Wednesday, September 18, 2013

Strategic Partners for HBCU Online Programs -- Part 1 of 4

Last updated: Friday 1/10/14 @ 11:13 am
In an ideal world HBCUs would have no use for strategic partners because they would have enough money and enough expertise in instructional technology, online marketing, and online recruitment to be able to develop their own state-of-the-art online courses for off-campus students, to market their programs to off-campus students, and to recruit interested off-campus students to enroll in their programs.

But in the real world, most HBCUs lack sufficient investment capital or relevant expertise to become proficient players in the rapidly evolving, highly competitive global market for online degrees and certificate programs. Therefore engaging a strategic partner -- i.e., an experienced, well-funded corporate provider of course development, marketing, and recruitment services -- is an option that most HBCUs should consider.

Some well-known strategic partners include Education Online Services Corporation (EOServ), EducationDynamics, Bisk Education, Learning House, Pearson eCollege, Pearson Embanet (formerly known as "Embanet Compass" before being purchased by Pearson), Deltak (division of Wiley), and 2U (formerly known as "2tor").

A. Strategic Partners as General Contractors
  • Strategic partners may also provide other services, but course development, marketing, and recruitment are, arguably, the most important services because they address the biggest barriers impeding HBCU entry into the global market
  • Conceivably a strategic partner might employ an extensive in-house staff that provides all of its services; but it's more likely that the partner will retain subcontractors.
  • Marketing and recruitment must be tightly coupled; so it's also likely that the same subcontractors will provide both services; other subcontractors will specialize in course development and/or other services.
  • Marketing and recruitment campaigns can cost hundreds of thousands, if not millions of dollars within the first five or six years ... which is why they are beyond the financial scope of most HBCUs and beyond the scope of small partner firms. Therefore the strongest partners are likely to be large corporations or firms that are closely tied to, if not owned by equity funds.
  • General advisement or "coaching" is a fourth service that's often provided by strategic partners. Coaches are not subject matter experts, so they don't answer students' questions about the content of their online courses.

    -- Coaches usually answer procedural questions and administrative questions. Procedural questions will address issues like logging onto and navigating the learning management systems that support the online courses a student is taking. Administrative questions address issues like  financial aid, registration, prerequisites for required courses vs. elective courses, expected time to graduation, etc.

    --- Coaches can also serve as proactive trouble shooters who initiate contact with students when a student's performance has lapsed, e.g, not logging on for a long period of time, receiving low grades on tests and homeworks, etc. In such cases, the coaches can help students identify solutions to their problems where the problems are not related to course content and/or refer the student's problems to the course instructor or to the student's academic advisor.

    -- Coaches are available 24 by 7, a level of service not typically provided by an HBCU's on-campus faculty, but one that is greatly appreciated by online students whose job and/or family obligations prevent them from communicating with faculty in the daytime or during early evening hours on weekdays.

    Of course, an HBCU could assemble a team of faculty and student assistants to provide this kind of around-the-clock coaching. But given the high-touch nature of coaching, these services can be provided by a  partner's recruitment teams for a marginal additional cost that will probably be less than the added cost to an HBCU for creating its own team.
  • Hosting the online courses and the course applications are other services provided by some, but not all strategic partners. Both will remove substantial traffic from an HBCU's network and are therefore services that will be greatly appreciated by HBCUs whose technical infrastructure is under budgetary constraints.

B. Terms of Engagement for Recruitment, Marketing, and Coaching
  • Strategic partners invest large dollars up front to finance the HBCU's marketing and recruitment campaigns; in exchange they expect a negotiated share of the revenue from the tuition and fees charged to students who enroll in the HBCU's online programs
  • QUESTION #1: How large a share of the tuition revenue will a strategic partner expect? Negotiations will be influenced by many factors:

    ANSWER #1A: One of the most significant factors will be the status of the HBCU's current online initiatives, to be specific ==> whether the HBCU has an ongoing online operation vs. whether it is launching a start-up operation vs the location of its online operation in-between these two extremes

    -- If an HBCU has online programs that are already in operation and enjoy substantial enrollments, a prospective partner will agree to a lower share of the revenue from these ongoing operations as it helps the HBCU to drive  enrollments to higher levels.

    -- But if an HBCU has no online programs in operation and/or if current enrollments are low, a prospective partner will press for a larger share of the tuition revenue because the risks of failure are significantly greater for start-up operations.

    ANSWER 1B: Another significant factor will be the strength of the HBCU's brand name.

    -- Partners will accept lower revenue shares from HBCUs that are well-known and highly respected regionally, nationally, and internationally

    -- Partners will expect higher shares from HBCUs with weaker brands

    ANSWER 1C: A third significant factor will be the potential capacity of an HBCU to offer programs that currently enjoy high demand in the global market, e.g., management, nursing, education, information technology, etc.

    -- Partners will accept lower revenue shares from HBCUs that could offer many high demand programs

    -- Partners will expect higher shares from HBCUs that could only produce a few high demand programs

    In other words, strategic partners regard investments in online programs just like any other investments. Where the risks are higher, they will want higher rates of return on their investments; but where the risks are lower, they will accept lower returns. 
  • QUESTION #2: How wide is the actual range of revenue shares that is allocated to strategic partners?

    ANSWER #2
    : At this time U.S. strategic partners negotiate shares that range between 25 percent and 85 percent of the tuition revenue
And a Caveat
The kinds of strategic partnerships discussed in this note require clarity of purpose from both partners. Each partner must have realistic expectations about what they hope to gain from the partnership and how the other partner can contribute to achieving those expectations. And each should be confident that their partner's expectations are realistic. Otherwise the partnership will become a bad marriage that is doomed to fail.
Strategic Alliances
HBCUs and other minority serving institutions that intend to offer similar and/or complementary online programs should also consider forming strategic alliances to share the services provided by a strategic partner. Alliances would have more online programs already in operation, have a stronger collective brand name, and offer a wider array of programs ==> factors that would induce a strategic partner to accept a lower share of the tuition revenue from the alliance than it would accept from any of its individual members.

This discussion is continued in ==> Part 2

Related Notes:

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