4 Getting Started with Online Learning

An Inside Higher Education report on an online collaboration that was voted down by faculty after the first year of operation got me thinking about the critical success factors that institutions should make sure they address as they start an online learning innovation.  Here are a half-dozen planning factors that I have found to be important across different institutional types:

1.         Define Terms – Lately, the idea of MOOCs has tended to dominate recent press about online learning.  As a result, some institutions new to the field may assume that all online learning is about attracting very large numbers of students to free programs.  In fact, however, online learning has grown over the past two decades not around MOOCs but around the idea of transforming traditional on-campus courses to serve both traditional and nontraditional student populations.  If one is to create a true institutional commitment to innovating with online learning, it is essential that leaders begin by defining terms so that everyone is talking about the same thing.  Frank Mayadas, John Sener, and I have developed a set of definitions (available on the OLC website: https://onlinelearningconsortium.org/updated-e-learning-definitions-2/) for the vast majority of online courses.  These can help institutions better define their goals.

2.         Define Your Mission – Articulate the purpose of the online learning initiative—who will it serve and why you want to serve them – and how the initiative will complement the overall institutional mission.  Then, create a vision that will help the institution judge progress toward that mission.  Both the mission and the vision should be developed in consultation with a broad spectrum of the institution’s leadership and shared widely.

3.         Target Your Student Population – Online learning can be used to serve a variety of different student populations.  Initially, many institutions targeted returning adult students who otherwise lack access to campus programs.  Others use online learning to innovate with new pedagogies for traditional students.  Still others focused on building partnerships with a particular industry or professional community or on collaboration with peer institutions.  It is important, as a very early step in the planning process, to define your target population.

4.         Create a Governance Structure – Higher education is a complex cultural organization that has a tradition of shared governance that ensures a balance between academic freedom and initiative and administrative oversight and management.  Online learning is both an administrative and academic initiative.  It is important that it operate within the shared governance principle.  Institutions should create a governance structure that involves all academic and administrative units that will be affected by it and that may play a role in its success or failure.  Any new academic or administrative policies should be approved through the institution’s normal pathways for new policies.

5.         Guarantee Early Success – One can anticipate that not all faculty or academic departments will be enthusiastic about online learning at the beginning, so early programs should be those that are very likely to succeed. Initial programs should combine two features.  First, they should be led by academic departments and faculty who are enthusiastic about the program.  Second, once faculty have expressed interest, the program should be tested against several criteria, including: (a) the suitability of the program for online learning, (b) the program’s reputation for quality, (c) similar programs offered online by other institutions, (d) the existence of an identifiable target student population that can sustain the program’s cost over multiple years, and (e) the institution’s ability to reach that population to promote the program.

6.         Create a Business Model –  It is important to create a business model that ensures that all new costs associated with the online learning initiative can be recovered through tuition and fees without weakening other, ongoing priorities at the institution and that any excess revenue is appropriately reinvested.  As with other aspects of the program, it is important that the business model be openly shared with both administrative and academic leaders.

Business Planning Issues

Developing a meaningful business plan may be the hardest part of getting started with an online learning initiative.  At many institutions, the idea of using technology to deliver complete degree programs to new groups of students who may never set foot on campus is a truly unique idea.  In that case, there may be no financial models to follow.  Here are some ideas.

First, treat the online initiative as a new cost center.  That is, identify all costs associated with the initiative, with the goal that these costs will be recovered through tuition and fees. The online initiative should be expected, when it matures, to recover all of these costs through tuition and fees.   Revenue from traditional programs should not be expected to cover costs of the online program; nor should students in the online program be expected to pay for services that they do not use.

Identify all new costs that will be incurred as a result of the online initiative, anywhere in the institution.  These might include:

• Technical Infrastructure—This would encompass the learning management system and other computer-based resources. If this infrastructure is to be shared with other functions (i.e., online activities for on-campus students and faculty), then calculate a share of that institution-wide infrastructure that should be borne by the online initiative.
• New Demand on Existing Units—This might include the increased demand on core services such as the Registrar, Financial Aid, library, the central IT unit, marketing, etc. Estimate the specific new demands that the online initiative will place on these units.  In some cases, the best solution will be to fund new positions in these units.
• New Costs Directly Tied to the Online Learning Unit – This includes all costs that will assigned to the central unit that is coordinating the initiative.
• Academic Unit Costs – This would include all new costs incurred by the academic units that develop and offer courses through the online initiative. In some cases, these costs will be covered by the central online learning unit; in other cases, the academic units will bear these costs but will expect to recover them through tuition and fees

It is also important that all parties understand how achieving scale over time will affect cost efficiency and revenue distribution.  Different kinds of costs contribute differently to achieving scale.  For instance:

• Infrastructure costs—technology, website management, licenses, library services, “brand” marketing, faculty professional development, etc. – will be recovered through each enrollment.
• Program costs – the cost of developing and offering degree and certificate programs (program design, faculty leadership, program-specific marketing, academic advising, etc.)—will be recovered through enrollments in those particular programs.
• Course development and maintenance (faculty and instructional design costs, etc.) are incurred every time a course is developed or updated and will be recovered through enrollments in those particular courses.
• Student services (registration, pre-enrollment counseling, financial aid, etc.) occur for each enrollment, regardless of the program or course involved.

Using the above, you can estimate how many programs, courses, and student enrollments you will need to break even.  Also, decide how after-cost revenue will be used.  For instance, to what extent should after-cost revenue be reinvested in new program development, new student services or co-curricular services; returned to the academic units that offer the programs for their own use; or returned to central administration?

A revenue sharing formula, based on the above considerations, should be developed early and shared widely with the administrative and academic units that will be involved in the initiative.  It is important that everyone have a common understanding of how costs will be handled—who will take the financial risk if a program does not succeed—and how financial returns will be distributed.   My own experience was that it was best to share gross revenue—ensuring that sponsoring academic units will receive a percentage of gross tuition in addition to cost recovery–rather to wait until all costs are covered and share whatever remains.  Risk should be with the central online learning administrative unit rather than with each individual teaching or support unit.

The business plan should be treated as new institutional policy and applied uniformly across all units.

Ultimately, each institution’s revenue and cost model will reflect the organizational culture and needs of that institution.  There is no single model.  However, I hope these principles will help guide the discussion at institutions that are beginning new online learning initiatives.

Closing Thoughts

Institutions have been developing online learning programs for the past two decades. There is a growing community of institutions that have gone through the start-up process and that are now institutionalizing online learning as an ongoing strategy for realizing their mission in the Information Society.  Organizations like the Online Learning Consortium and the University Professional and Continuing Education Association provide a meeting ground for this community and can help institutions get off to a good start.