Three Regrets Institutions May Have When Signing with an Online Program Manager (OPM)

by Dr. Scott Moore | January 23, 2019

Estimated time to read: minutes

As we enter 2019, many institutions that have tiptoed around the digital landscape are coming to grips with the realization that online learning is almost certainly in their future, one way or another. One driver is declining overall enrollments; the latest statistics show a drop of 90,000 students — or a half of a percentage point — during 2017, the most recent period for which we have data. At the same time, enrollments in online learning increased by 350,000, or 5.7%.

Until now, with some notable exceptions, most large institutions of higher learning with strong online offerings have been for-profit entities like the University of Phoenix. Most nonprofit public and private colleges and universities have continued to focus on their campus programs with little enthusiasm for the idea of launching online counterparts.

Change comes hard to some entities, but the pressure applied by falling enrollments is likely to cause these institutions to take another look at what online learning can do for them. As they do, they will be faced with a major decision: How do they enter into the unknown? Do they brave it alone, learning as they go? Do they look for someone who can do it for them? Or something in between?

For such institutions, the temptation to sign with an online program manager (OPM) must be almost irresistible. OPMs are organizations that provide everything needed to launch and manage a successful online program, including the up-front funding. In return, they receive a substantial share of the revenues for a stated period of time. Perfect, right?

Not exactly. Over the past few years I have spoken with many institutions who opted to sign an OPM contract —  and have since come to rue that decision.

Their regrets stem from three factors:

  • The details of the revenue-sharing arrangement

  • The length of the contract

  • The lack of faculty buy-in

Here’s what they have been saying to me:

“The revenue share is too high”

Most revenue-sharing contracts specify that the OPM will receive 50%–70% of the revenues. The organizations I’ve spoken to feel, in retrospect, that this percentage is simply too large.

This kind of split may have made sense back in the dark ages of early online learning, but it is our belief at Extension Engine that it’s no longer appropriate for most schools. Schools work hard to build their reputation, their brand, and their intellectual capital. Handing over most of the fruits of their long-term work to a vendor whose role is to “merely” move it to an online environment seems excessive.

Plus, there’s the irony — and frustration — of having the revenues they expected to generate by going online end up in someone else’s bank account.

At Extension Engine, our contracting and relationship model is quite simple in concept: You pay us, and we work; you stop paying us, and we stop working.

“The commitment is too long”

Many schools could live with high revenue-sharing terms for a short time; after all, the arrangement facilitates the launch of their programs. But most commitments are longer-term: five to ten years. This, according to the schools I’ve talked to, is far too long.

There are a couple of problems with these contracts. The first is how long it takes for the institution to realize the full promise of online learning as a source of new revenues. The second is that no one can really predict what the online learning world will be like in five years, let alone ten. Making a commitment for that length of time seems unacceptably risky in a world that is changing so fast.

At Extension Engine, we have monthly contracts. If both parties are happy, we keep working together; if not, or if we’ve achieved the institution’s goals, we can go our separate ways.

“Faculty don't want cookie-cutter courses”

Faculty want to teach in programs that they can be proud of, that they can get satisfaction from, and that they know to be effective. At the institutions I’ve spoken with, the faculty experience with the typical OPM engagement is just the opposite. Faculty feel like they don’t own the program and that they, as teachers, are being forced into preexisting boxes built by someone else. Not only is this unacceptable to most faculty, they will actively fight it.

The key to gaining faculty support is to work with them to ensure their concerns are addressed and their goals as teachers and mentors are met. It’s helpful to find a partner who can help generate the necessary momentum, buy-in, and strategy — and to educate the faculty on what is currently possible in online learning. Advances in pedagogy (and the underlying technology that supports it) enable effective learning experiences that could only be imagined a few years ago. Creating these learning experiences can be highly satisfying to faculty, as can the results they see from students who engage with them.

We know such faculty enthusiasm for online learning is possible because we’ve seen it. Every school, every program, and every faculty is different, but if everyone keeps an open mind and is willing to experiment, then success is achievable.

Keep Learning

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

Learn about the advantages and disadvantages of online program manager (OPM) engagement models, 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. Scott Moore

Dr. Scott Moore is a former Principal Learning Strategist at Extension Engine. In this role, he led the global Custom Learning Experience practice. He worked with dozens of nonprofit, higher education, and learning business organizations as they considered using online learning to support their mission and margin, using his deep understanding of organizational dynamics, online learning, strategic differentiation, decision-making, and more. Prior to joining Extension Engine, he was a faculty member, administrator, and dean at Michigan Ross and Babson College for 20+ years. He holds an M.B.A. from Georgia Institute of Technology and a Ph.D. in Decision Sciences from the Wharton School of the University of Pennsylvania.

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