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

If you are like many higher ed people that I speak with, your answer may not be all that positive. Higher ed people simply don’t like the idea of long contract lock-ins (usually between five and 10 years) and revenue share arrangements that send half to three-quarters of tuition dollars to for-profit companies.

Is it possible to be a critical and clear-eyed observer of the OPM industry and still believe that an OPM partnership should be on the table as institutions consider new online programs? I think the answer is yes, as I’ve come to believe that (a) the OPM industry is more complicated and nuanced than we often think, and (b) we need to think about OPM partnerships in a different way.

The OPM industry, however, is so big and so fast moving that it is hard to get our heads around this option. There are many excellent articles and resources on the OPM industry. I particularly like Paxton Riter’s 2017 article “Five Myths About Online Program Management,” as well as anything written by Howard Lurie of Eduventures. Reading Phil Hill and Michael Feldstein about the OPM world is a must. Inside Higher Ed and "Inside Digital Learning" also recently published an excellent overview of the OPM space.

These resources and articles about the OPM industry are great. How schools think about partnering (or not) with an online program management company, however, should be driven mostly by how they think about online learning. In order to evaluate the pros and cons about the OPM model, it is first necessary to confront five misconceptions about partnering with an OPM provider.

Misconception No. 1: Money Should Drive the Decision

The main reason that a school will partner with an OPM company is money. The university wants to create a new degree (or increasingly nondegree) online program in order to bring in new revenues. The university, however, is either unable or does not want to invest the money necessary to create, market, recruit for and support this new online program. Working with an OPM provider removes that initial money barrier, as the OPM company de-risks the initiative by providing the up-front capital (and people and expertise) in order to get the online program off the ground. In exchange, the OPM company gets a share of the tuition revenue, and a contract that is long enough so that the initial investment can be made back and the company can realize a profit.

The problem with this OPM partnership calculus is that it starts with money rather than mission. Before even thinking about a potential OPM partnership, each school should decide if the new online program aligns with its strategic objectives. The development of new online programs as primarily revenue-generating initiatives, as opposed to something that is mission aligned and has the potential to bring in dollars, is the main reason why these programs fail.

The hard work that colleges and universities need to do is figure out where online programs fit into their overall 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 bring to a new type of student using the affordances of online learning. Only after those decisions are made should the option to develop the online program in-house, or to work with an OPM provider, start to be examined. The financial arrangements of an OPM company should inform, but never drive, the decision to create a new online program.

Misconception No. 2: OPM Providers Have Rigid Partnership Models

The OPM industry is maturing, changing and differentiating. The old model of long-term contract lock-ins and lopsided revenue shares is beginning to erode. Nowadays, all OPM providers that I know are starting to unbundle their services. They are willing to build flexible partnership models that suit the individual needs of a particular school, rather than impose a rigid model of revenue share and contract length.

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

Mostly, I think that both OPM companies and schools are gaining enough experience to know that the real value comes from long-term relationships, rather than shorter-term profits. A successful OPM partnership has to be measured in decades. There is considerable concern among OPM providers that schools will not renew partnership agreements once the initial contract has ended, or will want to get out of existing contracts. Flexibility is the only way to build long-term positive relationships.

What this means is that schools should figure out what sort of arrangement -- from a full bundled partnership to fee for service to something in between -- would work best for them. It is up to individual colleges and universities to sort through what they need, what they want to outsource and what they want to keep. I recommend that each school should draw up its own ideal contract before engaging in any discussions with any OPM provider. Use that as a map and a guide, as this ideal contract will help determine which OPM company (if any) is a good partner fit.

Misconception No. 3: Degree Programs Are the Only, or the Even Best, Place to Start

We tend to think of OPMs mostly as enablers of full online degree programs. A better place to start may be with nondegree programs -- certificates and alternative credentials.

The reasons to investigate nondegree online options are many. First, the risk of doing a nondegree online program is less than developing a full online degree offering. The up-front costs are smaller. The risks to the brand of the institution are less. They can be stood up more quickly than degree programs, evolved more rapidly based on what is learned and closed down more quickly if they fail.

A nondegree online program is a good way to test the waters of online education. If a school is going to work with an OPM partner, starting with a nondegree program is a good way to build experience and trust. Nondegree programs can be built with an eye toward eventually scaling them up to full degree programs. Starting with a nondegree program is one way to build up confidence and capabilities in the online learning world.

OPM providers are moving more and more into the nondegree/short course space. They are discovering strong international markets for alternative credentials from institutions with strong brands and expert faculty. The revenue share and contract length agreements that OPMs are offering for nondegree programs may be more palatable than those of degree programs. The OPM companies have real expertise in research market demand for nondegree programs, and can help a school identify those areas of institutional strength where it would make sense to consider a nondegree online offering.

Misconception No. 4: Outsourcing Online Education Eliminates the Need to Make Internal Investments

One area where I see colleges and universities get themselves in trouble is in thinking that choosing to build an online program with an OPM partner eliminates the need to build internal capacity. They think that they will not need to recruit experts in online education, as the OPM company will be fulfilling that role.

The truth is that even the best OPM partnership needs to be carefully managed. The quality of the education provided in any online program is always the ultimate responsibility of the institution. It is the college's reputation that is on the line, not the OPM’s. The school needs to be heavily and intimately involved with every decision related to every aspect of the program, from how it is marketed to how the courses are run. An OPM partnership is not like the decision to outsource other aspects of the institution. Online programs are core to the mission and work of every university. There needs to be enough internal staff, with the right level of expertise, to tightly manage the day-to-day aspects of every OPM partnership.

OPM partnerships, when entered in to, are signed with the best of intentions. But it would be a mistake to assume that the relationship will go perfectly. There will be bumps and misunderstandings and disagreements along the way. There will be conflict and tensions. How future conflicts are managed is at least as important as contract terms in choosing which OPM, if any, to partner with. There should be a clear plan of communications and conflict resolution in place before any OPM contract is signed and any online program is launched.

Misconception No. 5: Choosing to Partner With an OPM Will Make It Impossible to Create Fully Internal Online Programs

Too often I see the choice to work with an OPM characterized as an all-or-nothing sort of decision. Either the school can start and run its own online programs, or it can work with an OPM.

The truth is that it is possible to have a mixed strategy -- to have some areas of the institution run their own programs and to work with an OPM on others.

In fact, having a mixed online learning ecosystem may be healthy for an institution. This approach ensures that the different sorts of models can be compared and contrasted. Running their own online programs forces schools to develop the sorts of internal expertise and capacities that I believe are necessary for successful OPM partnerships.

We are too early in the online learning story to know which models will work best. We don’t know if it makes sense for schools to run everything having to do with online programs. Or if it makes sense to partner in areas outside of core competencies. The important thing is that any online program aligns with mission. How those programs are launched, be they fully internal or with a partner, is ultimately less important.

What other OPM misconceptions would you like to explore? Where do you go to find news and analysis about the OPM industry? What has been the experience at your school in evaluating a potential OPM partner? If your school is currently working with an OPM, how are things working out? How would you like to see the OPM industry evolve?