Why You Should Prioritize Capacity Building When Launching Online Learning Programs

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There is an evergreen debate in higher education about outsourcing: Which services and capabilities are appropriate to trust to a third party, and which are not? Typically, outsourcing instruction and core academic functions such as advising are taboo, while administrative and operational activities, like payment processing, food services, facilities, and the bookstore, are deemed less sensitive. The conventional wisdom, in higher education and in other sectors, is that outsourcing is a good option to reduce costs, bridge resource gaps, and reinforce a focus on your own organization’s comparative advantages.

But the ambitions and aspirations many institutions have around online learning often blur those distinctions. As online learning has entered the mainstream, many schools have felt pressure to catch up with earlier entrants. Between the know-how needed to design, build, and launch an effective online program and the pressures of an intensifying competitive landscape, colleges and universities often — and understandably — find they need help to deliver online programs worthy of their institutional standards and mission.

How to build critical capacity

The implications of doing so, however, pose genuine risks to higher education institutions’ core capabilities and functions. Many third-party solutions address the need to provide operational, marketing, instructional design, and student support services to bring online programs to the market quickly. They generally succeed in this near-term purpose, but ultimately they only exacerbate the larger challenge facing colleges and universities: how to build the capacity to deliver engaging, high-quality, effective, and financially sustainable online programs.

Online learning is core

The reality is that online learning is becoming a core competency for most institutions. Even if face-to-face delivery continues to dominate the experiences you provide for students, technology-enabled learning opportunities are almost certainly a growing part of your portfolio. Whether as a way to support experiential learning, engage with students away from campus, gather and analyze student success data, orient and prepare students before they matriculate, connect with and provide value to alumni, or serve learners from audiences and populations you haven’t previously, technology-enabled delivery of educational experiences and support services will be critical to your ability as an institution to attract and support students, fulfill your mission, and remain financially sustainable.

The decision to rely on a third-party company to provide the capabilities essential to build and operate online programs may help you get to market more quickly and at greater scale. But if it requires a long-term commitment and a hefty revenue share, the drawbacks over the medium and long term are considerable. When you work with an online enablement company that takes a share of your online revenue, it’s typically for a period of seven or more years, limiting your institution’s flexibility to capture and reallocate any efficiency and revenue gains to reduce tuition costs. Likewise, by outsourcing the delivery of any academic program, you lose touch with many key drivers of quality online and constrain your ability to differentiate your student experience in an authentic way that is true to your institutional mission and brand, ultimately putting you at a disadvantage to react and adjust to an increasingly competitive market.

Why limit your ability to adapt?

These trade-offs will only become more detrimental to your institution’s success over time. And perhaps the most fundamental drawback of outsourcing is that it prevents your institution from building the organizational talent, managerial strengths, strategic experience, governance structures, recruitment know-how, processes and procedures, and operational infrastructure that will enable your institution to improve its online programs continuously, sustain and grow them financially, adjust to new trends and competitors, experiment with new models, and remain distinct and relevant to the market. Any new endeavor, especially one as multifaceted and transformational as online learning, will require an infusion of expertise and resources to get started. If fully outsourced, however, that knowledge never gets woven into the fabric of your institution and you’re left little capability to build on your initial success. Unless your institution is facing a near-term existential crisis, mortgaging your future in this way is shortsighted and success will be short-lived.

The market for third-party providers that specialize in launching and operating online programs is surprisingly diverse. As your institution considers partners to help launch or extend your online presence, prioritize those firms that can meet your near-term objectives while building a solid foundation for the future. Those providers won’t take a share of revenue once you’ve launched; they typically operate on a fee-for-service basis. As a result, you receive the support you need to get your online programs up and running without sacrificing the flexibility — both financially and in terms of programmatic decision-making — to adjust to a changing market and changing student needs in the years to come. At Extension Engine, we think of this as our “build, co-operate, transfer” model of designing and launching online programs.

Regardless of which provider you choose, your partner should work with you to design and build a learning experience — both the technology and content — that meets your standards and goals, and should continue to work alongside you to ensure you have the organizational, marketing, strategic, and technical capacities needed to make it successful until you are ready to bring those functions fully in-house. As online learning becomes increasingly core to how you improve quality and access to the learning experiences you offer, you’ll likely need supplemental resources and expertise through the critical design and launch phases of your programs. But that need shouldn’t supplant the opportunity to build your own differentiated model along with the internal know-how to put you on a path to grow and thrive for years to come.

Keep learning

A Financial Model for Online Programs: Revenue Sharing vs. Fee-for-Services Engagements

Learn about the advantages and disadvantages of each engagement model, which one is best suited for your institution, and how you can receive a custom-tailored financial model for your institution.

[WHITE PAPER COVER] A Financial Model for Online Programs: Revenue Sharing vs. Fee-for-Service (Higher Ed)*



Dr. Gerry DiGiusto

Dr. Gerry DiGiusto is the former Vice President of Strategy at Extension Engine. He has worked in higher education, both in the U.S. and in Europe, for more than 20 years as a teacher, researcher, strategist, and consultant, focusing on organizational design and capacity development to support high quality, sustainable learning programs. He previously served as Motivis Learning’s Vice President for Strategy and Marketing, Director of Consulting Services at Pearson Education, and Managing Vice President of Research & Data at Eduventures. He earned his Ph.D. in political science from Duke University and taught international relations at Bowdoin College and Princeton University.

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