Building the Online Enterprise: Lessons Learned from the Formation of USC's Palmetto College ACHE South Presentation April 19, 2016 ...
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Kennedy & Company
Building the Online Enterprise:
Lessons Learned from the Formation
of USC’s Palmetto College
ACHE South Presentation
April 19, 2016
2015 Kennedy & Company Education Strategies LLC
Starting Question: What should our online enterprise
accomplish?
Better Question: What are the goals for our university
and how does an online enterprise help us get there?
Marketing Extend Boost
Enhance Lower
& Reach of Enrollments
Retention Costs
Brand Delivery & Revenues
2 2015 Kennedy & Company Education Strategies LLC
Outline for Today’s Presentation
§ Goals for the Online Enterprise = The Goals for the University
§ Timeline for Development of USC Palmetto College
§ A Centralized Approach? or Every School for Itself?
§ Goals Dictate Architecture of Online Enterprise
o But Should we Outsource?
§ Assumption: Let’s Build Something Together – What are the Issues?
o Governance
o Revenue Sharing – How Should we Split Revenues & Costs
o Accreditation & Authorization
o Other Programs, Integration with Traditional Education
o Student Retention
o Admissions, Financial Aid, Registrar, Bursar
o Economies of Scale: Course Development & Marketing
o Strategy & Market Research
o Final Lessons Learned
3 2015 Kennedy & Company Education Strategies LLC
Timeline of Events: USC’s Online Enterprise
USC’s University
Chancellors, Dr.
USC-Columbia and its four Elkins, and the Palmetto College
regional campuses begin Provost agree to a finishes its second full
offering online degree- Dr. Susan Elkins final revenue sharing year with a 35%+
completion through Palmetto appointed first agreement that splits increase in students and
Programs; many of the courses USC’s Board approves Chancellor of a 35%+ increase course
tuition revenue
are taught via synchronized Palmetto College and USC Palmetto College consumption, leading to
between the 8
classrooms pushes for state funding to a doubling of tuition
participating
launch the enterprise revenues generated.
institutions
July, 2011 Summer, 2012 Fall, 2013 June, 2014
2007 Spring, 2013 May, 2014 June, 2015
February, 2012
USC President Harris Pastides begins
planning process for Palmetto College,
Palmetto College Palmetto College
seeking to expand delivery of online The SC legislature formally launches with 7 finishes its first full year
education, increase enrollment, and approves a $5M state programs, including 5 with 64 courses and over
deliver a low-cost degree to South appropriation to fund the new programs in 1600 students enrolled
Carolina residents. A consulting project creation of Palmetto Criminal Justice,
creates the initial architecture for College Education, Nursing,
Palmetto College, for Board review and
Human Behavior, and
approval.
Business.
4 2015 Kennedy & Company Education Strategies LLC
Designing an Online Enterprise? Start with Your Goals.
USC – Palmetto College started with a vision for what it wanted in 2011 and gained Board
approval for both its vision and the corresponding architecture for Palmetto College in 2012.
2012 USC Board Presentation
Stated Goals:
The$Need$for$Palme.o$College$
By#establishing#Palme0o#College,#the#University#of#South#Carolina#achieves#its#
fundamental#goals#and#plays#a#significant#role#in#improving#economic#stability#in#the# § Extend USC’s reach beyond
State.##
Low$Level$of$Bachelor’s$
• South#Carolina#ranks#40th#in#the#naCon#in#number#of#adults#holding#a#bachelor's#degree#at#
only#approximately#25%.##The#level#of#educaConal#a0ainment#relates#directly#to#the#number#
of#new#employers#that#might#consider#relocaCng#to#South#Carolina.###
its physical campuses and aid
Degree$A.ainment$in$
South$Carolina$$
Quality$of$Life$
• #An$increase$in$bachelor's$a.ainment$is$$determined$to$be$"cri:cal"$or$"most$cri:cal"##for#a#
majority#of#counCes#to#meet#projected#economic#demands.####
• Individuals#holding#a#bachelor's#degree#in#South#Carolina##earn$$1.2$million$more$over#a#
degree completion, in South
Carolina
lifeCme#than#those#with#just#a#high#school#diploma.#
Improvements$for$
• Research#conCnues#to#indicate#that#holding$a$college$degree$elevates$individuals$with#
Bachelor’s$Degree$ increased#social#and#cultural#capital##that#is#passed#on#to#future#generaCons.##Educated#
Holders$$$$ ciCzens#are#rewarded#with#higher#paying#jobs#and#higher#status#in#society.##
• By$2018,$630,000$new$jobs$and$job$vacancies$that$require$a$bachelor's$degree$will$exist$in#
Expanding$Job$Market$ South#Carolina#with#strong#growth#in#the#fields#of#health#sciences,#business#administraCon,#
Demand$for$Bachelor’s$ educaCon,#criminal#jusCce,#and#informaCon#technology.###
Degree$Holders$ • Based#on#projected#degree#compleCon#rates,#South#Carolina#must#increase#bachelor's#
degree#a0ainment#by#a#rate#of#7.3%#annually#to#meet#job#market#needs.#####
• The#mission#of#Palme0o#College#will#include#increasing$access$to$more$students$who$may$
Fulfills$Mission$of$the$
University$$
be$placeXbound#and#increasing$the$level$of$educa:onal$a.ainment$across$the$$State.$$$
• Palme0o#College#will#build#on#the#missions#of#Palme0o#Programs#and#the#regional#
campuses#to#deliver#educaCon#to#underserved#populaCons#and#to#individuals#who#
otherwise#might#not#have#access.####
§ Create affordable degrees
• Palme0o#College#will#hit#on#the#core$principles$of$the$new$funding$model:#degree#
a0ainment,#job#placement#and#opportuniCes#for#low#income#and#minority#students.#
Accountability$Based$
Review&of&Palme-o&College&&
• With#increased#bachelor's#degree#a0ainment#and#access$to$underserved$students$in#the#
Funding$$ State,#USC's#impact#on#economic$development$$will#be#vast#by#making#South#Carolina#more#
&
a0racCve#to#potenCal#employers#and#providing#access#to#higher#paying#jobs#for#its#ciCzens.####
As#Palme)o#College#develops,#these#guiding#principles#will#shape#the#final#product.##
Sources: Georgetown Center on Education and the Workforce & The Lumina Foundation Education Needs Index
4
§ Increase net revenue –
•
Students##
Adult#students#who# •
Courses&
Upper#Division# •
Programs&
VocaEonally#oriented## •
Structure&
Leverages#the#
important, but secondary
may#be# courses#only## • Fields#with#proven#job# regional#campuses##
geographically=bound### • Vast#majority#of# market#demand# • Organized#as#one#
• University#non= courses#on=line#via# • Accredited#through# college#within#the#
completes#and# asynchronous# the#senior#campus# system##
Associate’s#Degree# delivery#methods!! degree#programs### • Overseen#by#a#new#
holders# & • PosiEoned#to# Chancellor#with#a#
• Both#in=state#and#out=
of=state#residents&
compete#with#for=
profit#insEtuEons##
direct#reporEng#
relaEonship#to#the#
President#
§ Utilize existing infrastructure
and programs to jump-start the
• CentralizaEon#of#
many#services#&
Based&on&its&market&posi;on,&brand&integrity,&exis;ng&infrastructure,&and&strong&
market&demand,&Palme-o&College&is&poised&for&success.&&&&&
launch of Palmetto College
3
5 2015 Kennedy & Company Education Strategies LLC
Goals Dictate the Architecture of Online
Based on USC’s experience, we believe that the ultimate goal for the University should dictate
how the online enterprise is constructed.
Examples of Corresponding
Example University Goals
Architecture
Enhance University Brand MOOC/Not-for-Credit
Quick New Revenues, Outsource to Online Program
Low Investment Management
Extend University Delivery, Build Internally on Top of
Increase Long-Run Revenues Existing Structures
6 2015 Kennedy & Company Education Strategies LLC
For USC, Building on Something Established
An online extension wasn’t new for USC, which had 2 programs of study built on its four regional
campuses that offered 2-year degrees. Palmetto College expanded programs and resources while
creating a cohesive entity dedicated to growing enrollments and new programs.
2012 USC Board Presentation
!
Selec&ng!Programs!For!Palme0o!
Palme&o(College's(ini/al(programs(will(be(selected(on(the(mission,(goals,(market(demands,(
and(capabili/es(of(the(University(of(South(Carolina(System.(
!
USC’s “Palmetto
Programming!Goals!
(1. Offer(classes(best(suited(to(build(enrollment(
2. Offer(enough(online(programs(at(once(to(create(economies(of(scale(in(adver/sing(and(administra/on((
Programs” had offered
3. Serve(the(ci/zens(of(South(Carolina(((
Metrics!
online programs for
Proven(forA
profit(
market?(
Established(USC(catalog(of(distance(
educa/on(classes(applicable(to(a((
bachelor(degree?(
Projected(South(Carolina(Job(
Opportuni/es(in(2018(
Fit(with(USC(
Mission/Strategic(
Plan(
Overall(
Score( years. Palmetto
Organiza/onal(
Leadership*(
2 3 117,000( 4 3 College added
Liberal(Studies*(
Criminal(Jus/ce(
0
4
4
2
27,000(
61,300(
4
4
3
3
additional offerings to
Degree!
Programs!
Health(Sciences(
and(Nursing(
3 3 192,000( 4 3 create scale and
Business(
Administra/on(
4 1 286,200( 4 3
promised additional
Informa/on( 33,100(
support for marketing
4 0 4 2
Technology(
Educa/on( 2 1 140,900( 4 2
Hospitality(
Management(
1 0 N/A( 4 1 and recruiting.
Legend 0 1 2 3 4
*Program Exists
USC!is!in!a!unique!posi&on!to!immediately!add!online!degree!programs!
by!capitalizing!on!previously!done!course!design. 5
Source: 1Georgetown Center on Education and the Workforce 2 USC Department of Distributed Learning
7 2015 Kennedy & Company Education Strategies LLC
Can a Decentralized Online Enterprise Work?
Perhaps, but only when your goals focus on speed and creativity. Eventually, scale matters.
Erie Canal Example
School
1
School
2 Advantages of
an Organic,
School School
6 3
Decentralized
School School
Approach
5 4
§ Faster start-up
§ Promotes creative approaches
Erie canal construction started (1807)
§ Reduced bureaucracy in decision-making as a decentralized process with canal
§ Eliminates some issues of revenue construction divided into 3 segments.
sharing and governance § Canal managers learned new techniques,
not biased by a master plan of how to
§ Less arm-twisting to find participants build canals
§ Eventually consolidated best practices to
finish remaining parts of the canal
building
Advantages: (Sometimes) faster, more creative solutions
Disadvantages: Still requires “central” services such as bursar, registrar, admissions, financial aid;
higher operational costs on per-student basis
8 2015 Kennedy & Company Education Strategies LLC
Palmetto College: Early Outsourcing; Later, In-House
USC Partnered with Academic Partnerships (AP) on a fee-for-service basis (no revenue sharing) for
almost two years; the relationship was discontinued in 2014 for USC’s undergraduate offerings.
AP: Provided a Quick Start; Fee-for-Service Model Not Sustainable for USC or AP
§ The fee-for-service structure was not a part
Web
AP built initial of AP’s typical model (typically receives
websites, developed 40% to 60% of revenues)
many (but not all) of
Courses
the courses, and staffed § AP and USC could not reach an agreement
a call center for 1+ on future work for Palmetto College
years
§ USC now does all work formerly done by
AP in-house for its undergrad programs
Calls
Based on current costs for USC versus AP’s desired contract terms, moving to a
fully in-house model saved USC at least $1.5M in FY2015. Savings in 2016 are
projected to exceed $2M.
9 2015 Kennedy & Company Education Strategies LLC
A Checklist of Outsourcing Options
Every aspect of operating the online enterprise can be be outsourced, but some areas make more
sense than others based on your current competencies and the cyclicality of the work in that area.
Illustrative
Is it a Current Core Is it a One-Time or Should we
Service When to Outsource?
Competency? Cyclical Event? Outsource It?
Local/Regional Marketing 4 0 0 • When regional recruiting is poor
• When faster start-up is needed or fewer
Recruiting Online/Call Center 2 0 2
operational costs/risks
• When creation of digital classes will be
Course Development 2 2 2
limited and sporadic
Website Development 2 2 2 • When few university resources exist
• When speed is critical or when retention
Retention Services/Coaching 2 0 2 services for online are separate from on-
ground
• When seeking business/partnership
Partnership Development with
4 0 1 development in geographically
Business, Other Entities disparate areas
Marketing/Recruiting to Int’l • When university has few/no resources
1 4 2
Markets internationally
Marketing/Recruiting to National • When university has few/no resources
2 4 0
Markets outside of home region
• When data is hard to get or politics gets
Market Research & Strategy 1 2 2
in the way of clear strategic planning
4 = Yes 2 = Partial 0 = No
10 2015 Kennedy & Company Education Strategies LLCWhen Does Outsourcing Make Financial Sense?
Outsourcing to an Online Program Management company can be a good way to get off the ground
quickly using experienced recruiters, website developers, and course developers. But it comes with a
potentially hefty long-term cost. The right contract terms are critical.
Comparison of Net Revenues: OPM vs. In-house Approach
Sample Analysis, 2016-2025 Example
$40.0M $8.0M At 2,500 total students and $300/
$7.3M
credit hour (projected 2025
$35.0M Revenues (000s) $7.0M levels), a “typical” OPM revenue
sharing agreement would pin
OPM Costs (50% Revenue Share) $5.6M $6.0M OPM-related costs at ~$8.4M/
Projected Net Revenues ($M)
$30.0M year, plus include the
Total Revenues and Costs ($M)
Projected In-House Approach $5.0M institution's internal expenses,
$25.0M Costs $4.3M cutting net revenues by roughly
Difference - OPM and In-House $8M per year by 2025
$4.0M
Net Revenues $3.3M
$20.0M
$16.9M
$2.5M $3.0M
$15.0M $1.9M $13.3M
$1.4M $2.0M In this example, an OPM
$10.5M
$0.8M would have to outperform
$10.0M $8.3M $8.4M
$0.3M
$6.6M $6.6M $1.0M the in-house/DIY
$5.3M
$4.1M
$5.2M recruiting output by
$5.0M $2.6M $3.2M
$1.5M $2.1M $1.4M $2.0M
$0.0M roughly 75% to match the
$0.8M $0.9M $1.0M $1.1M
net revenue output for the
$0.6M $0.7M $0.7M
$0.7M
$0.0M -$1.0M
FY FY FY FY FY FY FY FY FY FY
sample institution under an
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 in-house approach.
*Model assumes that costs for admissions, financial aid, faculty, and course development are the same under both models and that these costs are borne by by the institution.
11 2015 Kennedy & Company Education Strategies LLCBuilding the In-House Enterprise: Major Decisions
With a DIY-approach to building the online enterprise, universities must decide how all of the
related components will work together, be governed, and share the revenues and costs.
Online Enterprise
Strategic
1 2 3
Accreditation & State
Governance Revenue Sharing
Who decides on new programs and Authorization
How are tuition revenues shared? How How will various degree offerings be
program ownership? On other major
are direct costs paid for? accredited? Who will seek authorization
changes?
for serving students in new states?
4 5
Role in Brick-and-Mortar Types of Programs
How can/should the online enterprise be involved with the Should the online enterprise include continuing education,
digital enhancement of on-ground courses? graduate programs, certificates, and any other online offerings?
6
Retention & Student Services
Does online use the University’s current advising/retention apparatus? How do admissions, financial aid, registrar, and bursar
Operational
manage these students? How are those extra efforts paid for?
7 Course Development 8
Marketing & Recruiting
9
Data & Decisions
How do we leverage current digital
Who manages? How does the brand stay Who provides research and analysis on
courses? Build new ones? How do we
consistent? Who runs call centers, online which new programs to build and how
use course developers from multiple
chats, etc.? to recruit (and where)?
areas?
12 2015 Kennedy & Company Education Strategies LLCGovernance – Who Decides?
The largest strategic issues—like how the online enterprise should be governed—need to be
decided before the enterprise is launched, ideally.
2012 USC Board Presentation – Governance Proposal •1 2012: Recommended that
USC create a Chancellor
DRAFT (
position, given that 8
Proposed(Administra/on/Governance(( For(Discussion(Only(
different colleges/
Palme&o(College(will(require(a(unique(structure(within(the(University(system(to(achieve(its(
many(goals.((( universities would be
Key(Considera/ons(( Preliminary(Recommenda/ons((( involved with Palmetto
• Palme&o(College(will(require(strong(leadership((
at(the(very(top(which(is(communicated(to(the(
• Appoint(a(chancellor(with(a(direct(repor?ng(
rela?onship(to(the(President(to(oversee(
College
public(to(illustrate(its(overall(importance.((( Palme&o(College.(
• The(role(of(the(Palme&o(College(Chancellor( • Centralize(services(to(eliminate(redundancy.((
must(be(empowered(to(make(important(
decisions(and(have(direct(access(to(other(
Many(services,(such(as(student(services(and(
financial(aid(can(be(melded(together(under(one( •2 High-level governance
decision(makers.(((
• Upon(the(comple?on(of(the(organiza?on(design,(
role.(
• Reducing(current(staff(levels(across(all( well-established with USC
ins?tu?ons(is(not(necessary(as(cost(reduc?ons(
many(exis?ng(roles(may(be(redundant((
will(occur(over(?me(through(a&ri?on.(( President and new
• Deans(should(take(on(increased(responsibility(at(
their(respec?ve(campuses(and(assist(across( Chancellor
mul?ple(departments.(
•3 In retrospect, required
more detail about who
makes decision on
launching new programs,
Across(years(one(and(two,(administra/ve(costs(are(expected(
to(rise,(but(are(predicted(to(fall(a?er(year(two.( 16 and other decisions
between and among
divided interests
13 2015 Kennedy & Company Education Strategies LLCRevenue (and Cost) Sharing – How to Split?
Similarly, revenue and cost sharing in a multi-school (or college) system should be agreed upon
up-front. A neutral party (like the President, Provost, Online Chancellor, etc.) can be arbiter.
2012 USC Board Presentation 1 The Plan: Pay the Costs,
Split the Rest
USC’s original cost sharing model,
A"New"Revenue*Sharing"Model" blessed by the Board, called for
The'new'model'will'require'a'revamped'revenue'sharing'system.'
direct costs of running the enterprise
Present' Future' to be paid up-front, with some
indirect (overhead costs paid) using
Inconsistent Models of Revenue Sharing Consistent Cost-Based Model of
Across the System proxies for effort. The remaining
Revenue Sharing for all Campuses
USC Upstate
USC Upstate dollars would be split between the
USC Union
online enterprise (central) and the
schools.
USC Lancaster
USC Columbia
USC Union USC Columbia
(Laurens Campus)
USC Sumter
USC Sumter
USC Aiken
USC Aiken
USC Salkehatchie
(Allendale Campus) USC Salkehatchie
(Walterboro
USC
Salkehatchie
(Allendale
USC
Salkehatchie
(Walterboro
2 Create Consistency, Right
Campus)
Incentives
Campus) Campus)
USC Beaufort
Current Revenue Sharing Arrangement Examples
• Consistent'set'of'revenueAdapting Revenue Sharing to New Conditions
USC’s original plan for sharing revenue was a good start, but didn’t account for how to create
incentives such that every school/campus recruited for every program.
USC implemented a tweak in 2014 to its …which grew cross-campus recruiting
original plan to account for cross-campus from practically nothing to a substantial
recruiting… amount in 2015
What%Incen*ves%Does%the%Model%Create?% New$Data$Shows$Diffuse$Pa0ern$of$Program$Enrollment$(2$of$2)$
Interviews%with%Chancellors,%Deans,%and%other%stakeholders%indicated%that%the%2012=2014%model% County ED)Elementary)Educ
PP)Liberal)
Studies
PP)Organiza:onal)
Leadership
Upstate)Criminal)
Jus:ce
Upstate)Nursing)@)
R.N.
USCA)Business)
Admin
USCB)Human)
Services
Headcoun
t
created%incen*ves%for%campuses%to%recruit%only%for%those%programs%they%deliver.%% Georgetown 1 1 1 3
Greenville 4 2 6 31 4 4 51
Campus% Recrui*ng%Priori*es% Greenwood 1 3 1 2 7
Hampton 5 2 1 8
Lancaster,%Salkehatchie,%% • BOL% Horry 1 3 3 4 2 2 15
Current%Model% Sumter,%Union% • BLS% Jasper 1 1 1 3
% Jefferson,$AL 1 1
Aiken% • Business% Kershaw 1 2 1 1 5
% Lancaster 5 54 42 2 1 104
Beaufort% • Human%Services% Laurens 1 7 3 2 2 15
% Lee 1 1
• Nursing% Lexington 2 7 5 5 6 13 5 43
Upstate% Marlboro 1 1
• Criminal%Jus*ce%
% Montgomery,$MD 1 1
Columbia% Newberry 2 1 1 4
• Educa*on%
Oconee 4 4
Campus% Recrui*ng%Priori*es% Orangeburg
Pickens
1
1
7
6
2
1
1 11
8
Lancaster,%Salkehatchie,%% • BOL% Richland 4 12 6 6 7 15 9 59
Sumter,%Union% Richmond,$GA 1 1
• BLS% Saluda 1 1
2014=2015%Model% • Business% San$Diego,$CA 1 1
Aiken%
• Human%Services% Spartanburg 2 3 1 25 2 33
• Nursing% Sumter 2 25 4 2 5 2 1 41
Beaufort% Union 14 20 3 1 38
• Criminal%Jus*ce% Williamsburg 1 1
Upstate% • Educa*on% York 1 9 9 2 6 8 5 40
• Future&Programs& Grand)Total 32 214 123 57 144 78 42 690
Columbia%
3% 6$
Design and implement a revenue-sharing model before you implement, but have the
right governance in place to be able to change it as conditions change.
15 2015 Kennedy & Company Education Strategies LLCBut Still More Structural Start-Up Questions
Understanding governance can help define the vision for how new programs get accredited and
authorized, how they blend with the University’s on-ground offerings, and how they include
and/or share resources with continuing education and graduate programs.
Accreditation & Blend with On-Ground Share with Continuing
Authorization Teaching Education & Grad School
• Many programs can be • Digital courses and • Depending on the offering,
accredited underneath materials can be re- sharing resources/costs
current accreditation, purposed for online/on- with grad and CE programs
which USC did. ground use, creating can lower overall costs
economies of scale
• State-by-state • May be large advantages in
authorization can take • Requires coordination in marketing/ad spending to
time; prioritize states course development and have a seamless catalog of
where your brand matters one “keeper” of all digital classes, especially with
inventory non-traditional students
16 2015 Kennedy & Company Education Strategies LLCHow Can (And Should) Online Help Retention?
Online classes can be a boon to retention efforts, when digital assets are re-purposed for
supplemental instruction or when courses help smooth curricular bottlenecks. But they can also
hurt students that nay be challenged by an all-online environment.
Classroom Environment
Completely Online On-Ground, With Online Resources
• Few retention issues here, generally
• Online classes can overcome course Online courses
Well-Prepared
bottlenecks, allow double-majors to provide a major
• Online assets can help students make opportunity to
finish on-time, etc.
up for classes missed due to illness, supplement the on-
athletic travel, etc. the-ground
• Can keep students from taking experience.
summer courses elsewhere and
Type of Student
• Risk of too many incentives to skip
transferring them back-in
class
However, a totally
online experience
• May require more intensive advising poses a retention risk
or supplemental instruction; • Online assets can help provide for some students that
Under-Prepared
additional coaching, even for supplemental instruction at any time require a more hands-
on learning
students that thrived in on-ground of day
environment and/or a
more connected
• Example: USC has seen some of its • Can aid professors in seeing which advising experience.
best on-ground two-year students sections of material students find
struggle with completely most challenging
asynchronous classes
17 2015 Kennedy & Company Education Strategies LLCOnline’s Effect on Core Student Operations
Without major workarounds, outsourced, decentralized, or centralized online enterprises will all
rely on some of the university’s core student services: admissions, financial aid, registrar, and
bursar operations.
Admissions
Student
Information New/expanded
System online enterprises
Financial
Aid
impose real costs
New Online on these functions,
Students which should be
acknowledged
Registrar
(and preferably
paid for) via the
Bursar revenue/cost
sharing model
Functions & technology that cannot be
outsourced and shouldn’t be decentralized?
18 2015 Kennedy & Company Education Strategies LLCBuilding (More) Scale: Marketing and Course Dev
Marketing and course development can both be done more quickly, initially, in a decentralized or
outsourced approach. However, getting the biggest bang for your buck in ad spending and course
development costs requires centralization of efforts.
Scaling Marketing & Advertising
• Important to keep control of brand and message
• Should consolidate advertising buys across all programs, if
possible (e.g., one banner ad, links to 20 programs)
• In many cases, important to associate online brand with on-
ground offering for greater credibility
Scaling Course Development
May not need a full-time course developer for one academic
45
40
40 40 40 Organizational Leadership
Liberal Studies
Nursing
Human Behavior
•
35
program, after initial catalog is built
Business
Education
30 Criminal Justice
Course Building Capacity: 2 FTE
25 23
20 19
20
15
10
14
• However, combining several programs under one roof creates
5
0
enough need to keep design know-how, pedagogical principles
Fall Spring Summer Fall Spring Summer Fall
2013 2014 2014 2014 2015 2015 2015
in-house
19 2015 Kennedy & Company Education Strategies LLCScale in Course Development Lowers Costs When Demand Varies
Illustrative Example: Expected Demand for Building Courses for 7 New Online Programs
45
40 40 40 Organizational Leadership
40 Liberal Studies
Nursing 1• If 2 FT course developers
New Course Building per Semester
Human Behavior
35 Business
develop 20 course per year, the
university seems to have
Education
enough work with all programs
30 Criminal Justice
Course Building Capacity: 2 FTE combined.
25 23
20 19
2• However, if assigned only to
20 specific programs, no program
needs a course developer in-
14 house for more than one
15 semester.
10 3• The university could outsource.
In the first 3 semesters,
5 outsourcing the development of
20 courses makes sense. In the
0 long run, outsourcing all course
development may prove more
Fall Spring Summer Fall Spring Summer Fall expensive and means the
2013 2014 2014 2014 2015 2015 2015 university lacks a vital core
competency
Maintenance and new course additions start in Spring of 2015
20 2015 Kennedy & Company Education Strategies LLCHow to Launch the Right New Programs?
A combination of market research, resources, and good governance are necessary to build and
deliver new programs so that your online enterprise can continue to grow.
Capabilities Students Competition
What programs already have online Where are the prospective students? Where are the pre-existing online
resources? Which programs are best- What is the demand for a four-year programs? What do they offer? Can
known in our region? Which schools degree? Degree completion? Graduate our offering be better? Where is
are most willing to jump into the programs? Continuing education? there a clear hole in the market?
online enterprise? Where are the prospective students
that will value our brand and
reputation most? Where do our
students take summer courses?
21 2015 Kennedy & Company Education Strategies LLCFinal Thoughts: Lessons Learned
Start with all of the university’s goals in mind and
then make the online enterprise an enabler of those goals.
Construct several alternative scenarios in terms of
outsourcing and decentralization, and understand the
financial implications of each
Draft a strategic plan that identifies governance and
decision-making rights, splits revenues, and shares
costs. Ensure your governance works and can make
mid-course corrections quickly.
22 2015 Kennedy & Company Education Strategies LLCAppendix
Enrollments (Seats Filled) in
Palmetto College Online Courses
______________________________________________________
Total Enrollments Average Enrollments
Semester Courses Enrolled Per Course
Fall 2013 57 1649 29
Spring 2014 64 1668 26
Summer 2014 15 542 36
Fall 2014 73 2077 28
TOTAL 209 5936 28Es>mated Average Life>me Earnings
by Educa>on Level (2008)
$5,000,000
$4,650,588
Bachelor Degree holders
earn 50% more than
$4,029,948 associate Degree Holders
$4,000,000 $3,837,239
$3,380,060 + $1,125,295
$3,000,000
$2,254,765 $2,239,548
$2,000,000 $1,767,025
$1,198,447
$1,000,000
$-
Professional PhD Master's Bachelor's Associate's Some College High School High School
Degree Degree Degree Degree Graduate Dropout
South Carolina ci>zens who earn bachelor’s degrees are much more
likely to achieve a higher socioeconomic status.
25
Source: 1Georgetown Center on Education and the WorkforceCri>cal Needs for Bachelor’s Degrees
The need for an increase in bachelor’s degrees to meet projected job market demands
is considered “most criQcal” or “criQcal” across South Carolina.
EducaQon Needs Index for South Carolina
Level of EducaQon Need
The EducaQon Needs Index is calculated by
combining the educaQonal capacity of a region’s
adult populaQon, the degree of economic
challenges, and populaQon growth issues and
potenQal need for increased human capital. Each
Source: The Lumina Foundation Education factor is converted to a Z Score with scores above 0
Needs Index. indicaQng criQcal educaQon needs. Scores from 0 –
0.47 indicate criQcal need and above that indicate
most criQcal. As a state, South Carolina scored 0.53
for an overall “most criQcal” raQng.
26Marke>ng Principles
To effecQvely communicate in a way that appeals to potenQal students and differs
with other available programs, a_enQon must be given to specific principles.
External − Tying Palme_o College to the original missions of the regional campuses will bolster their purpose and
Message: strengthen their individual value to the system and State
− The President’s ”three A’s” of Accessibility, Affordability and Accountability should be reinforced
Mission &
− Each of the “A’s” serves to disQnguish Palme_o College from for-profit insQtuQons
Access
− MarkeQng efforts must take into account the reflecQon on quality of Palme_o College and USC
− Techniques should be used to differenQate USC from the for-profit insQtuQons that are heavily marketed
Quality
− A disQnct focus on quality should play a central role
− The markeQng of Palme_o College will ulQmately have an impact on the overall USC brand
Control Brand − Palme_o College may be used as an opportunity to launch and promote the USC brand to new markets
− Care should be taken to avoid cheapening the brand
& Message
− DisQnguish Palme_o College from other entry points to the University such as “Back to Carolina”
Package as − Micro-target efforts to specific potenQal Palme_o College students
Unique − Avoid communicaQons overlaps with other markeQng efforts
27Five Year Projected Income Statement
Posi>ve Scenario: High Enrollment, high marke>ng and overhead costs
5 Year Income Statement
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Headcount
250 300 350 400 450 500
Revenue
$ 2,390,500 $ 2,881,155 $ 3,393,761 $ 3,809,126 $ 4,368,083 $ 4,891,495
Fixed Costs
$ 1,466,385 $ 1,494,045 $ 1,522,396 $ 1,551,456 $ 1,491,242 $ 1,611,773
Variable Costs
$ 772,292 $ 777,375 $ 949,958 $ 1,004,417 $ 1,030,125 $ 1,069,583
Total Costs
$ 2,238,677 $ 2,271,420 $ 2,472,354 $ 2,555,872 $ 2,521,367 $ 2,681,356
Net Income
$ 151,823 $ 609,735 $ 921,407 $ 1,253,254 $ 1,846,716 $ 2,210,139
• While costs per credit hour range from $155 to $570,
Assumptions
we recommend a price of $367/credit hour, equal to
the current price for Palmebo Programs courses,
$367: whichPrice/ Credit
furthers hour
the access mission of USC while sQll
25: fostering
Student/Class
a financially sustainable enterprise.
$500,000: Additional Overhead
• 1: Pricing
New Palme_o
Degree College at $367/credit
Program / Yearhour will make
the program a significant compeQtor to the for-profit
$360,000: insQtuQons
Development Costs
that have recently become major players in
22: the Credit hours
South Carolina / student
higher educaQon/ year
marketplace.You can also read
