools are well served by current vendor offerings, they are relatively few in number. Thus the vendors fight each other year after year for those large marquis accounts.

The winner of the game could likely be the company that creates a functional low-end system with a low-end price to meet the needs of the other 3000 institutions.

Chris Corum
Editor
[email protected]

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