Maximum profit and ROI in distance ed: planning to refine or launch your online learning programs? Learn from the winners. (Online).

It's no secret that the higher ed community has recognized that growth in online distance learning is exploding. In fact, our most recent estimates (Source: Eduventures.) indicate that nearly half a million students were enrolled in fully online distance learning programs at Title IV-eligible, degree-granting institutions in the 2001-2002 academic year. This equates to an estimated $2.4 billion in tuition dollars--not an insignificant figure. What's more, as enrollments in these programs continue to grow at more than 40 percent annually, the 2002-2003 academic year should see nearly 5 percent of post-secondary students (or one in every 20) studying entirely online.

Still, planning for and achieving such rapid growth can be an immense strategic and tactical challenge for colleges and universities. With so many institutions already online and seeking to scale the growth of and refine their programs--and many more seeking to launch their first online course offerings--it's essential to learn from the experiences of other IHEs with programs of scale or note that have been particularly successful in creating strategies for launching effective and profitable online distance learning programs.

TOP-DOWN, INSTITUTION-WIDE MENTALITY

While the genesis of online learning programs varies from institution to institution, many have arisen from continuing education arms, distance or extended education departments, and individual schools and colleges within a university. Many of the more successful IHEs involved in online learning have recognized that formulating an online distance learning strategy must be at the highest operational level: an "enterprise-wide" strategy that takes into account the operations of programs, departments, faculty, and administrators across the institution. The strategy should have a clear set of objectives, and it must address a variety of critical program requirements--an understanding of which is possible only through the involvement of a high-level decision-maker and/or a cross-functional team of stakeholders representing various constituencies within the institution.

ALIGNING PROGRAM WITH INSTITUTIONAL MISSION

Perhaps the most fundamental question in creating a strategy is, "How does the online learning program align with the institution's mission?" Much has been made of the failures of various for-profit spin-offs, as "traditional," non-profit IHEs sought to capitalize on the soaring stock market of the late 1990s and the promise of the Internet. But in many cases, these initiatives failed because they hastily sought profits without a tight alignment with the institution's larger mission. Success for most IHEs is not measured in profits generated, but in successful student and institutional outcomes. Many successful online learning programs are driving these outcomes in support of institutions' academic missions.

In fact, examples abound of online distance learning programs created as a key component of broader strategic goals. Santa Barbara City College, a two-year IHE in California, established its Online College in order to better execute its larger mission of serving its local community through accessible, flexible programs. The University of Central Florida, one of 11 IHEs in the Florida state university system, launched its online programs within the context of its goal to become the country's leading metropolitan research university--while addressing issues of access, quality, and cost. Bismarck State College (NO) and Portland Community College (OR) both created programs as an extension of their missions to serve the community through offering in-demand programs online. As an extension of its long history of reaching students through emerging technologies, Regis University (CO) moved from offering distance learning courses via videocassette and cable TV, to delivering courses via the Web. As institutions that are concerned with generating profits, mid-Atlantic-based Strayer University has utilized online distance learning to provide classes tailored to the needs of working adults, as has the poster child for success in online learning, the University of Phoenix Online. Both of these institutions focus on providing educational programs to working adults in formats founded on convenience and flexibility; maintaining that focus and efficiently scaling their online learning programs enhances the institutions' bottom line.

LEVERAGING THE STRENGTHS OF FLAGSHIP PROGRAMS

But while online distance ed greatly expands the pool of potential students, it dramatically heightens competition in certain disciplines and student demographics, as the physical barriers that confined many IHEs to primarily local competitive markets are broken down. Like it or not, in the online environment, certain types of courses and programs become relative commodities. In seeking a degree in business, education, technology, or another popular and widely offered field, online students have a world of choices. Institutions in a particular geographic area that previously attracted local students on the strength of a given program or curriculum now face direct competition for that student from an institution that may be 3,000 or more miles away. In other words, online, the state college in Florida now faces new competition for enrollments in its nursing program from a small, private university in Oregon; both are equally accessible to the Web-based student in Chicago. While historically, students have been willing to relocate to enroll in the program of their choice, that is the major economic and competitive difference today--they no longer have to.

Many institutions have recognized this new and heightened competitive environment, and have paid careful attention to bringing programs online that leverage unique strengths that are differentiated from other IHEs--whether it be through a renowned faculty, an innovative pedagogical model, an accelerated program structure, or an entirely unique curricular area.

As a national leader in offering certificates and degrees in the energy industry, Bismarck State College (NO) launched an online program that prepares students for careers in energy-related fields. In partnership with associations and firms within the energy industry, the program has been particularly successful and is highly regarded, generating hundreds of enrollments each semester. This, for an institution that faced the threat of a declining population of its traditional 18- to 22-year-old students in its home state. Penn State University's highly successful World Campus offers online certificates in turf-grass management, dietary management, addiction studies, and noise-control engineering. Even Cornell University's eCornell (which, incidentally, is one of the only for-profit subsidiaries to survive) focused on its unique strengths, with its first online offerings including courses from its School of Industrial and Labor Relations, Hospital for Special. Surgery, and Weill Medical College. Beyond Cornell's overall prestige, these programs are top-ranked nationally and internationally, and are focused on specific niches.

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FRONT-LOADING MARKET RESEARCH

Another best practice in developing an online learning strategy is the utilization of market research to size, scope, and map opportunities before launching an online distance learning initiative. With their businesslike, market-oriented approach, this is an area where for-profit universities, in particular, have excelled. For-profits employ extensive market research to assess student demand for various online programs, as well as to determine the appropriate delivery model, and eventually, to generate "leads" for prospective students.

For instance, Strayer conducted extensive focus groups with its students to determine if they preferred a synchronous or asynchronous instruction model. After beginning with synchronous online distance learning programs, the school now offers asynchronous online courses as well, in order to appeal to both learning styles. At last count, Strayer is one of the fastest growing--and among the larger--programs; its enrollments increased 80 percent from 2002 to 2003, to reach some 5,800 students. Other for-profit institutions with large online programs, such as the University of Phoenix Online and Devry University, are well-known for the market research that they conduct across their online and offline campuses and programs, to continually refine their approach.

Of course, this practice is not limited to for-profit institutions. Cornell reported that it had conducted more than 1,300 interviews and spent hundreds of thousands of dollars prior to launching its (for-profit) eCornell program. The Rochester Institute of Technology (NY) has also recognized the importance of conducting market research before scaling its program, taking care to identify specific niches and conduct an "environmental scan" of competitive offerings.

DECISIONS ABOUT INFRASTRUCTURE

Once the focus of an online distance learning program is determined, the strategic task leading up to actually implementing the program emerges as one of the most critical: determining how to create an infrastructure--that is, the required technology platform and student and faculty services--to support a successful program.

Many institutions have decided to outsource various components of their technology architecture--most commonly and visibly by licensing course management systems from firms such as Blackboard and WebCT. Others have outsourced the entire technology infrastructure (including hosting on a vendor's databases and servers elements of faculty support and student help desks, etc.) to firms such as eCollege (www.ecollege.com), EMBANet (www.embanet.com), or Collegis (www.collegis.com). Large for-profits and smaller, resource-constrained IHEs such as community colleges have been particularly inclined to outsource these functions, while many research/doctoral universities have decided to address technology in-house.

Yet, technology selection is just the tip of the iceberg, as the online learning infrastructure must encompass all of the institution's student and faculty services. Often, this requires an entire re-envisioning or restructuring of how various institutional functions will operate and how services will be delivered in the online environment.

READY, SET, GO

A successful strategy is only actualized through successful implementation, which presents a whole new set of considerations, choices, and challenges. Thankfully, there are plenty of examples in higher education of institutions that are prospering--many of which are even dramatically "reinventing" themselves along the way--through online learning. This suggests that the road ahead will be less revolutionary and more evolutionary, as the pioneers become veterans of the game and online distance learning truly becomes mainstream.

Fully Online Distance Learning Market Growth

           Tuition Revenues (millions)

1997-98                $260
1998-99                $505
1999-00                $925
2000-01              $1,576
2001-02              $2,443
2002-03E             $3,518
2003-04E             $4,573
2004-05E             $5,396

Source: Eduventures, NCES

Note: Table made from bar graph.

Sean Robert Gallagher is on analyst with Eduventures, Inc. (www.eduventures.com).