Part one of a three-part series.
As the popularity of online higher education programs grows, the need to have the right infrastructure and processes in place to attract, support and retain these students – and understand how they differ from on-campus students – grows more important. Most institutions are not equipped to support, at scale, the kinds of flexible online and hybrid courses and programs that today’s online students require.
That’s why so many colleges and universities have sought the help of online program management (OPM) companies to transition their established on-campus programs online in exchange for a share of tuition over a set number of years. However, as competition increases and views on traditional degree formats shift, these revenue-share agreements may be hurting institutions in the long run.
6 Reasons OPMs Can Hurt Schools in the Long Run
One of the primary reasons online program management companies appear attractive is that, under a revenue-share model, schools can largely bypass the upfront costs required to quickly launch new online programs. While this partnership model worked well when competition in the online space was smaller, it is now proving to have big risks and long-term limitations for institutions. These include:
1. Long-term, restrictive contracts that are difficult to terminate. Most OPM contracts are between five and ten years with limited remediation options for institutions when enrollment objectives aren’t met.
2. Complete lack of transparency around performance. Due to the nature of revenue-share contracts, an OPM company has no incentive to share its strategies and data (especially in marketing and admissions). Schools may not know what tactics are driving performance. This prevents the school from learning the operational and analytical nuances of operating at scale and understanding why certain decisions are made.
3. Conflicting objectives. OPMs typically focus their efforts on the specific programmatic offerings with the highest profit margin and are highly selective in what they are willing to support, which may not align with an institution’s mission and needs. OPMs also may not align with a school’s culture; for example, some OPMs’ tactics taken on behalf of an institution may be seen as aggressive and not in line with a school’s ethos. In addition, some tactics OPMs use are in direct competition with tactics the institution is already employing to recruit students for non-OPM–supported programs.
4. No development of internal online infrastructure. OPMs operate in a very closed, “black-box” manner. Strategies are not shared with the school and technology benefits are only realized by the OPM. When the relationship ends, schools are left without the capabilities, expertise and recruiting pipeline, as well as the data, insights or knowledge of what worked or what it took to launch their online programs and grow their enrollments.
5. Lack of control around decisions and strategies. In a revenue-share agreement with an OPM, the company often has ultimate decision-making authority on non-academic processes. This can cause friction with faculty – and leave schools with no way to intervene.
6. Less revenue generation over the long term. While OPMs help schools see revenue right away as enrollments grow, revenue-share agreements eat away at revenue over time. OPMs often collect more than 50 percent of revenue over the course of several years.
There’s a Better Way.
If your institution is already working with an OPM to support online programs, or is looking for help doing so, an online program enablement (OPE) company may be a better option to improve your institution’s long-term health and innovation, as well as enable you to own the future of your online programs.
OPE companies differ from their online program management counterparts in several ways, including the types of services offered, the programs supported and the approaches used to achieve results. Most notably, OPEs offer unbundled services and do not rely on revenue-share agreements to fund the partnership. Because of this, OPEs are an ideal partnership option for schools since the institution is able to build internal capacity and intelligence that can be leveraged across the organization and programs to improve marketing, enrollment and support services.
An OPE provider like Collegis Education can help schools successfully own the future of their online courses and programs. Learn more about.
This article is part of a series about OPMs and OPEs. Read part two, OPE: A Better Alternative for Long-Term Growth.