Developing online programs in a business school: framing the “make-or-buy” decision
27 April 2022
Nick Barniville, founder of the EdTech Lab at ESMT Berlin, asks what’s the right way forward for a business school to develop an online offer.
When thinking of building online content and a digitalization strategy in higher education, for example in a business school, an institution will need to consider what resources it wishes to make available internally, and what could be bought in. This is not unlike typical make-or-buy decisions faced in many manufacturing or software development contexts.
For the sake of simplicity, this blogpost will explore three options: the pursuit of a go-it-alone strategy, joining a consortium, or partnering on some or all of the value chain to a third-party Online Program Manager (OPM).
Let’s start with The Go-it-alone strategy. The Pros of this option are: that you can build on your existing LMS, you retain all revenues from online activities, and you build long term internal capabilities for the future. However, your legacy systems might not be fit for purpose.
Your current LMS might not have been designed with a delivery of online programs in mind. You might have no experience in creating digital content, and a go-it-alone strategy means no inbound knowledge transfer from partners. To follow this path, you will need a very strong IT team to support the process. You will need to invest significantly in digital marketing capabilities to succeed commercially.
Let’s now take a look now at the Consortium approach. This is the approach which was chosen by my own business school, ESMT Berlin. We found a group of partner schools who had the same challenges, agreed on a shared technology platform, and created a community called the Future of Management Education Alliance (FOME).
Among its many initiatives, the Alliance now works on knowledge and content sharing, platform development, joint programs and education technology scouting. This option offers great collaboration potential, the use of a best in class platform, and guaranteed inbound knowledge transfer from partners. It allows us to retain all revenues we earn from our programs, as our platform license fee is fixed annually. It is scalable, in that we can add as many new programs as we like. And as a super user group in the alliance, we have some Influence on the platform development roadmap.
On the flip side, it’s not always easy to find collaborators who are at the same stage of development as you, or who have the same needs from a platform as you. You also need to build your own EdTech team internally. You still need to find a digital marketing solution, and you will bear market risk on anything you develop.
The third option is to outsource to an Online Program Manager (OPM). After its US$800 million acquisition of EdX in 2021, 2U is probably the most famous example of an OPM. But when might you consider partnering with an OPM? Perhaps when speed to market is important, you don’t think you can generate sufficient resources to go-it-alone, and you feel you need the production and marketing expertise of an experienced provider. The pros are many. You see quick revenues and offload the bulk of the financial risk to the OPM. An OPM strategy is easy to bolt on to existing organization. OPMs have a professional content development process and are experienced in working with faculty. In most cases, the platform and user experience is of acceptable quality and, both student recruitment and program delivery are included in the revenue share.
However, on the downside, the revenue share model and long term contracts can be a bitter pill to swallow for providing your content and expertise. And you need to be comfortable ceding brand control to an external organization whose primary and sole aim is revenue generation. It can be difficult to reuse content developed with OPMs in different contexts or programs. OPMs may end up having several competing institutions on their books offering similar content, and the market is getting very crowded, so marketing gets a bit tricky. If you believe developing and delivering online programs is going to be a core competence of an educational institution in the future, then an OPM strategy might not be the best one.
To conclude: there isn’t one right answer for everyone. Whether to go-it-alone or to partner with a consortium or an OPM is a huge strategic decision. Many institutions try various options to learn from the experience. This is probably a sensible way forward.
Nick has recently set up as an independent consultant to help universities to build and implement their digitalization strategy, as well as to advise on how to build quality online and blended programs at scale. His website is www.gomeratech.com, and you can find him on Linkedin.