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What Does the Purdue - Kaplan Deal Mean to Other Top Tier Universities?

The bombshell hit last week - Purdue University was acquiring Kaplan University.

As with most innovations and game changers in online higher education, we have an opinion. We love the move by Purdue and applaud them. Why? Higher education institutions must move forward to develop core competencies in online education.

Purdue president President Mitch Daniels said it best: “None of us knows how fast or in what direction online higher education will evolve, but we know its role will grow, and we intend that Purdue be positioned to be a leader as that happens.

“A careful analysis made it clear that we are very ill-equipped to build the necessary capabilities ourselves, and that the smart course would be to acquire them if we could. We were able to find exactly what we were looking for. Today’s agreement moves us from a standing start to a leading position.”

The lesson here, in our opinion, is that higher education leaders need to develop a business model for online education that is core to the university’s strategy rather than as an afterthought or experiment. So how?

For years, universities outsourced online programs to OPMs like 2U, Pearson, Wiley, Academic Partnerships, and others. This eliminated risk and the need to build expensive internal teams —  plus, let’s face it, it helped overcome organizational politics and push back. OPMs flourished.

But with all the benefits came costs. Is it not ironic that OPM stands not only for Online Program Management but also for Other People’s Money? OPMs took 50 percent or more of the revenue from these programs in return for taking over their design, development and execution. The result is somewhat boring and cookie-cutter courses. The student experience is very vanilla. In some cases, where the online program was just a way to drive incremental revenue and reach, that might have been fine. But that’s not be good enough when you want to be a leader.

Today there are other options. Look at Notre Dame. When they decided to launch their first online master’s degree program, they had the vision and will to do it without an OPM. They found a strong corporate partner in AT&T, then identified a service provider (ExtensionEngine) to develop an online program custom designed to be similar to their campus experience, with small class sizes, access to and frequent interaction with faculty, rigorous academics, and more.

In approaching their online program this way, Notre Dame maintains full control over their program quality and the business model.  In addition, even though they are leveraging the resources and expertise of external vendors, they are using the experience to build internal competencies and expertise. Notre Dame will not find themselves “ill-equipped” to develop future programs.

Paul LeBlancwho as president of Southern New Hampshire University knows a bit about online learning — commented on the Purdue-Kaplan deal in an insidehighered.com article : “No matter how the deal eventually plays out, the Purdue-Kaplan announcement further legitimizes online education. . . that presages the most important implications of the era in which we now find ourselves. An era in which nonprofit IHEs that once looked down their nose at online education will now seek ways to enter that market.”

And we agree. The time for nonprofit higher education to develop internal competencies and make online education core to their strategy is now. Build these competencies, like Notre Dame, or buy these competencies, like Purdue. But don’t stand still.

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