When I was a college student I worked on the other end of this: a faculty member and I were technical consultants for the University as they were evaluating some software systems. Let me just say: colleges can be a pain in the neck. There is a TON of regulation on higher education (from student-related regulation, FERPA sort of stuff to financial regulations on grant money and such) which can be a big barrier to entry.

I don't know enough about your niche to say anything definitive (and I'm not really an expert, anyway) but I was working on selecting a research and export control system and there was a ton of regulatory policy we had to learn/consider. I'd say you should start by talking with faculty members who are directly involved with the process to see what you're getting into.

The one question that was pretty constant across the departments I worked with was "How long will this company be around, and what is our support commitment?" Universities usually avoid spending money on IT if they can, so they want a product that is going to be well-supported. Switching solutions is costly, so that makes them fairly risk-averse as well.

In addition, the procurement processes are usually bureaucratic nightmares, but that's the same with large companies :)

I worked at a more research-y branch of my school so we did things a bit differently than everyone else, but I'm going to try to sum this up in a way that I think applies to everything.

1) We have purchasing limits that are strictly enforced via method of payment. For instance we couldn't spend more than $5k per purchasing-card transaction, and no line item could be above $3k. I'm not sure if that applied to physical assets only because that $3k mark was where we had to sticker inventory. Beyond $5k we had to make a departmental purchase order, and beyond $10k(?) we needed a longer PO form (more approvals).

2) We preferred long established vendors, particularly those who were registered with the school. That cuts down on paperwork should we have to go with a DPO. We'll add a new vendor if it's worth it. Anecdote: A friend of mine helped get a T-shirt vendor on to the approved list. The vendor gave his club ~$5k in discounts for helping him get on the list, so it was obviously worth more than $5k being on the list (There's only 3 or so approved shirt vendors).

3) We're concerned about product licensing.

If you're what amounts to an impulse buy, we'll buy it regardless if we think it'll save us more than your product is worth. $100 license for a research scientist making $65,000? Done if he stops complaining to us. Granted, we had a bit more money than the rest of the school departments.

If you're established, we know we can upgrade later or get support.

If you're not established, we either want it to be cheap in case we have to implement something else later, or we want source code, etc so we can maintain it ourselves if you go bust. That takes the pain away (slightly) of you disappearing.

I appreciate the replies guys, it explains a lot about why I see a lot of expensive software when there are open source alternatives which are just as good.

I'll try get some introductions to people who make the purchasing decisions. I think the bureaucracy will be more difficult.

Pricing may be difficult also. I know there are higher expectations for academic institutions in terms of support.

Is there any general thoughts on SaaS for these institutions? I don't see too much of it going on (with the exception of GMail).