The ‘O’ in ‘OPM’ Could Stand for ‘Outsourcing’

Opinion | Higher Education

The ‘O’ in ‘OPM’ Could Stand for ‘Outsourcing’

By Michael Feldstein     Feb 21, 2019

The ‘O’ in ‘OPM’ Could Stand for ‘Outsourcing’

In their op-ed here in EdSurge, Harris Pastides and Randy Best made the “pro” case for Online Program Managers. They started off by telling an origin story of sorts, tracing the OPM (as it is known) back to the enrollment management companies of the 1970s. I am not going to make the counterpoint case, since I am a utilitarian when it comes to OPMs. But I contrast with a little more complexity than they present. I believe the right question to ask regarding OPMs is not whether they are “good” but whether they are a good fit for a particular institution’s needs.

And I will start by telling a slightly different OPM origin story based on a different development from the same era.

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In 1970, John Sperling and John D. Murphy founded the Institute for Professional Studies in the state of California. Having discovered demand among police officers with associates degrees for bachelors degrees, as well as demand among teachers with bachelors degrees for masters degrees, the IPS founder began promoting the idea of starting such degree programs to various colleges and universities around the state.

He found little appetite for the necessary investment and risk from the academic leaders who held the purse strings.

So his group proposed a revenue-sharing agreement, where it would develop and run the programs in exchange for a percentage of the revenue for a number of years. This idea of the bundled set of services, including a financial risk sharing service in the form of a revenue sharing agreement, predates online learning by almost 20 years. In fact, Sperling and Murphy went on to found the University of Phoenix, which offered its first online course over the Prodigy network in 1989. Notice that they achieved some success as both program managers growing other universities’ programs and as a university growing their own program. More recently, we’ve seen the opposite, when Kaplan University sold its daily operations to Purdue University, with the remaining portion of the original company essentially becoming a one-customer OPM for Purdue’s Kaplan-based operation. These decisions are not fundamental value judgments; they are calculations.

The essential OPM characteristics of bundling and revenue sharing, both of which Pastides and Best tout as almost inherently good, contain trade-offs just like any other proposed solution to a complex problem. They balance growth opportunity against a range of risks, including risk that the up-front costs of launching the program would not be repaid, or that the universities could not execute well on essential aspects of the project (like student recruitment), or that they would let down the students by failing to maintain good quality of technology platform support or service at scale.

There’s nothing inherently bad about managing these trade-offs through a full-service, bundled revenue sharing agreement. But there’s nothing inherently superior about the approach either. For example, universities that are more worried about the risk of failing to grow fast enough than they are about minimizing the expense of using an external vendor are often well served by finding a high-quality OPM partner, while universities with different risk profiles may come to different yet equally appropriate conclusions.

From the very beginning up to this moment, the OPM industry has evolved in reaction to changes in academic perspective about the risk/reward trade-offs they face in trying to grow online programs. As both for-profit online universities like the University of Phoenix and not-for-profit programs like that of University of Maryland University College (UMUC) grew at fantastic rates, more deans at not-for-profit universities became interested in launching online programs, and more entrepreneurs saw opportunities in helping them to do just that. Randy Best and his company, Academic Partnerships, were among the pioneers in this space. They have a good reputation and seem to have served their academic partners well. I could make similar statements about some of the other OPM providers. So when Harris Pastides claims that an OPM partnership has served the University of South Carolina well, I believe him.

Where I begin to struggle is with the broader generalizations that the authors make. Here’s one example:

"It’s clear from the Eduventures research that OPMs provide a proven track record for university leaders. OPMs have already kept many institutions from enrollment stagnation and will in the future help many more flourish."

On one hand, OPMs have indisputably helped some institutions achieve enrollment growth that they would have been unlikely to achieve otherwise. On the other hand, there have been some large and high-profile failures and misstarts among OPM partnerships, including at the California State University system and at the University of Florida. And it has always been true that some universities achieve impressive online enrollment growth without OPM partnerships. University of Central Florida, for example, has increased its total number of enrollments by about 50 percent through online courses. If you prefer a more recent example, then look to University of Southern New Hampshire. These institutions have proven they can achieve online success, including but not limited to enrollment growth, without an OPM.

Another spot where Pastides and Best perhaps lean a little too far out over their skis is this one:

"Some players in the OPM space who are not traditional comprehensive providers are trying to adopt the mantle of the future with fee-for-service or unbundled offerings. But fee-for-service simply shifts the cost and financial risk to universities."

The verb I would use is not “shift” but “calibrate.” Even within the world of full-service revenue-share OPM bundles, there is variation. Clients have options. They can make some adjustments about how much they would like the OPM to manage in exchange for some money and, potentially, some loss of control. The unbundling and fee-for-service trends simply extend the range of flexibility in the market.

The authors continue:

"Meanwhile, by unbundling services—say by separating recruitment and retention—outside partners become solely focused on getting students in the door rather than keeping them through graduation."

This may be the most problematic sentence in their entire piece. It focuses on an unbundling package that only has components for recruitment and enrollment, when the trend in OPM companies runs in the opposite direction. For example, one of the pioneers in pure unbundled companies is iDesign, which emphasizes course design and retention services (and which was founded by alumni from Academic Partnerships).

The current fashion to tar all OPMs with the same brush, painting them as greedy for-profit ventures that hollow out unsuspecting universities, is dumb. I understand why Pastides and Best want to push back against it. But the suggestion that any arrangement short of a full-service revenue-sharing relationship is foolhardy strikes me as—forgive me—not any better.

Likewise, the authors’ suggestion to rename the OPM solution category to Enrollment Growth Partners is unhelpfully narrow. There is a range of good reasons why universities might be interested in seeking help with their online programs. Enrollment growth is certainly one. Improving student outcomes is another. (And contrary to Pastides and Best, I have not seen evidence that OPM-supported programs provide inherently or even reliably better student outcomes than organically grown programs a priori.)

I propose a different change in terminology. I believe that Online Program Management is still a perfectly serviceable name for the product category of full-service, bundled offerings that are paid for through a revenue sharing agreement. That term is sufficiently descriptive of the category without being overly narrow about the partner college’s potential goals. But offerings that are unbundled and fee-for-service should be called Online Program Enablement, since they tend to be more like capacity-building consulting services than long-term outsourcing of program management.

Outsourcing versus insourcing is the key distinction, in my view. As an antidote to the black-and-white depictions promoted from both types of vendors, I recommend that universities considering hiring OPMs or OPEs start by sitting down with some of their business school faculty and get a lesson on the literature regarding how to make outsourcing versus insourcing decisions. As it turns out, it’s complicated. If it weren’t, there wouldn’t be business professors writing papers about the subject.

By all means, let’s have a robust discussion about effective means for universities to accelerate their digital enablement—particularly at this precarious moment when so many colleges and universities need to develop new financial sustainability strategies. But in doing so, let’s take care to preserve some nuance.

Flattening a complex debate about risk and utility into a simple argument about good versus bad will help nobody.

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