The nature of vendor relationships with universities has changed significantly over the past few decades. At one point, universities were likely to outsource strictly non-core functions such as cleaning and food services. Although important, for most universities, these activities have little impact on academic mission and are not points of differentiation. These are not the services that prompt university management to ask if they want a partnership, a more traditional vendor relationship, or something else. Although used quite liberally, I believe it serves us well to distinguish partnerships as special relationships that entail a set of non-trivial shared values. Other types of commercial relationships are based on assumptions that can be reduced to exchanges of value. There will be times when a university wants a partnership and times when it wants a vendor relationship, and it is important for the university to know what it wants, particularly as it considers services that are core to the university’s self-identity.
Why Consider a Partner?
As indicated above, the nature of education service providers has changed. The recent emphasis on enrolment and revenue growth has stretched the capacity of many universities. As university management considers sourcing capacity that is non-trivial in its relationship to the core academic mission, it becomes increasingly important to assess what has brought you, as an academic or administrator, to consider the need for a partner. Normally there is one of three general reasons for sourcing needed functionality.
- The university has decided a particular function is non-core and can be safely outsourced.
- Although a particular function is closely aligned with academic strategy and mission, outsourcing makes financial or managerial sense.
- The functions have been identified as necessary to meet a university’s aspiration for which it does not have internal capability and capacity.
The third reason is perhaps the most relevant for changes in how universities are approaching lifelong learning. Capacity pressure resulting in a need to outsource frequently occurs when a university decides to grow student enrolment, for example, through online learning or increasing international students. In these cases, outsourced functions can substantively overlap with core academic functions including faculty recruiting and development, learning design and course development, student services and student recruiting. As a university manager tasked with launching an aggressive online learning program, how do you fill that gap and what are your options?
Universities have a range of partnership options. Educational services, as a sector, has grown remarkably during the past decade, moving from auxiliary services to those many academics and administrators would consider core to the education mission. There are, broadly, three options available to meet capacity gaps.
1. Internal Partnerships (In-House) Providers
The university may create an internal service provider that operates in a semi-autonomous manner, delivering services to internal partners. Examples of universities that followed this path include Penn State University (World Campus), the University of Massachusetts (UMassOnline) and the State University of New York (SUNY Learning Network).
2. Commercial Vendors
The university can contract with a commercial education service provider. Arrangements can vary considerably from one-off services to entire suites of services in which the vendor is practically running all core operations. Financial arrangements can vary from traditional service contracts to revenue sharing, sometimes at levels in which the vendor retains significantly more than half of tuition and fees.
3. Non-Commercial Providers
There is a variety of non-commercial service providers boasting a number of models. Some of the most common are public or government technology service groups that provide technology hosting and applications sharing. Perhaps more interesting, however, are a number of emerging collaborative or collective models, of which one of the best developed is the Connecticut Distance Learning Consortium. Examples of other types of non-commercial service providers include the OERu collaborative, Quality Matters, the Commonwealth of Learning, edX and many others.
The chosen options should fit the needs, risk appetite, plans and values of the university community. That is, the university must understand its motivations, maturity, ability to act as a good partner or customer and the implications of both success and failure.
Different universities will consider the need for a partnership at different stages of maturity and will consider partnerships for different reasons. The decision to build internal capacity, or to outsource to a commercial or non-commercial vendor or partner, will be nuanced. There is almost no question that if your driving need is to launch online programming quickly and at scale, a commercial provider will most likely provide the most comprehensive suite of service options. If university management is interested in experimenting and is not willing to meet a vendor’s enrolment growth expectations or partnership restrictions, a different decision may be in order. Building internal capacity may be difficult, particularly if the university does not have a history in online learning or serving non-residential or adult learners. It may take a lot of work, up-front financial investment, political capital, persistence and the normal risk associated with investing in expanding staff, but the university is building important capacity, understanding and commitment. Values will be aligned and the university will own the endeavour — for better or worse. A commercial vendor may provide excellent service, their employees may treat your students as their own, apply needed and wanted pressure for change, provide a quick start and shield the university from significant distractions, but no matter how much talk of partnership is exchanged, and no matter how prepared all parties are to be in the relationship for the long haul, at the end of the day, if the pressure is on, your partner will likely act as a vendor, because after all, it is business. And the smart university manager who chooses to outsource to a commercial partner will not to lose sight of that, while taking advantage of the benefits offered.
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