For Colleges, Outsourcing the Virtual Future Is a Bad Idea

column | Higher Education

For Colleges, Outsourcing the Virtual Future Is a Bad Idea

By Robert Ubell (Columnist)     Apr 22, 2019

For Colleges, Outsourcing the Virtual Future Is a Bad Idea

More colleges are looking to online programs for financial health these days—and even survival—as demographic changes are leading fewer students to seek traditional campus experiences.

But as many academic leaders look around for help going online, they often can’t find experts at their own institutions with the experience and skills to build a virtual campus, or to run the sophisticated marketing efforts it takes to attract students around the country and around the world. That’s why OPMs—online program managers, commercial vendors with expertise in launching and delivering digital programs—eagerly bounded in.

Thomas D'Aunno’s experience is typical of those who go the OPM route. When D’Aunno, director of the Master in Health Administration and Health Policy & Management Program at New York University’s Robert F. Wagner Graduate School of Public Service, was hunting for the best way to launch a new online degree, he quickly discovered all the things he didn’t know about the logistics of running an online program. “The question was which OPM we were going to work with,” he says, “not whether we were going to work with one.” Now in its first semester, D'Aunno’s new online master’s, not only reached its initial enrollment goal, but it’s also going very well. Not incidentally, he’s learned what it takes.

On the other extreme, some institutions have decided to build their own virtual campuses without OPMs. Those include a handful of public and private institutions, including Southern New Hampshire University, Arizona State University and University of Central Florida, have seen enrollments rise markedly, now surprisingly close to—or hitting—100,000 each.

First at Stevens Institute of Technology and later at NYU Tandon School of Engineering, where I was dean of online learning at both schools, we decided to do it ourselves, built an in-house unit, hiring experts in instructional design, digital recruitment and other virtual crafts, enrolling 30,000 online students in about 20 years.

But with colleges all around us jumping into bed with OPMs, we wondered whether we were fooling ourselves. To explore whether we were making a mistake by continuing to go it alone, several years ago we invited three top OPMs to show us how each might help us launch a new online master’s degree we had in mind.

Once proposals rolled in, we consulted our finance colleagues, who cautioned us against signing up, advising us that the economic benefits we were achieving on our own far outweighed anything we might gain from a partnership.

In exchange for financing new online programs and conjuring virtual magic for your programs, OPMs commonly take about half of resulting online tuition revenue, more or less splitting the take, with some agreements calling for the vendor to receive as much as seventy percent (usually in cases where the OPM is also acting as the banker to front the money to set up the program). Our school’s finance team reminded us that on our own, we pocketed it all. Without an OPM bankrolling us, luckily, we were able to back each online semester, drawn from our own online course revenue—even topping it off with a decent surplus.

While at first, some universities may outsource online programs to help them jump digital hurdles, in the long run, many colleges that turn to OPMs, rather than build their own virtual units may end-up regretting their decision. Chances are, when online emerges as the best game in town, institutions lacking digital capabilities will be hamstrung—not knowing how to scale-up as remote learning becomes indispensable for the long-term health of higher education.

Outsourcing your institution's digital education infrastructure could impoverish your college, leaving it hollowed out, lacking essential virtual competencies just when you will surely need them most. Partnering with an OPM is the equivalent of a patient with a serious illness popping pain killers rather than treating the underlying condition.

Of course, universities have outsourced a wide variety of tasks for years—think of food services and campus security as examples. But most of those functions are on the periphery of the university’s mission, not at its very heart.

Sure, going online isn’t cheap; but neither are science labs or football stadiums. Higher education has always found the money to support its scientists and athletes. Institutions with a clear vision find ways to finance infrastructure needed to fulfill their mission. Partnering with OPMs is an easy way out. The hard way is to go for what’s best over the long haul.

For institutions that have already signed on with commercial vendors, it may be best just to go on blithely as a temporary measure, rolling in a Trojan horse strategy, disguising your gameplan to learn all you can about how they do it, hoping eventually to mirror their skill when you’re finally on your own. Partnerships can be exploited by colleges as workshops to gain know-how, especially how to build active-learning courses or how to run a call center, among other competencies, like online staffing and budgeting. Once you get the hang of it, you’re ready to take off your training wheels.

For most colleges and universities, perhaps the biggest challenge is how to recruit virtual learners with sophisticated, web-savvy techniques that may require—at the most elaborate end—fairly advanced knowledge of machine learning and other top-of-the-line tools, especially in selecting targeted databases and bidding on ad space in search engines, which are the most costly parts of going online.

In other words, partnering with OPMs may not be a bad idea if your plan essentially is to hire the company as your college’s teacher, showing you how to operate in the space so you can eventually go it alone. But be careful. Make sure your agreement calls for you to own all the data your vendor collected on your behalf—especially recruitment and student information—so that you’re not left holding an empty digital bag. But also remember that commonly, OPM contracts run for a fairly long stretch, some for as many as 7 to 10 years. So if you’re thinking of keeping your learning curve fairly short—think again.

Rising to a Challenge

Admittedly, virtual capabilities are not easy to come by, especially for institutions that have little or no experience. But, historically, universities have not backed away from assuming a powerful role in what at first appeared to be overwhelming odds. On the contrary, over time, higher education has risen to overcome some of society’s most intractable challenges. In the twentieth century, universities have conquered polio and diphtheria, among other traumatic diseases. Putting their best minds to it, there’s little doubt that higher education can learn how to manage digital recruitment expertly, too.

Then, too, some vendors have unbundled their services, so if you find that your college is prepared to hire its own cadre of instructional designers, for example, to work together with faculty members to produce virtual courses, but your institution is not up for managing digital recruitment, you might find it convenient to outsource just the marketing part of the job while performing other activities in house.

OPMs may be an expedient solution if your institution has only one or two online degree programs in mind. Until recently, most vendors have been brought in to run merely one—or just a handful—of programs, rarely managing the full curriculum, with dozens, if not thousands, of online courses. Partnering with an OPM is a quick way of jumping in without having to install a full-blown unit to handle it all like we did at NYU Tandon Online.

But if your institution is sensible, accepting that online learning will be a long-term university objective, then it’s wise to perform a risk analysis, comparing the benefits and dangers of dealing with an outside vendor versus going solo.

In his widely followed blog, Joshua Kim, director of digital learning initiatives at the Dartmouth Center for the Advancement of Learning, insightfully remarked, “What we really care about is the long-term resilience of our institutions, and our ability to meet our strategic goals and to support our larger institutional missions. Online education is integral to how education is changing. Online programs provide opportunities to not only bring in new (much needed) dollars, but also to build new institutional capacities.”

This column is not an argument against commercial vendors as corporate interlopers in academic space (on which I’ve commented elsewhere), nor is it opposed to their unorthodox contractual terms. As a matter of fact, from all reports, on the whole, top OPMs are really good at it. Most colleges are pleased with the results, even while admitting that not all marriages are happy, with a few ending-up so miserable, they get divorced. A few years ago, I visited an OPM facility of a first-rank firm and was quite impressed with their knowledgeable, sophisticated personnel and practices.

The way forward is to acknowledge that online no longer runs along academic side streets, but now occupies the main road. To succeed, higher education leaders must get some digital skin in the game and make big investments in home-grown virtual skills and infrastructure, building digital capacity to ensure the long-term viability of the university.

At stake is not just the health of online learning, but the life of higher education itself.

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