Universities Discover E-Learning

From the ASTD Learning Circuits (www.learningcircuits.com) — May 2001
By Paul Harris

As if the e-learning market wasn't already crowded with aspiring new entrants, America's colleges and universities are joining in droves. How will their presence reshape the landscape for buyers and developers of e-learning technologies?

[ Skip to quote from Dean Matkin regarding e-learning ]

Colleges and universities are in such a scramble to join the e-learning market that it's impossible to predict what will happen next. Consider this: Nearly 47 percent of U.S. colleges offered some form of distance learning last year, making an estimated 54,000 university-level courses available online. According to analysts at International Data Corporation, almost 90 percent of US colleges will offer e-learning by the end of 2004.

IDC predicts that spending on distance learning technology by colleges and universities will grow at a 20 percent compound annual rate, from less than US$300 million in 1999 to US$744 million in 2004. In addition, investment in distance learning will reach a whopping US$2.2 billion in 2004, up from US$900 million in 1999.

A quick search on the Internet reveals hundreds of college and university e-learning initiatives, stretching from Alcorn State to Zion University. Every day, it seems, another new content partnership or executive education program is announced. Many programs target the most enticing segments of the new market, such as corporate training departments and busy professionals eager to increase their knowledge.

Each player is seeking to carve a niche in a market already well populated by virtual universities and e-learning ventures of all stripes. Universities are lured into the marketplace with intellectual capital that's just begging to be exploited under their school's own brand. And through the Internet, they're no longer tethered to a geographic base but can view the entire world as their market.

At Stanford University, for example, e-learning is seen as an effort to "extend the Stanford experience to people out there every day," says Andy DiPaolo, executive director of the Stanford Center for Professional Development. Many learners are savvy professionals who know what the Internet can do for them, he says. Participant also know they have a large and growing array of e-learning providers to pick from. "And they don't want to study in isolation," says DiPaolo. The Internet will allow them to share their experience, he contends.

He sees firsthand how the convenience of online learning is drawing professionals who were never attracted to higher education in the past. But online learning isn't for everybody, cautions DiPaolo. "It has to be taken by students who are mature and focused because of the demands placed on them."

Earlier this year, the Massachusetts Institute of Technology created a splash when it unveiled plans to provide nearly all of its course material, both undergraduate and graduate, over the Internet--absolutely free. MIT says that within the next 10 years, it will post materials from over 2,000 courses, including lecture notes, course outlines, reading lists, assignments, exams, simulations, and video lectures.

In several respects, MIT's proposal ups the ante on universities that view the Internet as a seductive revenue source. Yet, it also raises questions because MIT may miss the boat on e-learning's financial bonanza, according to some observers. The school will neither tailor materials for e-learning nor offer credit to online students--two appealing features upon which many other university ventures are based.

Cyber gold rush
While it may be difficult to envision the approaching landscape in total, certain features are coming into view. For starters, there's universal agreement that e-learning promises to make a profound and lasting imprint on higher education. Analysts and e-learning professionals are increasingly predicting that many traditional classroom-based MBA programs will go the way of the dinosaur.

Indeed, universities are climbing onto the e-bandwagon for an assortment of reasons: to provide far flung alums with lifelong learning at their alma mater; to increase learning options for the current student body, both full- and part-time; and to exploit the ability of technology to meet the learning needs of working adults. And, oh yes, revenue.

There's a gold rush in cyberspace, if you haven't noticed. Universities large and small are launching for-profit subsidiaries to reap the envisioned spoils of an enormous market. For instance, the University of Phoenix Online, the market's undisputed leader with over 18,000 students, is setting a fast pace. For the six months ending in February, the for-profit subsidiary reported revenues of US$70.2 million, up 65 percent. Its net income rose 72 percent to US$11.6 million.

For $23,000, students can earn an MBA degree at Phoenix, a relative bargain compared to approximately $80,000 that they would pay at Duke University's Fuqua School of Business, where an online degree program has also been launched. Its enrollment is more than double that of Jones International University, the country's first totally online university and Phoenix's closest competitor.

With its broad array of accredited courses for working adults, Phoenix aggressively targets the corporate university market with reasonably priced programs and flexible learning options. It also works with client companies to customize courses that fit the needs of their industry. The University of Phoenix claims that almost half of its students get some tuition reimbursement from their employers.

To be sure, the attraction for companies is undeniable. Financially pinched corporate training departments attest to significant savings with online learning over sending employees to the classroom, while employees are attracted by the ability to spend less time away from work and families.

Size is no barrier to this phenomenon. Just ask Paul LeBlanc, president of Marlboro College, a tiny New England school with 350 undergraduates. In 1998, its new graduate school launched the country's first e-commerce degree program, offering Masters degrees in Internet teaching technologies, Internet engineering, and Internet strategy management. The e-commerce program currently has 110 students. The Graduate Center of Marlboro College prepares students to lead the Internet and online strategies of companies, not-for-profit organizations, and educational institutions. Targeted at working adults, the curriculum blends e-learning with occasional on-site instruction.

"We realized that [the Internet] is changing everything in terms of learning," says LeBlanc, a former executive with publisher Houghton Mifflin. He's clearly excited at the prospect of serving more effectively the nontraditional student who makes up more than 50 percent of enrollments in higher education. "People can log on at 10 p.m. after having dinner instead of rushing to an 8 p.m. class at a community college," he says.

Changes in the next decade will include dramatic growth in continuing, adult, and graduate education, he maintains. University e-learning will also embrace two new markets that have been relatively untapped: international and senior audiences. Another fundamental change will be the demise of teacher-centric learning models in favor of student-driven collaborative learning, LeBlanc predicts. "That will include a decoupling of the instructor from the content," he asserts. Another likely change in higher education spurred by e-learning is the continued growth of private startups. Touting superior products, they will siphon market share from traditional institutions while partnering with others. These corporate learning institutions will seek accreditation to become degree-granting institutions.

Also changing will be the fundamental assumptions of what constitutes higher education. LeBlanc asks, "for example, does the traditional sequencing of credentials, such as bachelor's, master's, and Ph.D., make sense any longer, or do we imagine some other mix?" He predicts more blending in terms of the sequencing of education to employment.

Stanford's DiPaolo agrees. Meeting the needs of the demanding consumer market requires universities to think about providing courses as chunks of learning, he says. In other words, squeezing education into bite-sized morsels, such as packaging a 30-hour course into 15 two-hour modules.

Stanford also has discovered a new supply chain of knowledge, thanks to the Internet. "In the past, a faculty member did everything. But now, someone will craft a course, another person will deliver it, another will facilitate, and another will tutor," he says.

Branding is key
Universities enjoy a distinct advantage over many other e-learning providers: brand, says ASTD research director Mark Van Buren. "They are well established and have a reputation for good education." In contrast, with the wide availability of material from startups, "it's hard to get a handle on the quality of e-learning provided," he says.

That doesn't mean that branded content will automatically translate into higher quality in every case, warns Van Buren. "The question is whether [universities] can make the transition from classroom to e-learning."

How can corporate trainers sift through this seemingly limitless array of content and make prudent buying decisions? "Many universities are partnering with high quality vendors to distribute their content," says Van Buren. "Some of these companies will be steady players in the future." Yet, "trainers will have to look at both worlds carefully," he advises.

One of the many challenges faced by universities is offering distinctive products that are properly branded, contends Alex Brigham, co-founder and CEO of Corpedia, a small e-learning company that helps develop and market Internet-based content. Brigham should know. The company has branded its own content to an international client base around exclusive arrangements with Peter Drucker, Tom Peters, and other luminaries. "If schools don't have a distribution strategy with a competitive advantage, they'll end up competing with others who are doing the exact same thing they do," he says.

Brigham foresees an impending shakeout that will produce a major consolidation among suppliers, which is good news for corporate trainers.

Growth signs abound
Universities are moving in a variety of directions. For example, New York University and the University of Maryland are among schools setting up for-profit subsidiaries to exploit new markets. Williams, Amherst, Brown, and Cornell are taking part in the General Education Network consortium. Other distance learning coalitions are being established among universities with geographic, religious, or other ties. Many universities are discovering that by partnering with private startups, they can step into the market at a far lower risk rather than if they had struck out alone. Several other recent developments in university e-learning include

Joining hands. Four universities that have been active players in the distance learning arena are teaming up to offer e-learning courses to corporate clients. The University of California at Berkeley, Penn State University, the University of Washington, and the University of Wisconsin launched plans in January to jointly develop benchmarks and content development standards to spur adoption of continuing education e-learning by corporate clients and consumers. They have named the group the Alliance of Four to purposely understate the relationship and distinguish it from articulation agreements and other consortia.

Going global. Lansbridge University, a private, online, degree-granting university based in New Brunswick, Canada, is partnering with Taiwan-based human resources development consultancy Chain-E to market Lansbridge's degree programs to students in Taiwan and mainland China. Lansbridge was founded 18 months ago by Learnsoft Corporation as an Internet-based university delivering flexible, affordable, and market-driven management education focused on the fast economy. The program offers three models of an e-MBA and has 92 students. Chain-E joins a recruiting network that includes the Arthur D. Little School of Management in the United States, Synphonix in the United Kingdom and Europe, karROX Technologies in India, and Stamford College in Malaysia.

Partnering with industry. EduPoint, a San Diego-based LMS, has been tapped as the first industry partner of the Alfred P. Sloan Foundation, the not-for-profit organization that operates an association of accredited higher education institutions offering associate, undergraduate, graduate, and master's degree programs online. EduPoint will add to its Corporate Learning Marketplace 2.0 program e-learning courses from more than 80 accredited institutions that are participating in Sloan's Asynchronous Learning Network Consortium called Sloan-C. The online marketplace allows employees of subscribing companies and individual consumers to efficiently find, compare, enroll in, and evaluate learning programs. It aggregates, organizes, and updates course information and schedules from accredited universities, for-profit schools, and training providers.

Quality can vary
The quality of online university courses varies dramatically, which is one reason such for-profit universities as Phoenix and such private e-learning startups as UNext boast about delivering a far superior learning experience. Both are aggressively courting corporate clients.

For example, Deerfield, Illinois-based UNext has invested heavily to offer an elite learning experience for working professionals. It has created its Cardean University, an accredited virtual university that offers an MBA degree non-credit classes. Its courses are created by academic partners, including Stanford, Columbia University, Carnegie Mellon University, the University of Chicago, and the London School of Economics.

"The program is modular," says company founder, chairman, and CEO Andrew M. Rosenfield, a former professor and trustee at the University of Chicago. "People can acquire just the skills that they currently require or seek, and they need study only those subject matter areas that interest them. They need not commit to a full MBA-like course of study."

He says the program is perhaps the first to permit real just-in-time learning on the subjects it offers, abandoning the academic calendar model of education. "A student can start a course whenever it's convenient to do so, move forward as rapidly or as slowly as desired, and, most important, accommodate the world of work which makes learning a complement to an already busy schedule."

Rosenfield claims the course material never includes lectures. "Instead, we challenge the student with interactive exercises, problems, simulations, and labs." UNext's impressive alliances and interactive courses have enabled it to sign up some major corporate clients, such as General Motors. As part of a new four-year alliance, GM's 88,000 executive, management, professional, and technical employees will have access to Cardean through General Motors University, which is among the largest corporate universities that serves professional, supervisory, and salaried employees.

That's the good news. UNext is also an enormously expensive undertaking, one in which investors have sunk more than US$120 million. Within the past few months, the company has laid off 52 of its 400 employees, and analysts speculate whether the privately held company, founded in 1997, will ever break even.

Another player elbowing for room is Harcourt Publishing's energetic new Harcourt E-Learning, a fully virtual university that is part of Harcourt Higher Education. It features over 100 courses in business, information technology, health sciences, and arts and sciences. Harcourt E-Learning gives customers a choice of licensing its current list of courses, developing custom courses, or licensing an entire online university. The venture;s founders are applying for accreditation with the New England Association of Schools and Colleges.

New alliance takes notes
One group of universities that's seeking to learn from the experience of others is the Alliance of Four, the pact formed by the University of California at Berkeley, Penn State University, the University of Washington, and the University of Wisconsin to jointly offer e-learning courses. Members will share knowledge about e-learning in the areas of technical issues, marketing, student services, and faculty, but will otherwise limit the relationship's scope.

"We've seen the difficulties faced by large-scale consortia, such as high transaction costs among institutions and difficulties in coordination, especially on the articulation side," says Gary Matkin, a principal coordinator of the Alliance. "When they get into academic review and approval of courses, problems typically develop." Matkin is dean of continuing education at the University of California, Irvine.

At two organizational meetings held this year, members agreed not to enter into the "continuous process of hype and unreasonable promises and creation of unreasonable expectations" that typify many consortia, says Matkin. Instead, they will work together on content sharing and interoperability, but likely will not standardize on an e-learning delivery platform. Also, there will be no shared degrees and no effort to brand the four as a unit.

Activities will include benchmarking program data, assessing opportunities from private sector e-learning technology providers, exploring joint sales arrangements, launching a combined marketing program targeting the consumer market, and pooling members' training content and development capabilities.

They will emphasize the synergies of four land grant universities, including some 200 online courses and staffs of 15 to 25 people who handle production and design of online courses. "All of us feel if we're not in the online learning business, we're not going to be able to retain our position in corporate contract training," says Matkin. Coordinating efforts will help the four strengthen that position, he says.

Like many experts, Matkin is puzzled by some recent university-related e-learning developments. For example, he's dubious of MIT's proposal to offer its courses on the Internet for free. "I believe MIT is being high-minded and generous. We're seeing a number of universities, including Stanford, endorse this notion of openware," he says. But the program's details are hard for him to fathom. "Given the high degree of interest in intellectual property concerns among faculty, how will MIT ensure that faculty are comfortable with these arrangements?" he asks. "Also, where's the funding for this? Resources have to be as high-minded as the university, which isn't usually the case."

The concept of universities partnering with e-learning companies as content providers also is lost on Matkin. "Why would a major university want to hand part of its brand to a dot.com company that was trying to create a new brand called Cardean University?" he asks. "People can go through money fast and not get much in return." Matkin says he personally would be uncomfortable with such an arrangement.

He also questions other elements of e-learning among universities. "There has been this notion that if you find the best professors in the country and put the best courses online, you will have a superior degree. That notion rests on several untested presumptions." Among them is that having a prominent professor — a distinction typically based on that individual's research and writings rather than lectures on Economics 101 — would translate into noticeable quality in an online degree. Managing the design, interactivity, and technology required to make any online course compelling and useful is a questionable concept, he figures. "These professors won't be teaching the courses themselves. This is more of a branding and reputation issue than a business strategy."

Matkin agrees that there are profound implications of the movement by universities into e-learning, both good and bad. For example, he expects residential programs to survive but worries about learning institutions that offer most of their programs at night. "I'm a believer in online education, but there are certain aspects they can't provide, such as the feel of the classroom and camaraderie." But clearly universities stand a far better chance of sustaining themselves in an uncertain marketplace than struggling dot.coms. "Universities are always going to be here," he says.