Tag: online program management

In my previous post on OPMs, I wrote,

There are several factors that are major contributors to the current rush to by vendors to call themselves OPMs:

1. The variation between kinds of programs that universities are looking to launch is significant and increasing. As a result, different OPM vendors are specializing in different kinds of programs.
2. More universities are making fine-grained choices about which aspects of their online programs they want to outsource to a specialist, which aspects they want to pay a consultant to help them get started or improve, and which aspects they believe they can do themselves. This broadening out of customer choices is creating further variability in in OPM business models and OPM-like services offered by an increasingly wide range of companies.
3. As the OPM business disaggregates, universities are increasingly recognizing that certain functions that OPMs perform, like recruiting students who are likely to be successful in a program, redesigning courses to maximize student success, providing early interventions to promote student success, and working with employers to help with career readiness and post-degree employment are all services that might be useful for improving the success of their traditional programs.

This last point is especially important. Within the three-letter acronym OPM, the “P” and the “M”—”program” and “management”—are defining features of the product category. OPM is a service in which the vendor actively manages at least some substantial subset of a full online program  for some significant period of time. As in multiple years. Once customers start contracting for individual services a la carte on a relatively short-term basis—say, just to get the program up and running—those customers are no longer paying for an OPM service. They are paying for some other digital enablement service which may not yet have a widely used name.

Because this distinction can be a little fuzzy, it helps to have a case study. Luckily, we have one. Open SUNY recently released a Request for Information (RFI) for vendors that can help them meet a wide range of ambitious goals. While the term “OPM” was never used in the RFI, it’s pretty clear that the request was written specifically to include questions that one might ask of an OPM service provider. MindWires, our consulting company, responded to that RFI. Because we think the answers we provided to SUNY might be useful to a wide range of colleges and universities, we have published a shorter, edited version of our response. Because that response includes fairly detailed descriptions of our consulting services, we have published it on the MindWires site rather than here on e-Literate. But some less commercial discussion of SUNY’s request is also appropriate for the blog because it sheds some light on the challenge defining the product category in a useful way.

SUNY’s Goals

In their RFI, Open SUNY enumerates quite a few ambitious and complex goals (even before accounting for the fact that these goals are for a system of 64 diverse and independent colleges and universities):

• Opportunities to position SUNY as a unique provider of educational opportunities for all learners;
• Reaching the millions of New York residents currently not enrolled at a SUNY campus, who need higher education to be more effective on their jobs;
• Significantly expanding SUNY’s online learning experience to serve exclusively online students who are currently not at a SUNY campus;
• Potential next-generation innovations in online/digital education where SUNY may have a unique opportunity to leapfrog competition;
• The most appropriate ways to productize SUNY’s vast educational offerings to prospective students;
• Business and revenue sharing models to incent behaviors, ensure sustainability and provide campus/System revenue growth;
• Opportunities to capture students SUNY is losing to other online schools generating revenue for investment in our campus operations;
• Outreach and marketing plans that reach a broad range of key stakeholders, including potential students in-state and out-of-state, internal staff and professors, and other key stakeholders as identified;
• Platforms and services to expand SUNY’s current online environment and enrollments to challenge current leaders in the field;
• Insights into the type and structure of programs appropriate for this platform/business model;
• Requirements to continually align educational opportunities with labor market needs;
• How to best integrate SUNY’s 64 campuses and their faculty into this improved platform/business model;
• The impact of the changing demographics in New York, as well as surrounding states and potential global opportunities;
• Partnering with interested industry leaders, including other university systems;
• Consideration of prior learning assessment as part of the improvement to this process.

Much of this sounds like classic OPM work. For example, “[b]usiness and revenue sharing models” and “outreach and marketing plans” are classic elements of an OPM solution.

The revenue sharing model is both particularly characteristic and widely misunderstood. Revenue sharing is best understood as a service offering. It’s financing. When I bought my last car from the dealer, I got a loan from them to help pay for the car. There were other ways that I could have financed the purchase. I saw the prospect of owing money and paying interest to the car company as a feature rather than a burden because the specific terms they offered were advantageous relative to other options I had at my disposal. In my case, I was buying a new car that cost more than the cash I had on hand. So I needed to take a loan from somewhere. But at 0.9% interest, I might have decided to take the loan even if I had the cash. I might have decided that the interest rate was low enough that I’d prefer to hold onto my cash.

In SUNY’s RFI, they specifically ask for information about “business and revenue sharing models” because the system wants “to incent behaviors, ensure sustainability and provide campus/System revenue growth.” The revenue sharing model, which is also a risk sharing model, theoretically aligns the vendor’s incentives with the customer’s. Again, theoretically, the vendor makes money only to the extent that the new program is successful. In order for companies to share the risk, they generally want some of the control in addition to some of the revenue. They want some ability to influence decisions that impact the program’s success. This kind of arrangement only makes sense for both parties when the customer wants the vendor to actively manage parts of the program on a long-term basis because they believe their program will have a higher likelihood of success if the vendor does so. Management is a particular kind of enablement where the service provider actively oversees a particular function that the customer doesn’t feel is their core competency (like online marketing) so that the customer can focus more energy on in-house areas of strength (like curriculum).

So here’s a rule of thumb for defining the shape and boundaries of an OPM service: If a reasonable person could believe that a revenue sharing arrangement is a rational option for paying for the program (regardless of whether the customer chooses that option), then the service may well be an OPM.

Conversely, if a rational person could not believe that revenue sharing is a rational choice, then it probably isn’t an OPM service. Revenue sharing isn’t definitional for OPM, but it is an indication of the kind of close, ongoing reliance on the vendor to actively manage the program that is the hallmark of an OPM service. One could imagine a customer having one or more of SUNY’s goals and not wanting a full program management service. Take, for example, “[p]latforms and services to expand SUNY’s current online environment and enrollments to challenge current leaders in the field”. This could be as simple as an LMS or a courseware platform. It’s hard to imagine a university or system signing a revenue-sharing contract with their LMS vendor. A learning platform, or even a course registration portal, would be a kind of digital enablement service. But it would not be online program management.

I’ve been very careful so far to refer to OPM as a service. “Solution” or an “offering” also both work. But I have deliberately avoided talking about OPM companies. Such beasts do exist. 2U and Academic Partnerships are two well-known examples of fairly pure-play companies that are known for offering full-service, revenue-sharing online program management solutions. But once companies start to unbundle their offerings to the point where it no longer makes sense for customers to think about paying for what they are buying via a revenue-sharing agreement, then those companies are offering both OPM and non-OPM digital enablement solutions. Since the sector doesn’t have product category names for those other solutions, they tend to get called OPM services. But prospective customers should think about them quite differently. In one case, the business arrangement should maximize the alignment of incentives between long-term partners. In the other, the customer might well want the opposite, i.e., to minimize long-term dependence on the vendor.

Generally speaking, true OPM solutions make sense when a college or university is looking to launch a new, differentiated, free cash flow-generating online degree or certificate program. Many of those words can be boiled down to one: Money. The college or university (or system) wants to create an offering that, among other things, pays for itself and generates free cash flow—i.e., leftover money after covering certain core expenses—to spend on fulfilling other aspects of its mission. It’s a new program, and maybe even a completely new kind of offering for the school, so it’s more likely that the institution will need ongoing help with certain aspects of the program. Since there are a million billion MBA programs online already (for example), a new MBA program would need to be differentiated enough to draw students. Otherwise, it won’t generate money. Many colleges and universities know how to create traditional face-to-face programs that are differentiated and will bring in more money than they cost. Fewer know how to launch and run one online. Or, honestly, would want to. There are all kinds of tricks to marketing online programs successfully. Managing seamless registration is hard. Managing, say, live nurse practicums to support an online nursing degree program is hard. Running the registration, LMS, CRM, learning analytics, accounting, and other software, tuned to work together for an online program, is hard. Some schools just don’t feel like they want to put their money and energy into learning how to do these things well enough to run an excellent program. That’s where an OPM offering—which is almost always some flavor of lasting partnership between the school and the vendor, regardless of financing arrangements—can look attractive.

There is a lot of attention being paid to a-la-carte, fee-for-service models within the OPM product category. We think that much of the activity in a-la-carte falls into one of two situations. First, a lot of OPM service providers tinker with the details to customize their service a bit. “Would you like to hire us for only 80% of our full service portfolio? OK, we can take these things off the service agreement (but not those others).” “Would you like to finance partly with loans rather than revenue sharing? Or use a down payment to reduce the size of your long-term payments to us? You can do those things.” The other situation is that the customer is looking for digital enablement but not online program management. They want help to get up and running. Maybe they’ll continue to contract out a couple of things, like help desk or marketing, but for the most part, they expect to manage the online program themselves. We’re not seeing a lot of activity in the middle ground between these two types of situations. That supports our belief that these are really two distinct product categories. True a-la-carte digital enablement services that do more than tinker around the edges are not OPM services. That doesn’t make them better or worse. It just means that they solve a different problem.

There’s one more point worth making about the boundaries of “OPM” which is specific to SUNY’s situation. Precisely because online program management requires a very close, ongoing collaboration between the school and the vendor, many OPMs sell first not to universities but to individual schools within a university. First they may develop a relationship with the business school. Maybe they’ll use that to get a referral to the nursing school. And so on. That way of working cuts against the grain of a large, diverse, and decentralized system like SUNY. I used to work at SUNY Systems Administration, and I still know people both in the central offices and out on the campuses. It’s very difficult to get SUNY to do anything in unison as a 64-campus system. Nor is that abnormal for a large, diverse state system. The kind of slow consensus-building and respect for autonomy required to galvanize group action in that kind of environment is hostile, if not outright antithetical, to kind of joined-at-the-hip relationship required for a successful OPM partnership. SUNY can vet and pre-negotiate with OPMs for adoption on a campus-by-campus basis. They can contract for system-wide digital enablement services where campuses can opt-in. They can even build their own sort of system-internal OPM (which would not be entirely different from the function of the original SUNY Learning Network). But we don’t see any evidence that a traditional OPM service could be successfully implemented as the default partnership system-wide in an environment like SUNY. To reach that kind of scale in that kind of environment, the State of New York will have to come up with something truly innovative.