3 Misconceptions About Online Program Management Providers

What do you think about the online program management (OPM) industry?

If you are like many higher education people with whom I speak, your response may not be so positive. Higher education people simply do not like the idea of long-term contracts (usually between five and 10 years) and income sharing agreements that send half to three-quarters of the tuition dollars to companies for the purpose of profit.

Is it possible to be a critical and impartial observer of the Online Program Management industry and still believe that an OPM association should be on the table when institutions consider new online programs? I think the answer is yes, since I believe that (a) the OPM industry is more complicated and nuanced than we often think, and (b) we should think about the OPM associations in a different way.

However, the OPM industry is so big and moves so fast that it is difficult to understand our options. There are many excellent articles and resources in the OPM industry. I especially like Paxton Riter’s article of 2017 "Five myths about the management of online programs", as well as any article written by Howard Lurie de Eduventures. Reading Phil Hill and Michael Feldstein about the world of OPM is a must. Inside Higher Ed and "Inside Digital Learning" also recently published an excellent description of the OPM space.

These resources and articles about the OPM industry are excellent. However, the way in which schools think about partnering (or not) with an online program management company, should be based primarily on how they think about online learning. To assess the advantages and disadvantages of the OPM model, it is first necessary to address five misconceptions about partnering with an OPM provider.

Misconception # 1: money should drive the decision

The main reason why a school will associate with an Online Program Management company is money. The university wants to create a new online (or increasingly unlicensed) online program to generate new revenue. However, the university can not or will not invest the money necessary to create, market, recruit and support this new online program. Working with an OPM provider eliminates that initial barrier of money, since the OPM company risks the initiative by providing initial capital (and staff and experience) for the online program to take off. In return, the OPM company obtains a portion of the income from enrollment, and a contract that is long enough so that the initial investment can be recovered and the company can make a profit.

The problem with this Online Program Management association calculation is that it starts with money instead of mission. Before even thinking about a possible OPM partnership, each school must decide if the new online program aligns with its strategic objectives. The development of new online programs as initiatives that mainly generate income, as opposed to something that is aligned with the mission and has the potential to generate dollars, is the main reason why these programs fail.

The hard work that universities and colleges and universities must do is to find out where the programs fit in line with their general goals and objectives. The differentiating areas of strength that the school wants to invest. The parts of the institution with the strongest faculty. The philosophy and model of education that the institution wants to provide a new type of student using online learning resources. Only after these decisions are made should the possibility of developing the online program internally or working with an OPM provider begin to be examined. The financial arrangements of a payment management company should inform, but never drive, the decision to create a new online program.

Misconception # 2: OPM providers have rigid partnership models

The OPM industry is maturing, changing and differentiating. The old model of long-term contracts blockages and unbalanced shared revenues is beginning to erode. Nowadays, all the OPM providers that I know are starting to break down their services. They are willing to build flexible partnership models that suit the individual needs of a particular school, rather than imposing a rigid model of participation in the income and duration of the contract.

The reasons for this new flexibility among OPM providers are many. This is an incredibly competitive industry. There is something like 30 OPM providers, maybe more, competing to partner with schools. The success of OPM companies has given investors the confidence to allow OPM companies to have longer leads to profitability and, therefore, more flexible partnership agreements.

Above all, I believe that both Online Program Management companies and schools are acquiring enough experience to know that real value comes from long-term relationships, rather than short-term gains. A successful OPM partnership must be measured in decades. There is considerable concern among OPM providers that schools will not renew partnership agreements once the initial contract has been finalized, or they will want to exit existing contracts. Flexibility is the only way to build long-term positive relationships.

What this means is that schools must find out what kind of arrangement, from a full partnership to a service fee or something in between, would work better for them. It is up to individual colleges and universities to determine what they need, what they want to outsource and what they want to maintain. I recommend that each school develop its own ideal contract before participating in any discussion with any OPM provider. Use that as a map and a guide, as this ideal contract will help determine which OPM company (in your case) is a good suitable partner.

Misconception # 3: degree programs are the only, or even the best, place to start

We tend to think of OPMs mostly as facilitators of complete online degree programs. A better place to start may be with unlicensed programs: certificates and alternative credentials.

The reasons for researching online options without a license are many. First, the risk of conducting an online program without a license is less than the development of a complete online title offer. The initial costs are smaller. The risks to the brand of the institution are minor. They can be lifted more quickly than degree programs, evolved more quickly based on what was learned and closed more quickly if they fail.

An online program without a license is a good way to test the waters of online education. If a school is going to work with an OPM partner, starting with an unlicensed program is a good way to build experience and confidence. Non-degree programs can be built with a view to eventually expanding them to full-degree programs. Starting with an untitled program is a way to increase confidence and skills in the online learning world.

OPM providers are moving more and more in the space of short/unlicensed courses. They are discovering solid international markets for alternative credentials of institutions with strong brands and expert teachers. The agreements for participation in the income and duration of the contract that the OPMs are offering for unlicensed programs may be more acceptable than those of the degree programs. Online Program Management companies have real experience in research market demand for unlicensed programs, and can help a school identify those areas of institutional strength where it would make sense to consider an online offer without a license.

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