Collaborative That Once Criticized Software Companies Becomes One

Ten years ago, a group of universities started a collaborative software project touted as an alternative to commercial software companies, which were criticized as too costly. On Friday the project’s leaders made a surprising announcement: that it would become a commercial entity.

The software at issue, called Kuali, does the boring but important work of managing accounting, billing, e-commerce, budgeting, and other campus functions. Colleges can pay software companies tens of millions of dollar...