Why are more university OPM partnerships ending early?
For many years now, I’ve been analysing and tracking the online programme management (OPM) market and associated online education companies. For the uninitiated, these are private companies that enter into partnerships with universities to manage online degree programmes and/or other types of courses.
These partnerships have existed for a long time, much longer than most people realise. One of the earliest was initiated over 20 years ago between the University of Liverpool and the US company Laureate Education. In those early days, there were a very small number of partnerships. However, from the 2010s onwards, a significant number of partnerships started to be established with a range of online education companies, and this has continued into the 2020s. These partnerships span different types of online provision, from MOOCs to degrees, and in some cases focus on different geographical audiences.
The 2010s were the period in which classic OPM-style partnerships began to be established more widely in UK higher education. By classic, I mean partnerships with companies that mainly or exclusively manage portfolios of online postgraduate master’s degrees through long-term revenue-share agreements, and that, in managing these degrees, provide an array of services from marketing and recruitment through to student support. While other types of online education companies exist, it is this type of company and partnership that I’m focusing my attention on here.
In the 2010s, over 20 of these types of partnerships were established with UK universities, and that number has increased in the 2020s, despite us being only just over halfway through the decade. But although the number of these partnerships has grown, in recent years we’re beginning to see an increasing number coming to an end.
Only a small number of partnerships have lasted over five years, and more have ended before that milestone. Given that these partnerships are typically entered into as long-term relationships, this is a concerning pattern that is worth examining in more detail.
OPM performance and the limits of the current model
Those looking for a singular, simple reason to explain the growing number of partnerships coming to an end will be disappointed. There are a range of factors at play. Some OPM critics, including small pseudo-religious sects that seem to live out their days in a simplistic, angsty, Manichean la la land, will point to company performance and how the “evil” private sector is leeching off higher education whilst simultaneously not delivering, and the sector is getting wise to it. However, while they build their plastic populist personas on whatever slightly naff Twitter substitute is currently popular, the complex, nuanced, real world spins around them.
Now… having got that off my chest, an undoubted factor does relate to OPM performance, but it’s far from the whole story. Ultimately, the performance metric that rules over all others is the number of students recruited to programmes. In some cases, OPMs have not lived up to expectations and projections around the number of students recruited to programmes, which has spelt the death knell for partnerships. Sometimes OPMs have made a rod for their own back, with projections that, if they were literary works, would find themselves in the fantasy and fairytale section of all good bookshops.
There are companies that really do need to grasp the fact that business development is not simply about gaining new partnerships at all costs, but gaining partnerships that last, create and deliver value.
The other aspect of performance that I have been increasingly questioning is the extent to which OPMs have really evolved and improved what they do. In my opinion, the way many approach things like marketing and recruitment, and programme identification, has become formulaic and stale.
The OPM value proposition has been their ability to bring things like modern demand generation, digital marketing and sales capabilities to a sector that has largely lacked this. Their offer has been built on doing things universities are not well set up to do. But that is subtly different from saying these companies are exceptional across all these capabilities.
They are good at doing things in the way they do things. But the extent to which they are doing anything creative and positively differentiated is debatable. This is a market of high convergence, and when you couple that with increasing competition and increased costs, it’s harder to be effective in the same way.
I think this is the crux of some performance issues, and for OPMs to continue to be valuable partners long into the future, they need to offer more than a standard set of capabilities that universities have historically lacked. Or, to put it another way, some new thinking and creativity is required.
OPM financial pressures and market consolidation
One related factor, continuing the focus on the companies themselves, has been the turbulence within the OPM market in recent times. Several companies have experienced financial challenges as a consequence of varied factors, including their own decision-making and wider economic conditions. There have also been, related to that, acquisitions and mergers.
This has created uncertainty, upheaval and change that has sometimes impacted the continuity of service, delivery and operations, and has been another factor in several partnerships coming to an end. But the initiative for ending partnerships because of these wider factors has not rested on one party alone. Both universities and the companies themselves have effectively ended partnerships, with the latter usually motivated by unprofitable partnerships.
One wider comment to make here also relates to the financial performance of some OPMs. Whilst a small number are consistently profitable, this is far from the case across the board, and a simple analysis of several company accounts shows profitability as the exception rather than the rule.
Call me old-fashioned, call me naive, but in my view profitability is really important, and too few of these companies can point to consistent profitability.
University due diligence and partnership readiness
While my focus to date has been on the companies themselves, it does, as they say, take two to tango, and the factors behind some partnerships having limited durability also lie with universities.
One issue relates to my last point, and that is a lack of really rigorous due diligence. I have to confess to, how do I put this politely, having been somewhat surprised by partnerships some universities have established.
Although I don’t really want to single out specific examples, it was quite something to witness the US OPM company 2U agree partnerships with a number of UK universities during highly public financial turmoil and a period of layoffs. It’s not surprising to me that it seems apparent, but not publicly or officially confirmed, that those partnerships are no more.
As someone who has worked in this space and analysed it for years, I have found myself proverbially banging my head against a wall sometimes when witnessing not simply the decisions being made by some universities, but the gaping mismatch in knowledge of the commercial realm and the online education landscape. This creates an imbalance in power dynamics that, while understandable, does not always create the best conditions for the formation of a partnership that is going to deliver and last.
I’ve mentioned business development previously, and it is an art that befuddles some universities. The burning desire to really want a potential future state to be true can sometimes result in a lack of sufficient scrutiny. My favourite example of this is when I see OPM partnerships announced that are framed as grand moves into reaching a vast online international student market in the thousands, with companies that lack a demonstrable track record of ever having achieved that or focused heavily on it.
I’ll spare those involved, but there was publicly available reporting from one university that expressed surprise that the majority of interest in their OPM-managed online degrees was from a nearby city, and not the big international interest they were expecting.
To develop solid partnerships, universities not only need to be better at scrutiny, due diligence and being more street smart, they also need to better understand the commercial world that private companies operate in. These types of partnerships are not simply about universities dreaming up a wish list that they slap on a tender, then sitting back and waiting for the offers to roll in.
It’s a partnership that has to marry the real-world realities of a company that needs to be profitable with the goals and aims of a university. If there’s a misalignment here, it can also impact the durability of partnerships and, in some cases, even getting to that stage.
A different but related element of this that has caused partnerships to get into trouble is universities being a good partner. Remember, this is a partnership. What I mean by that is universities effectively playing their part by offering a good service and experience to students, by being efficient when timeliness is critical, and by being willing to adapt.
In a similar vein, it’s also ensuring that governance arrangements are effective. A partnership needs to be constantly cultivated and should not be a type of activity you just totally retreat from. Developing good relationships and governance, and therefore durable and valuable partnerships, requires effort from both sides and, like all relationships, issues and frictions arise and need to be worked through.
These partnerships are a bit like an old married couple when you get them on their own… universities complain about their company partners, and companies complain about their university partners. Just like a marriage, it takes work to make a partnership successful.
Can OPM partnerships still offer value?
The increasing number of OPM partnerships coming to an end is due to multiple, rather than singular factors, with responsibility resting on both companies and universities. Overall, the trend is a negative one, as it reflects badly on both OPM companies and the credibility of universities to effectively diversify into online education and competently instigate and manage public-private partnerships.
Another negative relates to the compounding effect of operating in the online education market over the long term. There are advantages to committing to online provision as a long-term business-as-usual strategy, and there is evidence that points to this amongst universities that have done that. This doesn’t mean that there will not be bumps along the way, but online education is still too often viewed as a diversification tap that can be turned on and off, and that approach often results in levels of wastefulness, albeit levels that are hard to easily quantify.
For OPM companies themselves, this trend creates reputational damage both specifically and at a category level. This is at a time when I think there is no less need for support to operate effectively in the online education market. I think, bluntly, there is a need for some companies to up their game and to not rest on their laurels, and to consider how they offer value now and in the future, rather than tacitly relying on a model that feels as though it has diminished in effectiveness from earlier years of operation.
Overall, I think this pattern points to the importance of managing relationships proactively and understanding each other’s differences and the operating environment. These partnerships can still offer value, but if the number of partnerships coming to an end within a relatively short period of time continues to increase, this will broaden a negative perception around them, whether this is deserved or not.
